An analyst's point of view. A new Issue.

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Posted by The Analyst on June 17, 2009 at 23:37:48:

Some of you here may or may not know of me, but I wrote a little post about a year ago here concerning the then current and future fiscal situations of the Southern California dive boats. I focused, among other issues, the effect Sport Chalet and other shops may or may not have had on the future of boat diving.

After I wrote those observational bullet points and supportive statements, I asked for any further comments about the conclusions drawn. Other than some dolt blindly accusing me of issuing false statements, that were never really defined Ė just a knee jerk reaction to the truth, I never received any direct rebuttal. Fair enough I concluded. My points were well received, but not overall happily accepted by the parties involved I heard in the wings.

Well itís been some months now and I have another observation and analyzation for you.

Recently I was asked if I had any idea why some shops that charter boats outright charge more per diver than what an open boat itself would charge. The answer is a simple Ė a profit of money. Shops will not charter a boat nowadays unless they can make a profit from it, and a usually high one at that. Would you like an example? Of course you would.

I asked one boat owner this week what he charges for a Saturday chartered trip to Catalina, including food and air, for 1 day. He said $2,300. I asked him if that is the best price he charges his best shop or club customers, or only to people whom I would call walk-ups; those just inquisitive on how much a whole charter is. The boat owner said that $2,300 price is what he charges to anyone who can come up with the money before leaving the dock.

Letís set the general minutia aside for now. We all know there are slower bigger boats that afford much more space and comfort, and smaller boats that seem jet-fast to Catalina with a rougher ride and no place to relax in between dives. Some boats serve nothing more than pre-packaged reheated fare for meals, while others have a trained and certified chef creating quality spreads. Some have hot tubs, others have bowling alleys (not really). Some do the outside islands while others do only Catalina. In the end all boats have access to all the same dive sites as the next boat down the dock. All boats will dive in pretty much the same conditions on any given day. With one exception that I know of, size doesnít matter once the anchor hits the water.

This particular boat of reference sits nicely inside the average size and quality category.

This particular dive boat also takes anywhere between 30 to 32 divers as a fully booked boat. For the sake of argument, letís just focus on the best case 32 diver number.

$2,300 (the shopís cost for the boat, crew, food and air for 3 dives) divided by 32 divers equates to slightly more than $71.87 per diver. That is a chartering shop or clubís COST per diver for the trip if it leaves the dock full. You could also consider a half filled boat a break even trip for the most part Ė more on that later.

Now there I see on one shopís web site that they charge $149.00 per diver for one of these trips as described WITH the boat referenced. A quick check of the calcs says thatís more than a 100% mark-up per diver for the trip if you buy a ticket with them. If all 32 spots sell, thatís a trip GROSS of $4,768, or $2,468 NET after the initial charter cost for the boat.

Now I do realize that there are some shops out there who will figure in such things as shop dive masters and staff time required to administrate these trips. Even after a couple hours of staff time per week to book and process the tickets for these trips, it shakes down to a not too shabby ROI if they can fill the boat. Trust me when I say this particular shop does fill their chartered boats, mostly with classes, on every trip this time of year. If this shop does a trip every other week for a month, they could NET $6,170 a month using a 2.5 trips per month frequency, even more if they had a more aggressive schedule that included a 2 or 3 day trip once or twice a year.

Captain Obvious here; why wonít shops charge a reasonable mark-up on their charter costs. This will ensure the boat trips are full (itís been proven that most Ca divers are cheap anyway) by not pricing out what I estimate is over 2/3 of the local diving public. I say start at 12% up to 18% of margin and go from there. Running local shop chartered boat trips were never supposed to be the main revenue generator for shop by most business plans. These dive trips were meant to serve as a mechanism for getting divers certified and cater to their newly found sense of adventure, as well as sell them more equipment as they progress. As an extremely long time certified diver, I applaud that. I know the brick-and-mortar shop is a rare breed now, but in this instance, I agree with supporting your local shop for instruction and gear at a good price with great service. After seeing these numbers, I donít agree with paying such a high mark-up for local trips.

This is but one breakdown of one particular shop and one particular boat of which I have definitive data and knowledge to draw from. I know there are many other shops and boats out there that charge more, but even fewer that charge less. I am in the process of analyzing at least two more shops that regularly have charters in the Southern California area. Preliminarily at least one other ďshopĒ does charge a very high amount above its costs, but I am still waiting for more reliable data before I report on it publicly.

Remember that the numbers speak the truth. This is something to think about when you buy your next ticket on a shop chartered dive trip.

As last time, I am open to a rational discussion on this topic. No baseless attacks will be acknowledged, at least not by me.

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