UK: Sunsail International - first flotilla. (3 of 4)

UK: Sunsail International - first flotilla. (3 of 4) - Renting out fully equipped yachts, for amateur sailors - however experienced - to come and go when they please, is every bit as risky as escorting parties of tyros around the islands. The boats gener

Last Updated: 31 Aug 2010

Renting out fully equipped yachts, for amateur sailors - however experienced - to come and go when they please, is every bit as risky as escorting parties of tyros around the islands. The boats generally have to be of a higher specification. Moreover, when it comes to bareboat charter, Sunsail has to compete with hundreds of businesses managing their own or, more often, other people's boats; even with private owners who are looking for a small contribution towards their maintenance costs.

The benefits of scale which the company enjoys in flotilla holidays are thus less apparent in the charter market. Nevertheless, a sizeable marketing budget, established bases in the sailing areas and the ability to quote all-in air travel do confer certain advantages. Sunsail is committed to bareboat charter: not only in the Mediterranean but also (through its Caribbean joint venture) in the West Indies - and further afield. For about £1,500 each, parties of romantics with a taste for Conrad can spend a fortnight exploring Thailand's west coast on the Malay peninsula.

If Chris Gordon himself has a romantic streak he keeps it well hidden. On the other hand, the Gordons are committed to the sea - and have not been noticeably successful when they have strayed from it. Some years ago they tried skiing holidays, in the belief that vacationers who ski'd with them in the winter might be induced to come sailing in the summer, and vice versa. The theory turned out to have no foundation. Skiland lost a modest £24,000 in its first season and then ceased trading. Another small winter sports operator, acquired as part of the YCA package, was promptly sold on.

The Gordons currently have high hopes of "clubs", however. At the time of the merger YCA ran three residential clubs on the Mediterranean, and Island Sailing one. There are now five - two in Turkey and three in Greece - all operating under the Sunsail name. They are largely dedicated to watersports and are closely aligned with the flotilla programme. Holidaymakers can thus combine a week based on shore with a week's gentle sailing in flotilla.

After a disappointing first year under the new banner the clubs have picked up of late. "Last year was good, this year will be superb," promises Sally Gordon. Compared with yachts, her husband explains, the clubs have the advantage of carrying a lower percentage of fixed costs. They are thus easy to "walk away from" at fairly short notice: one of the original clubs has been closed down. On the other hand, the clubs' profit margins are not as great as those of the flotillas - at least when boats and holidaymakers are in reasonable balance. Nor do clubs have quite the same significance for Sunsail's overall performance. The fact is that the clubs and bareboat charter together account for only a quarter of the company's turnover of approximately £12 million. Roughly three quarters is generated by Mediterranean flotilla sailing holidays - with the Caribbean joint venture providing a bit on top.

The most direct route to increased profitability is therefore likely to be via improved efficiency in flotilla operations. Except to the extent that the company can drum up customers on the continent or elsewhere, revenue is clearly constrained by the state of the UK travel industry and the overall economy. There can only be limited scope for reducing labour costs, which are in any case a relatively minor item. Far more important are air travel (approaching 25% of turnover), and the financing and depreciation of those expensive floating assets (adding up to a slightly greater figure).

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