Strategies : FROLICS AFLOAT : Party-Givers Choosing Charters; Yachtsmen Playing With Full Decks

Irene Rose, administrative supervisor for Beaver Insurance in Orange, began hunting last June for a yacht to accommodate the company’s annual employee party. She soon discovered that all the suitable vessels were booked through September.

Ultimately, the Hawaiian Luau theme party for about 70 couples in Newport Harbor was scheduled for the evening of Oct. 17, which turned out to be chilly and rainy. “I wore my long underwear under my clothes,” she said.

Despite the unfavorable weather, Beaver’s employees raved about the yacht party, which cost the company more than $15,000. “It is something most of us don’t have the opportunity to do every day,” Rose observed.

The desire for an out-of-the-ordinary experience, or a special event to enliven a romance, is helping to transform yacht chartering into a growth industry. In Orange County the industry is centered on Newport Harbor, one of the nation’s premier small-boat centers.

A growing number of commercial charter companies have sprouted up to provide boats, skippers, food, liquor, flowers and all the rest of the trimmings for a variety of on-the-water events including birthday, graduation and cocktail parties. The customers include individuals, fund-raising organizations and corporations.

As a result, landlubbers with modest incomes are getting an opportunity to enjoy an experience once reserved for the very rich, while private yacht owners have a chance to make their expensive hobbies pay for themselves.

In some cases, said Tony Melum, tidelands administrator for the City of Newport Beach, individuals have bought boats specifically to make money by leasing them with the help of brokers who advertise in the Yellow Pages and promote charter yachting through hotels and travel agencies.

Many other yacht owners lease their vessels every once in a while to help defray their considerable mortgage, maintenance and mooring costs.

For example, Ben Bukewihge, the busy chief executive of BP John Furniture, a furniture manufacturing firm in Santa Ana, spent $2.5 million for the 102-foot yacht that he uses in his spare time to go marlin fishing off Mexico.

No matter how much or how little he gets to use the luxury vessel, he must pay $500,000 a year in maintenance and crew costs just to keep it afloat. So he leases it out to help cover the costs.

Similarly, owners of the MoJo, a $1-million, 80-foot motor yacht, use charter revenue to help cover the $200,000 a year they spend for its upkeep.

Melum estimates that about 100 boats varying in size from 25 feet to 105 feet are available for lease in the harbor--triple the number of charter boats he recalls four years ago.

Charter prices range from about $185 a day for a 30-foot sailboat to a minimum of $3,200 for four hours on a power yacht with custom upholstery and private staterooms.

One Party After Another

And the public’s yearning for a yachting experience keeps these vessels busy. While the biggest demand for charter yachts is in the summer and during Newport Harbor’s Christmas boat parade, boat parties cruise the harbor year-round.

“It is just one party floating past another party out here,” said Glen Everroad. As Newport Beach’s licensing supervisor, Everroad issues permits to charter operators.

The sudden proliferation of yacht charters has created some problems. Owners of expensive homes that ring the harbor complain about blaring music from the yacht parties and pressures placed on already limited parking, while Coast Guard and city officials are concerned that many of the privately owned boats being leased through brokers are not safe for carrying large numbers of passengers.

Everroad estimates that only about half the people currently offering boats for charter in Newport Harbor are complying with city and Coast Guard regulations that require, among other things, fire extinguishers, life jackets and skilled crews on board.

In an attempt to address these concerns, some of Newport Harbor’s largest yacht chartering businesses last year revived a moribund organization called Yacht Masters & Marine Associates of California, whose goal is to police the local charter industry.

The organization also stresses the public benefits of the yacht charter business. Norm Catton, former president of the group, estimates that the charter business pumps $15 million a year into the local economy, including revenue reaped by ancillary enterprises like caterers, florists and boat maintenance firms.

Yacht brokerage firms like Irvine Coast Charters and Adventures at Sea advertise themselves as full-service companies that, in addition to providing a boat, will arrange for everything from a limousine to bring guests to the dock to a menu plan and a band.

“I’m a party planner on the water,” is how Janet Winterhalder, president of Adventures at Sea and newly elected president of Masters & Marine Associates, describes her role.

Frequently yacht charter companies establish a business niche.

The Spike Africa specializes in “burials at sea”--actually the scattering of ashes. A typical ceremony, with 25 mourners aboard, costs $350.

Monica Sloan, owner of the Spike Africa, said she also draws a lot of business from corporations wanting to entertain out-of-town clients. “Many who live on the East Coast enjoy the novelty of being able to sail in November in shorts,” she said.

Marriage is another popular occasion for sea celebrations. Wedding packages priced at $2,500 to $12,000 account for 70% of Irvine Coast’s business.

“Five years ago it was lucky if there was one wedding a month on the water, and now there are six or seven every weekend, said Tom Deemer, president of the Balboa Bay Club, which has a separate department to arrange boat charters for its members.

Robert and Fabienne Kealiher of Corona del Mar had lived together for 10 years before they decided to marry. In planning last month’s celebration, Fabienne said, they ruled out scenic gardens and other suggested settings and decided instead on an evening wedding cruise in Newport Harbor aboard the MoJo.

Kealiher, who used Irvine Coast to plan the event, said the water, the sunset and the harbor lights helped to “make it special.”

Romance also brought Terry and Laura Bischof of Garden Grove to the harbor recently.

The couple didn’t get married on the water--they have three children and had been married for 10 years when Bischof arranged for a gondola ride for two and catered dockside lobster dinner to celebrate an anniversary. Bischof, a self-employed drapery manufacturer, said he is “not wealthy,” but the $200 price of the outing seemed worthwhile “when you think of the overall experience.”

Yacht chartering has begun to grow all along the nation’s coastline and in Orange County can be found in Dana Point as well as Newport Harbor.

Jeff Long, president of Dana Harbor Yacht Charters, said he has seen his business expand by 15% to 20% a year over the last three years, boosted in part by the opening of the Ritz-Carlton Laguna Niguel and the Dana Point Resort overlooking Dana Point Harbor.

Long recently arranged a four-boat fishing tournament for members of Prudential Insurance Co.’s real estate division who were meeting at the Ritz-Carlton.

But yacht brokers say the glamour of Newport Harbor, with its legions of expensive yachts, views of celebrity homes and meandering channels, gives it a decided edge over Dana Point Harbor as a party spot.

The latest splash in the Orange County boat charter business was made by Hornblower Yachts, a high-profile San Francisco company that came to Newport Beach in June by buying out a smaller company to obtain its premium dock space.

Hornblower, which also operates charter boats in Berkeley, San Diego and San Francisco, grossed $8.5 million in 1986 and currently has about 300 full-time and part-time employees.

The 8-year-old company, which specializes in catered dinner parties, recently held a gala christening celebration for the newest addition to its Newport Beach fleet, the Pacific Hornblower, a 105-foot vessel with a full galley and room for 300 party-goers. Ownership of the $1.4-million Pacific Hornblower has been syndicated as a limited partnership.

Competition from increasingly luxurious party boats has cut into the charter business of the Pavilion Queen, which has been carrying parties around Newport Harbor for about 20 years. But Catalina Passenger Service, which owns the Queen, expects that there will be greater charter demand for a plush new 118-foot catamaran power boat that it plans to introduce to the harbor next June and will lease at a rate of about $900 an hour.

By contrast, many other charter boat operations that advertise in Orange County are brokers who do not own or operate any boats themselves and may not even operate their business near the water.

“All it takes to go after the charter business is a telephone listing,” noted Terry MacRae, president of Hornblower Yachts of Newport Beach.

Matt Adams, owner of Pacific Yacht Charter & Management in Newport Beach, said some of the charter companies “are not very reputable.” He said he knows of one that routinely shows prospective clients a picture of an attractive yacht without telling them that the craft is kept in Florida. After the company accepts a deposit, Adams said, the company substitutes a less desirable boat.

On the flip side, inconsiderate people who lease yachts can cause headaches for Newport Beach residents and the boats’ owners.

Barbara Sloat of Whirl-A-Round Tours said she refuses to arrange boat charters for high school proms, fraternity and sorority parties or bachelor parties because participants tend to “run amok and start tearing up the boat.”

But those who are involved in boat chartering contend that its benefits outweigh the abuses.

Everroad said yacht chartering offers “a great opportunity for just about everybody involved. . . . Vessel owners are benefiting, and the general public is getting something they couldn’t have unless they owned a boat.”

For instance, Catton, skipper of the MoJo, said the booking of 50 to 60 charters a year defrays about half the $200,000 annual cost of maintaining and docking that yacht.

Some in the marine industry, however, predict that the 1986 federal tax law and more strenuous Coast Guard enforcement of boat certification requirements may shrink the number of private yachts available for charter.

Furniture manufacturer Bukewihge provides one example of how the tax laws are affecting the charter industry.

The Internal Revenue Service has challenged his contention that the BP John II, because it is often chartered, is a legitimate business rather than a hobby. He said he plans to take the IRS to court to argue that he is chartering the luxurious 102-foot yacht in an attempt to make a profit and thus is eligible to write off losses.

Currently, Bukewihge said, the $2.5-million yacht costs $500,000 a year to maintain and earns about $200,000 a year from chartering.

But demand for the 100-passenger yacht, which leases at a rate of $3,200 for four hours, is increasing by 25% a year, he said, and he hopes that the yacht will soon start making a profit.

Observing that the BP John II is “a world cruiser” with elegant appointments and has been leased by Arab sheiks--once with a 62-foot yacht as an armed escort--Bukewihge asserted that “a boat like that shouldn’t be sitting still.”