Utilization rate: the most important number in your boat rental

Two rentals with the same revenue can be in very different shape. One has its boats out on the water almost all the time, the other just has more boats than people who want them. The number that shows the difference is your utilization rate.

This one’s for you if you rent out boats by the hour or by the half day and your customers drive themselves: pontoons, electric boats, small motorboats. Running tours or charters? The bottom of the page has how you count it there.

What is utilization rate?

Your utilization rate is the share of the time your boats are rented out, out of the time you could rent them out. So it’s about the hours you’re open, not all 24 hours of the day. A boat tied up at night isn’t sitting idle. A boat tied up on a Tuesday afternoon in July is.

How to calculate your utilization rate

Take the hours you rented out over a period and divide them by the hours you could have rented out in that period.

• Available hours = number of boats × hours open per day × days open
• Utilization rate = hours rented ÷ available hours

Work it out per boat, per month and, if you have more than one, per location. Then you don’t just see how you’re doing, you see where the difference is. Which boat is falling behind, which month is disappointing, which dock does best.

Two things to decide up front, and then stick to. If a boat is out of the water for a week of maintenance, take those hours out and track them separately. A day you’re closed for a storm you do count, because that’s just rentals you missed. Whichever way you go, do it the same every month, or you’re comparing apples and oranges.

A worked example

Say you’ve got six boats and in July you’re open every day from 10 a.m. to 8 p.m. That’s 10 hours a day for 31 days, so 310 hours per boat and 1,860 hours for the whole fleet. You rented out 1,116 hours that month. Your utilization rate for July is then 1,116 ÷ 1,860 = 60%.

Sounds fine. But look what happens when you split it out per boat:

Boat	Hours rented	Utilization
Boat 1	236	76%
Boat 2	223	72%
Boat 3	205	66%
Boat 4	186	60%
Boat 5	161	52%
Boat 6, the big one for 12 people	105	34%
Whole fleet	1,116	60%

Five boats are doing well, and the big one lags behind. That could be all sorts of things. It’s too expensive for a weekday, it’s only offered in long blocks, or there just aren’t as many groups of twelve as you thought. The 60% average would never have told you.

Same goes for the days. Say you’re at 85% on weekends and 50% on weekdays. Those are two very different problems. On weekends you’re turning people away, on weekdays your boats sit still. More on that in a bit.

Watch the gaps in your schedule

Empty hours aren’t all equally empty. If you rent in three-hour blocks and you’re open ten hours, you’ve got 10 to 1, 1 to 4 and 4 to 7. The hour from 7 to 8 you’ll hardly ever sell. That’s an hour per boat every day, and with six boats in July about 186 hours, 10% of your available time.

The same happens when there’s a gap of an hour and a half between two bookings that no block fits into. So don’t just look at how many hours are empty, look at what those empty hours look like. A short block at the end of the day, or a time slot that starts right after your last booking, often fills them already.

What’s a good utilization rate?

There’s no fixed number. It depends on your price, your costs and your season. In April you might be at 15% and in July at 60%, and both are completely normal. So mostly compare yourself with the same month last year, and work out what you need at the least.

Why you need less than you think

A lot of rental owners get a fright the first time they work out their utilization rate. It looks low. But you really don’t need your boats full all day to make a profit. So also work out your break-even utilization. That’s the utilization at which your revenue covers exactly your costs. Everything above it is profit.

Back to the six boats, now over a whole season. You’re open from April 1 through October 31, 9 hours a day on average. That’s 214 days and 11,556 available hours.

• Your fixed costs are $170,000 a year: your dock staff, your slips, insurance, maintenance, depreciation on your boats, your software and your marketing. You pay those anyway, whether the boats go out or not.
• A rented hour brings in $65 on average, after discounts and before sales tax. It costs you something too, say $10 in fuel or charging, cleaning and wear. That leaves $55 an hour to pay your fixed costs with.
• Your break-even is then $170,000 ÷ $55 = about 3,090 hours. Out of your 11,556 available hours, that’s 27%.

Say you rented out 4,400 hours this season. Then you’re at 38%. The gap with your break-even, 11 percentage points or over 1,300 hours, is your buffer. The bigger it is, the easier you ride out a rainy summer or a new competitor down the shore. If summer’s a letdown and you rent out 15% less, you’re at 32% and still making a profit.

It works the other way too. Get 5 percentage points more utilization, and at this rental that’s about 580 extra hours. Times $55, that’s over $30,000 more profit, with the same six boats.

These are example numbers, so put in your own. What you keep per hour and what your fixed costs are differ a lot from one rental to the next.

Too full is a thing too

If you’re at 90% or more on sunny Saturdays, that’s not only good news. It means you’re turning away people who were happy to pay. That’s when you can put your price up, and it’s also where an extra boat pays for itself fastest. High utilization on weekends and low on weekdays calls for two different prices, not one average.

How to push your utilization rate up

Fill the quiet hours

Weekday mornings and early evenings are often the quietest. A lower price at those times brings in a different crowd, like retirees, students and people who are off when everyone else is at work.

In Let’s Book you put that in a price rule: one rate on weekdays, another on Saturday. Want only Tuesday mornings cheaper? Make a discount code that only works on certain days and times. A code like that can also give free time instead of money off, say an extra half hour on the water. And with last minute pricing, a booking for the same day costs less.

Look at your rental lengths

If you only offer long blocks, you’ll have gaps in your schedule. A short block fills those gaps, especially at the end of the day.

With open hours in Let’s Book, a customer can start at any time within the hours you keep, not just at 10, 1 and 4. So a new booking lines up with the one before it, and you’re not left with an hour and a half that nothing fits into. The rental length you’d most like to sell, you highlight in the booking form. And you set the buffer time to get a boat ready yourself, so keep it as short as you can manage.

Don’t lose a customer when a time is full

If the time someone wants is already taken, they often just leave. Even though there was room at 4, or on Sunday.

The Let’s Book booking form then offers other times and dates for the same boat by itself. If the boat someone picked is taken, it suggests another boat from the same category. That fills the hours around your busiest moments with people who would otherwise have clicked away.

Extend your season

Every week you open earlier or close later brings in extra rental hours with the boats you already have. More on that in how to extend your boat rental season.

In Let’s Book a season starts on the date you pick, with its own prices. So you set up a quiet early season in April with lower prices, and peak season starts on its own. Your customers from last year get a win-back email when they haven’t booked for fifty weeks: right in time for the same week this year.

Adjust your fleet

Is one type of boat sitting still all the time, like the big one in the example? Then you might have one too many, or the type doesn’t suit your customers.

In the Let’s Book planning, a bar per boat type shows what’s still free at each moment of the day. So you quickly see which type lags behind. Put the big boat in the same category as the small ones, and the booking form offers it as soon as the small ones are taken. With a price that changes with the number of people, you make it worth it for a group of six too. And if you have more than one dock, you plan a move to the dock where it does get booked.

Go after business customers

Company outings tend to fall on weekdays, exactly when fewer people book for themselves. And they’re planned weeks ahead, so you know well in advance where you stand.

In Let’s Book, make a customer type for companies, with its own prices and its own rules. A customer type like that can book without paying up front. You choose whether the balance gets collected later or you invoice it yourself. A group books several boats in one booking, and with a price condition that counts boats you can, for example, make every third boat cheaper.

Let others sell for you

Hotels, campgrounds and B&Bs nearby have guests looking for something to do on a weekday. Those are exactly the hours you want to fill.

Give them a booking link of their own in Let’s Book. The bookings that come in through that link are counted against that partner, and the partner books at the rates you set for them.

More ideas are in 9 marketing ideas to rent out the same boat more often, and how to build up your prices in the right pricing model for your boat rental.

Tours and charters count it differently

If you run tours with set departures, you count per seat. Your utilization is the seats you sold divided by all the seats on all departures. Count the departures you canceled for too few people as well, because you could have sold those seats too.

If you rent out charters by the day, you count in days: days rented divided by the days the boat was available. Break-even works the same way, just with what you keep per seat or per day instead of per hour.

Your utilization in Let’s Book

In the Let’s Book planning you see on one timeline which boats are free and when, with the buffer time between two bookings drawn in. That’s where you spot the gaps. The capacity view shows how full each time slot is. In Sales insights you see what you sold over the period you pick, next to the same stretch last year. Want to work out your utilization per boat model exactly? Export your bookings to Excel and do the sum there, with the formula above. That shows you whether your big boat lags behind the small ones.

Book a demo if you’d like to see how it works, or ask for a test login.