V2V Vacations -- Vancouver to Victoria ferry service launching 2017
 

The new V2V ferry service between Victoria and Vancouver launching in 2017 is quite possibly the worst business concept ever conceived.

I shall explain why in a moment, but first a message from our sponsors, V2V Vacations:

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Why does this horrific local business concept deserve its own thread on RevScene? A few reasons:

1.) The new ferry will take "3 and a half hours, one-way" and cost ~$75pp, which is the same cost as a car & driver on the BC ferries. Except you'll arrive at your destination extremely seasick and without a car. (The price will likely be reduced when management realizes there are no passengers on their boat, but to date the company has alluded to average one-way fares in the $60-$80 range.)

2.) Apparently 'tourists' are the target market, which is great! ...Except that there are only tourists in summer, meaning their target market is non-existent for 8 months of the year. Summer, when there ARE tourists, also happens to be the same time of year that Helijet and Harbour Air compete and regularly offer fares under $150.... and the trip takes 35 minutes one-way (not 3.5 hours) with scheduled flights departing hourly. (Also, a significant portion of the tourist market arrives via cruise ship and therefore disqualified as potential customers.)

3.) Oh, well how about business and government crowd, you might ask? Great idea, except that the business market is either time-sensitive (can't commute for 7 hours to attend a 30 minute meeting) or their employer is footing the bill, which is why that crowd flies Helijet/float planes already. I have friends in the provincial gov't based in Victoria who fly Helijet weekly because it's reliable and fast, and any logical business person wouldn't even consider wasting 3 hours of their day just to save $100. And since it's a 3.5 hour trip each way, most people won't be able to use the new ferry for a day trip, and that introduces hotel costs. So there's zero appeal for the government or business crowd.

Who does that leave as the potential target market for this service?

To cap it off, the company has publicly stated several times that the new ferry is going to be an "upmarket service" for "demanding customers"... because the luxury travel market always jumps at the chance to save $100 by wasting 3 hours (and a half-bottle of Gravol) riding a refurbished riverboat rather than a helicopter...?

4.) The company's VP of operations, Nick Cheong, is quoted as saying that "we hope we will be offering something unique and different."

Well, you see Nick, that's where you're wrong. I hate to break the bad news, but the same business model failed within a year of launching back in 1992 (SeaLink Express), and has also failed very quickly a couple of times on the much shorter Nanaimo to Vancouver route (ie. HarbourLynx). But hey, who says an identical business can't succeed where others have failed miserably almost immediately? According to Mr Cheong, it's a "fresh new idea" (and tbh, at this point, it's probably best not to tell anyone at V2V to Google "SeaLink" as it may lead to some tough realizations).

I am now accepting all bets on the length of time this new ferry will operate before declaring bankruptcy. The over/under will be set at 10 months.

PS. Before anyone asks.... yes, I do indeed have an opinion on this issue. I hope I've convinced you to agree with my opinion in the post above. Thank you.

Only thing I'm thinking is your really must have a grudge against them or something for putting together such a lengthy post, interesting. All-in-all this business is pretty much "making a better mouse trap" whereas they should be making "rat poison".

Haha. Every time I read a new article about this company, the concept seems more and more outrageous to me.... and the most recent piece I saw pushed me over the edge and I had to vent my opinion. There's so many holes in their plans that I couldn't mention them all without it turning into a long post.

I'm biased, but personally I think I've made a pretty strong case for this being the worst business model in modern history. Your rat poison analogy is definitely fitting.

Perhaps V2V's parent company has done some hardcore market research, and maybe they'll prove me wrong, but everything the company says publicly indicates total naiveté and/or lots of someone else's cash to burn on a pet project. Will definitely be entertaining to watch it all go up in flames though.... :Popcorn

Oh, and for the record I am a regular Helijet customer, and sometimes fly Harbour/Kenmore Air, but otherwise I have no involvement with any parties and no beef against whoever the hell is dumping money into this V2V company. I just think they're unintelligent.

PS: footnote to readers who haven't flown with Helijet or on a float plane to Victoria/Van before -- it's not like a traditional airplane experience. There's no security, you only need to arrive 20 mins ahead of your flight, and you can cancel last-minute or change flights without any hassle.

I once arrived the Helijet 1-2 mins before my flight's scheduled departure time, the rotors were already spinning, and the customer service rep at the counter simply walked out and ask the pilot to wait so I could board before taking off. So the "35 min travel time" quoted in my OP means downtown Vic hotel to a downtown Van hotel in as little as an hour. Helijet is usually faster because there's no taxiing in or out to the dock, but even with Harbour Air it won't take longer than 90 mins total from door to door.

Compare that to this new ferry at 3.5 hours plus presumably 15 mins or so (at least) you'd have to arrive in advance and you're looking at about 4x longer travel time in total. That's roughly the same as the BC ferry (with no traffic) for the same route, but then you have a car and reliable hourly scheduled sailings 365 days a year.....

Playing devil's advocate, other than tourists, wouldn't locals who want to get to Victoria without a car find this more useful than BC Ferries, and cheaper than air?

I mean, it's quite a PITA to get to Tsawwassen by public transit.

^what the heck can you do in victoria without a car?

Fair question but...

1. AFAIK, this company only has 1 boat, so there will only be 1-2 sailing each way on a given day (ie. AM and PM)... so your schedule has to work with one of those sailings or else it'll probably be faster taking the BC ferry. Only one boat also means any breakdown or delays mean you're stuck and possibly going to be staying overnight, missing flights/concerts/etc, or forking out big $$ for last-minute alternate options.

2. The BC ferry, if you walk on, costs $15, so there's a huge cost savings. Additionally, if you walk on, then you only need to arrive 10 mins before the departure time and the travel time is 1hr35mins which is less than half of this rubbish V2V ferry. And then, once you arrive, you can take either city busses (slow, cheap) or charter busses (ie. Pacific Coach Lines) that run from the ferries to downtown core on every sailing (more direct, more $$). Basically, this means it'll be faster and cheaper (or comparable) to walk on the BC ferry in every situation. (Taking a shitty crowded bus for an hour sucks, sure, but let's talk again after you've been on a medium-sized passenger ferry in the Salish Sea on a stormy Nov evening and see if you still prefer that option over public transit.......)

3. The BC ferries are huge and can operate in any weather except high winds. I cannot stress how rough the open seas can be in winter on a smaller boat made for higher speeds. The SeaLink was brutal for this, the Clipper (Vic to Seattle) is awful in bad weather... and it's usually rough in winter. Even if this new boat is as "stable" as the company claims, the ferries will always be far less likely to cause motion sickness.

4. Sadly, I must admit that BC Ferries are arguably the best ferry service in the world, or at least among the top large public ferry companies. They sail hourly in the summer and on weekends and every 2nd hour other days, so there's another sailing soon if you miss one or you desperately need to get to your destination today. We love to complain about the ferries but they really are a reliable and usually painless mode of transport these days. Plus they have cafeterias, buffets, gift shop, etc to kill time.

5. If you're not going downtown or to North/West Van then you're always going to be better off taking the ferry to Tsawassen... so, lots of peeps heading to Surrey or Langley or Kelowna won't even consider a passenger-only ferry that goes harbour to harbour. The people who want to get downtown are also most likely to be among the tourist or businesspeople/government crowds which I already excluded as possible customer bases pretty comprehensively in my OP. (On the Victoria side, most people will be headed to the downtown area, but it's also nice to have a car here on the island as transit options are pretty crappy, hotel parking is much cheaper or free in many cases, and traffic isn't really an issue on the island.)

Quite a lot, if you stay near the DT harbour, at least for a day or two.

Yes but if you could have your car in Victoria without paying anything extra and without the journey taking any longer, why wouldn't you want one?

Plus, the Island is more than just Victoria. Many visitors want to explore beyond the downtown core and you need a car for anything outside Victoria, and even sometimes within the city (ie. for late night trips or service to rural suburbs). 1 or 2 taxi fares and you've easily spent more than you would on parking and gas.

Trust me, I've lived in both cities, and Victoria is nothing like Vancouver in terms of public transit. Relying on the public transit system is totally unthinkable to 90% of the population here, because it simply can't always get you where you need to go when you need to be there. You cannot catch a bus home from the downtown core after 2am ever and even those late busses will only go to a few major hubs. Some routes you may have to wait 90 mins between busses. There's also minimal traffic outside rush hour (and even then it's only on a few certain routes) so having a car is always better than not having a car in Victoria if all else is equal. Busses in Vic are only for: Canada Day, young or foreign students, the elderly, cheap downtown office workers who won't pay for parking, crackheads, and drunk morons with suspended DL's.

While I agree this business will more than likely bust, I must argue that their reasoning isn't as retarded as you think.

Yes, they have one shitty boat, but if they manage to fill it to capacity, they'll be turning a profit. BC Ferries' operations are completely different, IMO.

I am interested in how the whole sea-sick thing pans out, as well as what management is going to do when they only have 5 seats booked. Are they going to cancel the trip or will they run it anyway?

Anyway, I'm not disagreeing with you, I just want to see how this really pans out haha

Because some people don't have a car, but still want to visit Victoria.

My GF had this exact problem last year. She had a few days off and wanted to take a short trip somewhere, but couldn't go because while the ferry ride was cheap, busing from DT to terminal, terminal to DT would have taken an additional 3 hours on top of the trip across.

How do you know that? Do you know how much they've already invested in the boat and new docks in the harbours? How long before a full boat means making a profit? How often will boats be full in the winter, and how many full sailings in summer (remember: 4-5 per day would be the max) would be required to make up for those empty sailings in mid-winter? With only one boat, any breakdown or cancellations would mean a total loss of all revenues until resolved, and there's no economy of scale or spare parts lying and trained mechanics lying around.

The BC Ferry routes from the South Island to Vancouver are highly profitable and cost way more than they should because they're used to subsidize the many small remote ferry routes that operate despite being HUGELY unprofitable because they're required to serve those places by law and can't cut the unprofitable routes. A half-full sailing from Tsawassen to Schwartz Bay -- and you'll rarely see anything less than half full -- is almost certainly breaking even at the current fares.

They'll definitely cut back frequency of sailings significantly in the off-season and probably try to set schedules around major events like Canucks games or concerts or holiday long weekends, but yeah I think they'll have to cancel some sailings if they're losing a ton of money on them. That will be the nail in the coffin for the business crowd and Victoria locals who don't want to rely on a "maybe" service that's sometimes cancelled randomly at the last minute.

I don't think seasickness will be nearly the issue it was with the SeaLink or HarbourLynx, those were both high-speed catamarans, but this boat isn't huge and isn't going to be as stable in rough winter weather as a BC ferry.... remember the harbour to harbour route is much different than the one the BC ferry takes (through mainly protected Gulf Islands), it's very open water and is generally choppy in winter. The seasickness issue was a huge problem for the SeaLink and it means that anyone who is prone to motion sickness probably would rather not take their chances when there's other options that don't pose the same concerns or require Gravol.

If anyone has taken one of those high-speed ferries that run from Hong Kong to Macau or other nearby islands, you know how crazy the ride can be when there's more than a foot or two of swell... seatbelts required, barf bags in every seat pocket, etc. This V2V boat will be way slower and better than those catamarans and hydrofoils, but the weather here blows on the open ocean at least half the year.

Maybe they'll just fucking shut down and park the boat for 6 months, but that'll probably be too costly in the long run. Either way, it's GG. Any takers on my over/under???

So taking this new ferry would cut off maybe 30-45 mins at the very most, and that's assuming that she is OK with the limited choice in sailing departure times on the V2V ferry, and that they'll allow passengers to arrive only 10 mins prior to sailing time (which BC ferries does for walk-on passengers). But then again, no-one will risk showing up that late for this useless new ferry anyway, because unlike the BC ferries where there's always another one leaving in 1-2 hours at most, you'd be waiting at least 6-7 hours for the next V2V sailing (if there's even another one departing later that day at all)... so you'll be there half an hour early just to be safe, which then wipes out any potential savings in travel time.

Also, it would cost way more -- probably close to the same as driving onto the BC ferry.

Interesting read on your posts and the news article.

I think the company is trying to position itself as a high-priced luxury play, which is a market (the owners think) that is not served by BC Ferries.

It is definitely very high risk.

The company needs to be very well capitalised to go through many months of long-term customer acquisition to be profitable enough to sustain the company.

If the company, in any way, is highly leveraged with large debt payments, it's not going to survive long.

Everything here is conjecture, but one thing is certain: it's a very high risk play.

Lets do the numbers:

$60 per customer, one-way x 270 seats
=$16,200

Fuel costs:
https://thetyee.ca/Blogs/TheHook/Tra...5/GuzzleFerry/
270 seater compared to 1600 seater (we'll do 2500 seater because BC Ferries carry vehicles too), so 8416 litres of fuel for a BC Ferry equals 909 litres of fuel.

$1.50 of marine fuel per litre = $1,364 per one-way trip.

Gross, if all 270 seats are filled is: $14,836
Below is just conjecture:
minus boat attendants, lets say 8 attendants x $80
minus boat captain and other staff, lets say 1 captain at $160 , 4 staff (assistants and engineering) at $120 per
= $1,280


So, gross is: $13,556



That is per one-way trip.

So, 1 round trip per day, 7 days a week.

$13,556 times 2 times 7 = $189,784 weekly gross.

Lets give them 5 months operational per year.

$3,795,680

We'll keep the docking fees as a fixed cost.
Maintenance, fixed.
G & A, fixed.
Advertising and marketing, fixed.
Other costs? It's 2AM, can't think.
Feel free to add more expenses to this calculation.

So............. this is based on full capacity, and I don't have the docking fees, G & A, maintenance etc., interest on debt (which 99.99% they will take on).

If they use 10% interest for $15 million (cost of the boat and retrofitting it as shown in the article), that's $1.5 million in yearly interest payments.

So, the company will need to definitely raise capital, not debt for making this venture work.

Anyways, at full capacity, it's doable.

At 50% capacity?

It's $5,456 Gross profit per one-way trip or $1,527,680 annually at 5 months per year.


In any case, it's a high risk venture.

Mitigate risks: use as much capital from NON-debt financing/investment/capital

Market the crap out of this service.

And, as with any business, after coming up with $ value of capital needed, double that to handle unforeseen situations or to take advantage of opportunities.

Find alternative uses for the boat in the 7 months out of 12 months that there are few "luxury" users, such as renting out the boat as pleasure cruises, as a party boat, etc.

And, I think most important is the background of the management team. Do they have the experience in managing a "luxury" ferry venture?

So many ifs.

High risk.

I saw this boat in person when they brought it over from Quebec. What a pile of shit! I also heard the Clipper (Which runs Victoria to Seattle) is going to take a run at them.

I thought there was gonna be a bridge between Vancouver and Victoria

BC Government Website: Potential Fixed Link to Vancouver Island - Province of British Columbia

So there pitch is we are slower and we charge more? This is going to fail fast.

I've had my doubts that this ferry service would ever be successful since when I first heard about it,

But man, to go ranting on Revscene about it that's some almost personal level hate.

I'm content to just let the market decide.

Why you so angry?

Meh..honestly for a weekend getaway in Victoria it's probably a service I'd consider using. Parking always seems to be a PITA and typically when in Victoria everything is within walking distance or a short cab ride from where we stay.

Would probably be somthing I'd ever only use once, but would still consider it for sure. If you have to use transit to get to and from Twsassen and then transit to Victoria from the ferry, I'd pay the difference every time to sail from Can directly to Victoria.

Going that route you probably save a lot of time and potentially money as well. It's an alternative to heli jet it's not really a direct comparable.

Some people enjoy doing random business analysis, myself included.

LOL
3.5 hours for $75?

i wanna see the FOBs and old people, who he's clearly aiming this at, who will say yes to this, rather than a 30 min flight for $99.
go.

This is also only of interest to tourists who didn't drive to the GVRD, somehow I feel that's not a majority. After driving 4 hours from Kelowna the last thing I want to do is go through downtown, try to park (which I assume I'll have to pay for on top of the ticket), and then take 2 hours longer than I needed to just to end up in Victoria without my car.

Then there's the issue of the price. $75/person means $150 for 2 people on this, or we could pay $90 to take the ferry with a car. Even if you don't own a car, a car2go is what, $50/day?

2 people, V2V same day return = $300, 2 more hours, no car
2 people, BCF same day return = $180 (your car)/$230 (car2go)

Hell even if you stay overnight and take a car2go, it's still cheaper on BCF. If you own a car, the more people that are going the less this makes sense. Most normal vehicles seat 5 which is $135/xing with BCF, or $375/xing with V2V.

Which means this V2V thing would only *maybe* make sense to a tourist who doesn't have a car and is traveling alone. I'm not sure about you guys but I can't think of anyone I know that would apply to. I know it's a small boat but they seem to be designed for an extremely tiny number of people here.

This is obviously a very elaborate Chinese Money Laundering scheme :troll:

I ride my motorcycle when taking the ferry. First on, First off. :awwyeah: