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Today’s trends herald tomorrow's marinas

 

26 | Marina Dock Age | December 2010
escribing the marina of the future
requires a solid understanding of
history and a firm grasp of the present.
These days claiming to have a “firm
grasp on the present” may be a bit of a
stretch. It seems that the only constant
in the marina industry is change. While
the industry once heralded “paradigm
shifters” as pioneers and explorers,
today they are called survivors because
they have managed to hang on to the
wheel in these tumultuous seas.
Current outlook
Although many marinas have suffered
a decline in their business in recent
years, the marina segment of the
marine industry has not been as hard
hit as other segments, such as boat
manufacturing and retail dealers. Why?
Because most marinas derive the
majority of their revenue from boat
storage (either dockage or dry stack
storage), and these revenue streams
are more readily sustained than those
from “active sales,” such as retail and
service and repair. Moreover, it’s far
easier for owners of small boats to
move their vessels to and from marinas
rather than large boats, so those
marinas accommodating larger boats
are maintaining higher occupancy
levels.
While faring better than other parts
of the marine industry, marinas are still
suffering. Unemployment, currently
near record highs, is having and will
continue to have a negative impact on
marina businesses. Related to the
unemployment issue is a second wave
of mortgage defaults among the jobless.
This will both reduce expendable cash
and further squeeze available credit. In
the near term it’s possible that the cost
of consumer credit will have a negative
impact on marinas.
Another area of concern is credit
card payments. What started out as a
convenience for boating customers is
fast becoming a fiscal nightmare as
more and more people rack up credit
card debt. The marina industry is
seeing more and more boaters who use
credit cards unable to pay their bills.
When the loss of credit catches up
with this trend toward virtual
payments, marina operators will
experience a real increase in
receivables. The ability to manage and
minimize those receivables will
differentiate successful marina
operators from those that don’t make
it through the “new normal.”
by Bill Anderson and Jim Frye, CMM
D
Today’s trends herald
tomorrow’s marinas
Marinas of the future will have larger boats.
The Wharf Marina located in the America’s Cup Harbor of
San Diego, Calif., caters to yachts up to 175 feet long.
2011
MARINA
TRENDS
THE
FUTURE
Effects of the recession
The economic slowdown seems to have
affected more small boat customers than
larger ones, although there is a group
among the larger boats (55–75 feet long)
that have been hit hard as well.
Generally, the megayacht owner has not
been affected by the recession, and this
segment continues to show modest
growth. That being said, the number of
larger boats looking harder for dockage is
growing. Many boats are headed up river
in Fort Lauderdale, Fla., for discounted
storage rather than heading to the
Caribbean this winter. Yacht charters
have also fallen off measurably.
Those that value boating as a
recreational interest and lifestyle
continue to value it, maybe even more
now then before. For these individuals,
the boat is not the first thing to go.
These individuals will sacrifice any
number of things, even retooling their
lifestyles, to preserve the opportunity to
go boating. Leveraging this commitment
into a sustainable business in difficult
times is one of the things that will
identify tomorrow’s successful marina
operators.
Today, many lenders that expected
“dockominium” sales to repay loans are
now reluctant marina owners. Many
marina lenders are foreclosing on
properties worth only a fraction of the
loan amounts they extended. Slips/racks
that previously “were reserved for sale
only” are hitting the rental market at
below market rates and pricing. In
today’s marina industry, higher quality,
lower priced marina slips/racks (meant
to be sold) are challenging the value
equation at otherwise successful marinas.
The “get rich quick” scheme that
attracted many non-marina businesses
and individuals to marina development
is, at least in the near term, posing
problems as now underpriced facilities
are absorbed into the rental
marketplace.
Surviving these times
To survive and maybe even thrive in
these challenging economic times,
marinas, just like other hospitality and
retail businesses, are focusing on
customer service, recognizing and
rewarding quality employees and
delivering more than customers expect.
An article in the June 6, 2010, edition
of the Wall Street Journal noted that
leading executives are paying more
attention to customer service in an effort
to increase sales and gain market share in
the economic recovery. A survey of 1,405
companies performed by Accenture last
year revealed that more than a quarter of
the companies said customer service
would be the first area where they’d
increase funding as the economy
recovers. Some companies have already
begun this practice.
A review of the industry shows that
marina businesses are dedicating more of
their efforts to their most lucrative
customer segments. This trend is an
outgrowth of the recession, when
companies scrutinized customer service
spending to see which business practices
delivered the biggest returns. Some
executives also see a chance to woo
frustrated customers from rivals through
word-of-mouth and by creating pleasant
experiences. In another Accenture survey
of 5,000 consumers, 69 percent said they
had switched at least one provider
because of poor customer service in
2009. That’s two percentage points
higher than in 2008 and 10 points higher
than 2007.
Rather than answering a call by saying
“Thank you for calling,” agents now say:
“How is your day going?” They’re also
told to look for opportunities to pitch
services rather than rush off a call. As Jim
Bush, head of worldwide customer
service for American Express, said,
“Customer service is a growth engine for
a company in a world where marketing
dollars and credit is constrained.”
On the flip side, Howard Hyden at the
Center for Customer Focus and a
consultant to Westrec Marinas for more
than 10 years, has helped marinas
respond to changes in a customer’s
values and attitudes. Management staff
now view today’s boating customers in
these terms:
• Boaters that have money to spend are
waiting to buy as commodities continue
to decline in value. An oversupply of
boats and marina slips, plus lack of
demand, continues to push prices
downwards eroding the long-term value
of assets.
• Customers now expect quality in all
sectors of products and service, so
delivering a quality product or service no
longer provides a marina with a
competitive advantage. In today’s
marketplace, quality does not distinguish
one marina from another. To successfully
compete in a marketplace that has
competing recreational interests, marina
owners will need to continue to find a
way of adding value to the boating
Marina Dock Age | December 2010 | 27
Hamilton Harbor Yacht Club in Naples, Fla., was the first all-concrete facility to be built in the U.S.
experience or they will be forced to
compete on price.
• Customers are finding that many
marina owners are panicking and
drastically reducing slip prices to
maintain market share. This may prove
to be successful in the short-term, but
the challenge to marina operators is to
add real value to the customer’s
experience rather than competing on
price and cutting rates to a level that
may never be recoverable.
Future predictions
The current recession may be only
temporary, but it has produced some
lasting results for the marina industry.
• The “dockominium” trend is over, at
least for the near term.
• Marinas dependent on “active” income
from fuel sales, retail and service and
repair are experiencing a decline in
participation among boaters.
• Marinas that increased leverage (debt)
are feeling a pinch.
• Anyone depending on new boat sales
to increase occupancy is suffering.
Because there are few “new starts” in
marina development, the trend is
toward renovating, redeveloping and
upgrading existing facilities. The
challenge for the marina of the future is
to create “new” revenue through
redevelopment—getting more out of
existing footprints.
The marina of the future will face
ongoing issues related to staying in
business. Today’s continued pressure
from environmental regulation, which is
impacting the development and
sustainability of some marinas, will only
become more intense. The cost of
marina insurance is rising at a rapid rate.
In this “new normal,” there is a scarce
supply of capital for marina renewal,
expansion and acquisition. More and
more marinas will ask themselves if it’s
worth it as marinas to continue to be
sold and/or converted to non-water
dependent uses.
On the positive side, professionalism is
increasing in marina management and
ownership. The number of professional
marina management companies is on
the rise. The number of Certified Marina
Managers (CMM) continues to grow,
and training and education programs
continue to be valued by successful
marina operators.
Marinas are branding themselves in
new ways. They are becoming nautical
destinations rather than just launching
pads for excursions. They are striving to
become recreation and entertainment
centers recognizing that much of
“boating” occurs at the dock.
Moreover, marinas are becoming
education and information centers, as
well as lifestyle communities.
Tomorrow’s marina
In the future, tomorrow’s marinas will
have fewer small slips (moving those
boats into dry stack storage) and will be
able to accommodate many larger
vessels in the water. Marina facilities will
be more diverse, adding restaurants,
retail, boat sales and more to improve
appearance and profitability. Marinas
will be redesigned to facilitate an “easier”
boating experience.
On the operations side, there will be
more connectivity between boat
manufacturers, dealers, boat service and
storage. It is expected that this “turnkey”
approach to boating will bring in
new boating customers.
On the other hand, some
manufacturers and dealers may look to
control access to slips and racks to
sustain new boat sales. If this occurs, it’s
likely that every facet of the marina
design including slips, racks and berths,
fueling areas, parking areas, green spaces
and service and repair facilities will be
created on the business model that the
marina is a recreational destination and
entertainment center.
Overall, the marina of the future will
be part of an industry that not only has
weathered the current economic
recession but also come out of it
stronger than ever.
William Anderson is president of Westrec
Marinas in Encino, Calif., and James Frye,
CMM, is vice president of Westrec Marinas
in Warrenton, Vir. Westrec Marinas is a
marina management firm that owns and
manages more than 25 marinas around the
world. Anderson can be reached by
phone at 818/907-0400 or via e-mail:
This e-mail address is being protected from spambots. You need JavaScript enabled to view it . Frye can be reached
by phone at 540/341-2014 or via e-mail:
This e-mail address is being protected from spambots. You need JavaScript enabled to view it .
28 | Marina Dock Age | December 2010
THE
FUTURE
Harbour Town Marina in Fort Lauderdale,
Fla., took advantage of the downturn by
building a new dry storage barn at its
facilities.
Marinas of the future will be integrated into
their communities and add economic value,
such as Burnham Harbor Marina in
downtown Chicago.
Like Sunrise Harbor Marina in Fort
Lauderdale, Fla., marinas of the future will
adapt to changing times by building bigger
slips with more power.

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