Superyachts & Oligarchs

[william24424]

Blackstone owns Safe Harbors. Private Equity owns Acme Marinas (UAE investor Kirkman) My tin foil hat fell off, so I didn't dig further into all marinas...yet. Hyannis harbor has berths for these boats, and Falmouth marine, (where my sailboat is moored) has been bought by Acme.

1) Do you believe most of us will be priced out?
2) A 200' Superyacht can pay 10 million a year for service/maintenance/ect. One boat, more $$$, less customers, less hassle for marina.
3) Are you worried the local marina owners will be bought out, consolodated, pricing out average (non-superyacht) boaters?

Asking from a concerned friend in Hyannis, who likes to sail his Wianno Senior. Thanks for your thoughts.

 

[dLj]

I feel it's a disturbing trend.

dj

 

[Don S/V ILLusion]

Not sure the math leads where it seems.

In a former life, I got to peer inside the books of a marina company which owned 20+ marinas in the northeast. Their expenses are enormous so it’s understandable they are attracted to the big revenue generators. It’s a business. They wouldn’t last long with any other strategy.but the biggest income stream they have might surprise you.

What I found somewhat surprising is similar to what car dealerships experience. That being the service arm of their business generates the greatest revenue. While a mega yacht might seem a cash cow, they generally have their own service staff and don’t rely on marina yard guys for assistance. It’s us little guys who ‘pay their freight’. In the case I referenced, about 45% of their revenue derived from small boat work.

 

[Project_Mayhem]

Not sure the math leads where it seems.

In a former life, I got to peer inside the books of a marina company which owned 20+ marinas in the northeast. Their expenses are enormous so it’s understandable they are attracted to the big revenue generators. It’s a business. They wouldn’t last long with any other strategy.but the biggest income stream they have might surprise you.

What I found somewhat surprising is similar to what car dealerships experience. That being the service arm of their business generates the greatest revenue. While a mega yacht might seem a cash cow, they generally have their own service staff and don’t rely on marina yard guys for assistance. It’s us little guys who ‘pay their freight’. In the case I referenced, about 45% of their revenue derived from small boat work.

Isn't it easier to manage a bunch of slips than a service department?

 

[dlochner]

Isn't it easier to manage a bunch of slips than a service department?

Yes, but the expense of renting a slip is quite high, consider insurance cost, personnel cost, dock maintenance, property tax, electricity, water, wifi, and other facilities cost.

Years ago my YC considered taking over a marina. As part of our due diligence we looked at the operational costs of the marina. Profitable marinas make a little bit of money every where, seasonal slips, transient slips, fuel, service, ships store, laundry, and so on. Take away any one or two, and profitability falters.

The private equity play book is pretty simple, buy a marina with lots of borrowed money. Make as much money as you can to pay back the loans and pocket the rest. Do as little maintenance as possible and when it starts to fail sell it off to be condos or to another private equity firm who will slap a coat of paint on the place, raise rents and let the place go to hell.

If you look at transient slip rates for marinas along the east coast, you'll find the rates vary based on the LOA of a boat and the larger the boat the higher the per foot rate. So there is some incentive there. Additionally, some marinas offer fueling at the slip and there is profitability to pumping hundreds of gallons of diesel into one boat.

 

[Don S/V ILLusion]

Isn't it easier to manage a bunch of slips than a service department?

“Easy” doesn’t equate to revenue.

 

[shemandr]

If any of this forum have received the glossy info-magazine from Safe Harbor it is easy to see they are spending big on upgrades to their marinas. They will be extracting money from their customers without a doubt. But I think they are in it for the long run rather than the quick buck. But their prices will go up and, worse yet, drag other marina's prices up too.
Combined with the selling of marina property for condos there is going to be significant pressure upward in prices.
Trailers and moorings will start to look like better, options at least on the East Coast.
It's not good.

 

[Hayden Watson]

...
2) A 200' Superyacht can pay 10 million a year for service/maintenance/ect. One boat, more $$$, less customers, less hassle for marina.
...

Do you really believe that someone who pays 10 million a year for moorage will be less hassle?

 

[dlochner]

Do you really believe that someone who pays 10 million a year for moorage will be less hassle?

Depends on the marina. For a marina, like Safe Harbor City marina in Charleston, SC, all the work on the boat is hired out to approved contractors. The marina itself does not actually do the work. The megayachts also have professional crews running the ship and an agency handling the charters when the owner is not on board. Unlike us mere mortals, the owners of these yachts don't do any thing but show up and expect to be treated like royalty. If things are not as expected the owner deals with captain, who deals with the marina or contractors. They don't even write the checks, their accountants do.

 

[Scott T-Bird]

It's not really a question of whether or not people like us will be priced out. The question is really 'can we keep up with the pricing?'

Obviously, marinas are businesses that have to be profitable to survive. There isn't an endless supply of high-end boat owners to fill every marina, but the economy grows and with it the number of wealthy boat owners continues to grow (while the number of available slips is relatively static or shrinking). So, is your income keeping pace? That's up to you. It's not up to the marina owner, who needs to maximize profit as any business owner would do.

I don't have any illusion that mom & pop marina owners are in it to provide slips for the "common man". They are simply catering to the available marketplace. When the wealth & disposable boat expense budgets surrounding their customer base (be it current or prospective) increases, I expect them to take advantage. That's their right and their duty to themselves and their families. If we can't keep up via our income, that's our problem, not theirs's. We go where we can afford to go and that's the way it has always been. If we can't afford to stay where we have been at for years, we haven't kept up with the local economy.

Whether or not marinas are disappearing to condominium development, I'm not so sure that is an over-riding concern. Environmental & other regulatory constraints make it very difficult & expensive to build on commercial waterfront land. I'm sure we all know of examples, but I think that concern may be diminishing. For one thing, environmental clean-up, required by any developer for new projects, is prohibitively expensive, especially surrounding marinas, which can be a hot-bed of environmental contamination. Worst case is that you might have to purchase a condo with access to a marina. That goes back to the affordability issue.

Besides, I've seen a lot of Safe Harbors marinas that haven't drastically altered their customer base. I'd consider their investments as an upgrade for our benefit.

 

[Don S/V ILLusion]

I must be missing something in this discussion as this isn’t a new issue. Can anyone point to a time when boats weren’t getting bigger, more expensive or when marinas weren’t also getting bigger or more expensive?
what’s the issue now which didn’t previously exist?

 

[dlochner]

I must be missing something in this discussion as this isn’t a new issue. Can anyone point to a time when boats weren’t getting bigger, more expensive or when marinas weren’t also getting bigger or more expensive?
what’s the issue now which didn’t previously exist?

I think the issue is the consolidation of ownership. Safe Harbor now operates 140 marinas in the US and abroad. That is different.

Home

Safe Harbor owns and operates the world’s largest boating network. Find your home on the water or let us help you navigate your next adventure away.

shmarinas.com

 

[Scott T-Bird]

Consolidation has advantages for consumers. When you lease a slip at a Safe Harbor marina, you can stay for free as a transient at other SH marinas (subject to availability and the discretion of local managers). Who knows what else may be advantageous about consolidation as consumers start buying in.

Ski resorts have been consolidated for years so there is nothing new about consolidation. There is a lot of bitching about it for sure, but skiers can now buy a cheap season pass (less than $1,000 per season), either Epic or Ikon, that gives them access to unlimited skiing around the world for a season. A daily pass at Rocky Mtn resorts tops over $300 per day at the ticket window now - so if you go on a single week vacation, it is worthwhile to purchase a season pass - and you may as well take multiple trips and/or use it at your local resorts as well!

The world economy and recreational habits evolve and we must evolve with it if we wish to stay satisfied.

 

[Woodworks1]

I remember when Florida had small mom and pop marinas that did boat bareboat charters. The places I used have condos on then now with a marina. But no Out Island 41 bareboat charters.

 

[Don S/V ILLusion]

I remember when Florida had small mom and pop marinas that did boat bareboat charters. The places I used have condos on then now with a marina. But no Out Island 41 bareboat charters.

If you ever spent some time watching the bareboat ballet circus in RoadTown, BVI, the reason is obvious. Imagine the ‘itty bitty’ boat rental business by Freedom et.al. but with bigger, heavier boats.

 

[Scott T-Bird]

Also consider that the US population in 2025 is about 125 million more people than it was in 2075 when many of us were just coming of age for boat ownership. The number of marinas and available slips and moorings probably has probably not increased correspondingly. It can't be said that the average boater is being priced out. It can only be said that the average boater has increased their income and increased their boat buying extravagances according to the market. Many of us at the lower margin are being squeezed out, though. That's just simple economics and the law of supply and demand.

 

[dlochner]

Also consider that the US population in 2025 is about 125 million more people than it was in 2075

Been time traveling have ya Mr. McFly?