What will the Marina War mean to you?

[La Mer]

Very interesting, I always enjoy BandB comments, thanks for your well written posts.

+ 1 , this couple write for readers and not for themselves

 

[ranger58sb]

Steaks went up in price in grocery stores. Is that the result of Safe Harbor?

We have to be careful in a period of rising prices in blaming it on Safe Harbor. I'd question marinas that are not increasing prices.

Yep, agree... and that was one of my earlier thoughts if that wasn't clear.

-Chris

 

[backinblue]

When was the last time a new marina was built on either coast of the US?
marinas are bought and sold, sort of churning existing assets, with some improvements.

A new state of the art world class marina was recently built near where I am in CT. It's not owned by Safe harbor that is buying up many marinas in the area, but it is marketed as a luxury marina. So far it's been mostly empty during the summer season. As the waterfront continues to develop, I'm guessing they will eventually be successful. However I'd like to believe that the market (boaters) can still influence the prices. There are dimininshing returns on raising prices too high to where people leave boating or find other options like private clubs or private moorings. Marinas are entitled to charge whatever the market will bear, but I'd like to believe there will still be enough competition for boaters who don't have an unlimited budget.

 

[Hippocampus]

Endorse many of the opinions offered. Corporate medicine has raised the floor but has also seriously lowered the ceiling. You are penalized as a provider for going the extra mile to achieve a obscure diagnosis or use a more expensive intervention that is more likely to provide a better result. I served as a consultant to a large regional health insurer. Meetings with the three letter crowd was an eye opener. Three groups of insured to their thinking from listening to them
Dead. No premium but no expense. Revenue neutral.
Alive and healthy or sick using minimal resources. Revenue positive.
Alive at the expense of high utilization. Revenue negative.
Any action that shifted people to dead or low utilization has a favorable impact on the bottom line.
All kinds of fluffy statements are made but end of day that seemed to be the outlook.
For marina wars end of day like groceries it’s a low margin industry. The ancillaries offer an opportunity for income. Rates reflect that.
So with marinas the country club ancillaries allow the marina to b a destination. The large Safe harbor in my town has a restaurant and bar. 80-90% o the people coming through aren’t boaters. In fact during tourist season >50% are tourists (Plymouth -Americans home town). All that drinking is money in the bank. People want to look over the boats at the water so it’s a destination.
We left Barington when it became a safe harbor. They put in a pool, fancied the place up and jacked the rates. Their main wrench sucked so for less money could use Hinckley and have things done right. That Hinckley yard has no frills. The higher prices are justified by a higher level of skilled personnel. Kept the boat ina safe harbor but when I needed work went to Hinckley.
Now patients are asked to give an assessment of each practitioner they see. When I refer to another physician or surgeon I care less about if they are touchy-feely and more about clinical wisdom and skill set in the OR. Have no objection to good bedside manner as it facilitates care but the main purpose is to do the task at the highest level of skill.
Feel that primary purpose is being lost in the chain marinas. I want skilled efficient yard workers, good docks, clean fuel, and maybe a decent shower and laundry. Beyond that I have no interest in the frills. I don’t want to keep my boat in a destination
So think marinas look at us as three groups.
Works on boat himself using products bought elsewhere spends little time in the marina. Some work comes to the marina due to need for specialized training or tools. Other than work comes to the boat and leaves.
Views the marina as a social setting. Actual boating is almost secondary. High utilization of services
Goal directed people such as competitive fishing, sail racing and such. Willing to spend whatever it takes to get an edge.
Now of course most are a mix but do believe one mindset predominates.
The first group takes up dock space and provides the least income. Given demand it’s in the marinas interest to force out the first group it’s also in their interest for you to not develop a relationship with staff. You slow down staff and if you learn things from staff they’ll get fewer billable hours in the future. Also a more educated consumer will want a higher quality of work.

 

[backinblue]

Thanks Hippo and I agree with everythng you have said. However, boating and chosing a marina are still something we have control over. It's not a necessity, it's discrecinary spending. So I still think some of the long term results will be market-driven. As you and others have said, some boaters want the luxury destination and are more than happy to pay for it. But that quantity of boaters is not infinite. Companies like safe harbor can buy several marinas in my boating area and likely will have enough boaters to fill them. However, they can't buy every marina and expect to fill them all because not all boaters want what they are offering or will pay for it. I can through a rock and hit boats in a Safe Harbor from the yacht club where my boat is kept. Different facilities and different atmosphere. Some boaters would favor my club, while others would favor the marina. My yearly spend is less than half that of the marina boaters. It works well for me, but wouldn't suit everyone. Just like years ago, high state taxes on boaters drove many out of boating and closed many small businesses here, marinas are not unlimited in what they can charge and expect people to pay. They have since reduced the tax rate on the sale of boats and it turned things around. I hope the marina business doesn't have to learn that same lesson the hard way.

 

[Alaskaflyer]

Now that Suntex is buying Westrec and they and Safe Harbor have both shown they intend to be aggressive, what might that mean to all of us? Just a few thoughts.


Potential Negatives

-Smaller, individual marinas, can't compete and can't survive.

I’m no great man of business, but how do these marinas fail to compete with the big boys as they raise rates and piss off current occupants and last year’s transients? As another poster noted, where are economies of scale in the marina business? HR and accounting? Attorney retainers? Fuel contracts, sure. Probably not insurance. Not a lot there.

And I’m cynical about brand loyalty in the marina business, but hey that’s me. I just don’t see a Safe Harbor marina attracting boats like KOA attracts campers. Is there a Safe Harbor iOS app yet? Lol. (Speaking of which, there are probably more ex-KOA campgrounds in North America than there are current KOA campgrounds. But different business model of course.)

Seems like there’s plenty of opportunity for independent operators to disrupt the disrupters.

 

[BandB]

I’m no great man of business, but how do these marinas fail to compete with the big boys as they raise rates and piss off current occupants and last year’s transients? As another poster noted, where are economies of scale in the marina business? HR and accounting? Attorney retainers? Fuel contracts, sure. Probably not insurance. Not a lot there.

And I’m cynical about brand loyalty in the marina business, but hey that’s me. I just don’t see a Safe Harbor marina attracting boats like KOA attracts campers. Is there a Safe Harbor iOS app yet? Lol. (Speaking of which, there are probably more ex-KOA campgrounds in North America than there are current KOA campgrounds. But different business model of course.)

Seems like there’s plenty of opportunity for independent operators to disrupt the disrupters.

Economies of scale-Accounting, IT, HR, Legal fees and contracts, dock construction and repair, fuel perhaps, insurance some, but then the small mom and pop has the economy of not even having much in the way of some of those things.

I do not see them running anyone out of business. I do see them being blamed. However, there's no reason any small marina can't compete with them and find their own niche. Nothing's changed. Same competitors, just under different names. Small marinas die because of ownership lack of interest or heir lack of interest or their own mismanagement. Businesses worry too much about their competition rather than paying attention to themselves and how they're doing things. I'd rather operate in a healthy market and I want my competitors to succeed. We often help competitors.

Businesses that fail always find something or someone to blame, but it's generally themselves at fault. The only way Safe Harbor or Suntex runs a small marina out of business is if they provide a better service. If Safe Harbor moves in and raises prices too much, then some of the unhappy customers will move to the other marina.

 

[O C Diver]

To answer the original question:

What will the Marina War mean to you?

Probably very little. I own my slip in a condo association inside a yacht and country club. Technically I own very expensive submerged property.

So my interaction with marinas is only while cruising. As I boat to escape humanity, 80+% of the time I anchor out. The rest of the time is on moorings, municipal marinas, and one off marinas.

Basically I'm looking for dockage with power, water, and a pumpout. So the resort marinas are low on my list as they are my parking lot not my destination. It reminds me of pulling into a KOA campground with the RV and thinking the price for a hotel room down the street was cheaper than the RV site.

Ted

 

[twistedtree]

It's a bit of a tangent, but there seem to be a couple of different business models for marinas.


There are marinas that have docks and associated facilities, plus service and repair capabilities that are under common ownership.


Then there are marinas that have docks and associated facilities, but that don't have any of their own services or repair offerings. Many of these rent out space to one or more independent service organizations who in turn offer their services at the marina.


The first seems more common on the east coast, and the second more common on the west coast.

 

[BandB]

It's a bit of a tangent, but there seem to be a couple of different business models for marinas.


There are marinas that have docks and associated facilities, plus service and repair capabilities that are under common ownership.


Then there are marinas that have docks and associated facilities, but that don't have any of their own services or repair offerings. Many of these rent out space to one or more independent service organizations who in turn offer their services at the marina.


The first seems more common on the east coast, and the second more common on the west coast.

I'd say marinas having their own boatyards is more common in the NE. As you come south on the east coast, I'd think fewer than 20% do. Most marinas in South Florida do not. Also, for the marinas with their own yards, often they are a boatyard with an attached marina that is secondary and mostly there for the yard. I think of places like Jarrett Bay or Rybovich or ACY. The slips are definitely not their primary businesses.

 

[Alaskan Sea-Duction]

With the advances in electric meters that can keep track of use and report totals to the office ,

I think "free" dock electric will be history, even for transients.

Cruising B.C. some places, mom and pop operations charge $40 a night for just electric. Marina Generator running 24/7.

 

[Alaskan Sea-Duction]

Viewing Crusty Chief, aka Pairadice had issues in Fort Lauderdale trying to find a few weeks transient slips at a reasonable price.

In reading all these posts I have come to one conclusion. It's all about revenue for the shareholders.

 

[BandB]

Viewing Crusty Chief, aka Pairadice had issues in Fort Lauderdale trying to find a few weeks transient slips at a reasonable price.

In reading all these posts I have come to one conclusion. It's all about revenue for the shareholders.

The issue in FLL is defining reasonable price. Land is very expensive as are property taxes. So dockage is expensive. Compared to the PNW it's like another world for dockage. We were shocked in the PNW and in Alaska. We couldn't believe transient dockage so cheap.

 

[Alaskan Sea-Duction]

The issue in FLL is defining reasonable price. Land is very expensive as are property taxes. So dockage is expensive. Compared to the PNW it's like another world for dockage. We were shocked in the PNW and in Alaska. We couldn't believe transient dockage so cheap.

For moorage Wrangell is our favorite.

 

[FF]

"In reading all these posts I have come to one conclusion. It's all about revenue for the shareholders."


As it is supposed to be.

 

[ranger58sb]

"In reading all these posts I have come to one conclusion. It's all about revenue for the shareholders."

As it is supposed to be.

"Shareholders first" isn't great.

B gets it right, here:

What you're saying is very true in terms of attitudes toward "big business." As a businessman who might be considered to have been and to be in big business, I am bothered by it, just like I'd think lawyers are bothered by the perception of their profession. However, much of that has been by businesses failing to be good citizens. I was taught young that in a business we needed to serve and be responsive to three groups, our customers, our vendors, and our employees. Simple, but uncommon.

In fact, I'd add a fourth group: The People. Business and personal (employee's) tax payments fund various services (defense, infrastructure, etc.) and there are social benefits to comfortable employment levels. And so forth.

-Chris

 

[Retriever]

I think the ski resort industry would be a good comparison. The corporate consolidation of resorts has been going on for decades, it ebbs and flows and is affected very much by the economy and weather. Prices have risen, the demand seems pretty stable. Both industries are recreational and require extensive infrastructure, both are heavily affected by environmental factors and real estate holdings are complex and essential to the core business operations.

Southern Marinas and KSL Capital Partners bought Elliott Bay Marina in Seattle (as well as some other marinas). KSL is one of the big ski resort owners, through a partnership named Alterra Mountain Company. Maybe KSL is trying to do the something similar with marinas.

At least one of the Southern Marina executives sold a previous company to Suntex Marinas.

 

[Hippocampus]

Outside vendors are treated differently by different marinas to my understanding. Most charge for access and check if paid when outside worker shows up. Being friendly with some they tell me the corporate chains do charge more. When market penetration is sufficient not paying for access isn’t a choice as the outside vendor would lose to big a book of business needed to survive. Given policy is made at a corporate level there’s no room for negotiation. They’re just told at a local level “it’s out of our hands”. This is true even when that specialty isn’t available in that yard. Some outside vendors say the playing field has changed as limiting access shifts business to the yard so to the extent outside workers are excluded the yards book of work increases with resultant increase in profit. Boaters get less choice and with less competition quality of work goes down.
There’s still small commercial lobster and ground fish boats here. Hear in the past they would have little troubles being carried. Often their income is seasonal but their expenses aren’t in synchrony. Corporate doesn’t care so they need to carry lines of credit from outside which increases their nut. In the past the same family that owned the marina did business with these families for many generations (kids going to school and playing with each other) so long term informal relationships existed. Those are gone.

 

[twistedtree]

I also wonder whether some of these waterfront properties wouldn't be worth more as something other than a marina? Waterfront residential and/or commercial might be a much better use of the land in many cases. This might continue to split working yards from dockspace marinas, pushing the working yards to more industrial settings, and dockspace marinas with retail and residential on land.

 

[Miz Trom]

...Getting back to BandB's original question, "What will the Marina wars mean to you?"

As residents of Florida, we have seen the cost of transient and monthly slip fees steadily rise over the past decade, with the biggest rise over the past two years. I don't attribute this to the Marina wars; I attribute it to the rising cost of everything.

A piling should last forty years. But in 1972, installing that piling cost $150 total. Now it costs $1500, plus the cost of the piling. Property taxes are way up, along with every other cost of doing business.

My family owned a marina/restaurant for forty years. I don't know how marina-only businesses stay open today, because the margins were slim back then. It used to be a customer-service driven industry, but with the scarcity of slips now, I meet boat owners who are okay with minimal customer service.

I have wondered on many occasions if the corporations who are buying up marinas now, have a plan to privatize them in the future, thereby pricing out the average Joes and Jills.

Or as TwistedTree points out, perhaps they have an eye on converting these waterfront properties to residential units.

For us, as boating has become more expensive, we will be taking shorter trips and anchoring out when we do. Fortunately for us, there are plenty of places to visit by boat in Florida.

And don't forget the trailer-boat crowd. As slips become more unattainable, I have a feeling that the trailer-boating segment will grow.

Cheers,
Mrs. Trombley

 

[twistedtree]

I think given the various business models for marinas, one model is basically just a commercial real estate business. They rent slips, both long term and short term, and they rend other building space - perhaps a restaurant, a few retail locations, a yacht broker or two, and a marine service business or two. They point is that it's fundamentally a real estate business, not a marine business.


The other model includes a marine service business, either as the primary business or in conjunction with slip rentals in one capacity or another. But even in this case, I wonder how many on-0site restaurants are actually owned and operated by the marina vs just space leased out to someone who owns and operates the restaurant. My guess would be more the later, but I don't know for sure.

 

[bowball]

I’m an on the hook type but a friend’s brother recognized the need for better facilities for mega yachts so he started a company called IGY Marinas years ago, and appears to be doing very well with it. Smart to recognize the need for quality and luxury service for the high end market. But I don’t want to see the small family owned places disappear in British Columbia.

 

[Hippocampus]

Would offer another model I’m seeing increasingly on the east coast that being dockominiums with no services offered. Occasionally not even fuel. On occasion you can secure one of these slips as a transient with the dockominium management acting as the interface. From talking to owners they either use mobile services or move the boat to obtain servicing.
Know this was common on the Floridian east coast and my wife’s parents had a dock as part of their condo but the pure dockominium model has now extended further north.

 

[Hippocampus]

Have used IGY in the Caribbean (Rodney Bay) multiple times and pleased with the experience.(we are not a mega yacht and would say <50% of the book of business there is to 0.5%ers. )

That yard was sharply divided. Marina and restaurants on one side. Dry dock boat yard /travel lift totally separate. Between the two a string of restaurants. Behind the restaurants independent marine businesses (sail loft, electronics, Budget Marine, small grocery, liquor store etc.). Customs and immigration on second floor above restaurants along with marina offices.

Prices reasonable as alternatives were available a short dinghy ride and/or very brief walk away from main complex. Same level of competition as in St.Anne’s /LeMarin. In both settings multiple competing marine businesses cheek to jowl with both cruisers and local populations using local clustered businesses (laundry, food/drink vendors and restaurants, hardware etc.). Very unlike what’s evolving in this country where a single business entity controls all features.

 

[BandB]

Part of it is better understood by looking at backgrounds too. I think with Safe Harbor, they'll continue the path they are on with marinas. However, someone we haven't been talking about, Centerbridge Partners. They are one of two investment firms that made huge investments in Suntex at a time when Suntex couldn't expand further. Suddenly, Suntex went on a buying spree this year which includes Westrec and many individual marinas. They're buying at a much more aggressive pace today than is Safe Harbor. In every acquisition they've talked about the total property including expanding service, winter storage, restaurants and more.

There have also been some IRS rulings to accelerate this. These entities are set up as REIT's and on November 1, 2019 the IRS made a private letter ruling that resolved a long time question and determined the rent of slips is consider rent of real property, not a service. In addition, they ruled that other customary services would not be considered impermissible tenant service income and, therefore, would not cause any portion of the qualifying
rents received by the taxpayer to fail to qualify as rents from real property under the REIT rules. While this is not important to tenants, it is very important to the profitability and return on the investments.

 

[Besslb]

Interesting conversation. Our marina in New Bern was recently acquired by an investor and will be managed by Oasis Marinas. Does anyone have any experience with Oasis? They seem to manage many marinas along the East coast, several that we have thought about visiting.

 

[BandB]

Interesting conversation. Our marina in New Bern was recently acquired by an investor and will be managed by Oasis Marinas. Does anyone have any experience with Oasis? They seem to manage many marinas along the East coast, several that we have thought about visiting.

They currently manage 42 marinas. They do it either by leasing or charging management fees. They do not own, do not buy or sell on their own behalf, but will help find buyers. No further knowledge. I just don't grasp turning one's business over to someone else to manage.

 

[Besslb]

Oh by the way, I got a notification last week that Jarrett Bay Boatworks is now a Safe Harbour.

 

[BandB]

Oh by the way, I got a notification last week that Jarrett Bay Boatworks is now a Safe Harbour.

Yes, they are on a binge of purchasing boatyards. Obviously, with Sun Communities, they're getting access to funding to afford high dollar acquisitions.

Do you have the details of what they purchased? I saw indications it included boat building. Didn't see comment about the property leased to others but assume that too.

And what does that mean for Bluewater?

 

[lwarden]

I'm in a Safe Harbor marina and they just bought the neighboring marina across the spit which was owned by Sunroad. They own one in South Bay as well which I wasn't aware of till now. They also just recently[purchased Shelter Island Boat Yard, one of the more reasonably and better run yards nearby. Seems they like San Diego, hope they buy some marinas up in the LA area or Newport so we can have reciprocal rights. As of now they the next one up is Ventura.

So far I'm quite happy with the management at our marina and they have been steadily upgrading it. No complaints from me, GM runs a tight ship.