MIAMI 2014: Panel tackles the cost of boating

Posted on Written by Jim Flannery

MIAMI — Can recreational boating become more affordable?

That was the question before four panelists on Friday at the annual meeting of Boating Writers International at the Miami International Boat Show.

Brunswick Corp. chairman and CEO Dustan E. McCoy said it can and must become more affordable, and his companies are working hard to accomplish that.

“We need to have every new model cost less than the model it replaces,” he said. “Over five or 10 years, that will have a real impact.”

He said Brunswick companies are 70 percent along the road to reaching that goal. McCoy said a Brunswick survey of 15,000 people in major marine markets around the world showed that 90 percent think boating is great, but they have a problem reconciling the cost of boating with its benefits.

“The cost versus the benefit in boating is out of whack,” he said.

The fact that more used boats were sold in 2012 than in 2007 confirms that finding. New-boat sales are just 60 percent of prerecession levels.

“That begins to line up in my mind with the conclusion that our stuff is too expensive,” he said. “The consumer sees more benefit in buying used.”

McCoy said making boats more affordable requires better engineering, better sourcing, better manufacturing processes and innovation.

“From our perspective, this news is good,” he said, “but it’s sobering.” The good news is people like to boat and affordability is a solvable problem.

Sun Trust Bank senior vice president Don Parkhurst said it does not appear that lenders can do much to make boats more affordable: 10-, 15- and 20-year lending terms can’t be extended much more than that; rates are at historic lows and are likely to rise down the road as the Federal Reserve backs off its support of artificially low interest rates; credit terms have eased and are about where they should be from the viewpoint of sound lending practices; and money is available.

He said a Sun Trust study suggests that as baby boomers retire, they are selling their boats and leaving boating or buying much smaller boats. “There’s a huge demographic going on here” that is shrinking the boating market, he said.

Fred Pace, a partner in Legendary Marine, which has won industry awards for its innovations, said it has become increasingly difficult for boating to compete for the limited time that busy families have today. He says he focuses on keeping his customers — mostly folks who are affluent and well along in their careers — by making sure they have a lot of fun when they come down to the marina, that they get out on the water and receive consistently excellent service.

“The big holdback for the millennial generation is time,” he said. “We’re just not seeing them come into the market.”

Are there alternatives to boat ownership? John Giglio, CEO of the Freedom Boat Club, a members-only club that rents boats, said he gets millennials and baby boomers in the club. “We make it extremely easy for people to get into the market,” he said. “There’s not a big capital outlay and you don’t have to get a loan.”

He said it is essential give new boaters hands-on skills training.

“We do a lot of training,” he said. “We want to get people on the water and have a pleasant experience.”

“A well-trained boater is more likely to stay in boating and move up to owning a boat,” he added.

Comments

4 comments on “MIAMI 2014: Panel tackles the cost of boating

  1. John

    In the article you addressed the initial cost of purchasing a boat. The cost of keeping a boat at at a marina is also an issue. Together they sink many a prospective purchase. Purchase cost plus marina fees equal no sale.

  2. Eddy

    I’ve been in the business for almost 40 years and I’ve always thought it was way more expensive than its worth. I’ve made more money selling used boats than new ones. The fact is that it’s about the experience not the boat itself. Boating has evolved into a rich mans hobby due to the value of marina real estate and the cost of marina insurance.

  3. OBXKoastie

    I think the attendees are missing the point. It is not so much the cost of a new vessel that drives individuals away, it is the constantly rising costs of dock space, maintenance/repairs, insurance, fuels, etc. You can get a cheap rate for a loan but when it comes to paying those annual costs for which there is no loan, people tend to shy away from vessel ownership. If you were to look at something as simple as rising insurance costs (forget about the impact of Sandy) you would find that insurance companies are chasing a shrinking market for premiums but still must remain profitable driving costs up.

  4. Ned

    You simply need to look at the front page of almost any newspaper any day and to read news about the shrinking middle class and you have the obvious answer to the question of shrinking sales and especially new boat sales. In the fifties and sixties the economy grew, unions created a new middle class, and boats did not cost an arm and a leg boating grew. Today companies care only about increasing share holder value and income and not paying there employees enough to put their kids through college let alone buying a boat. PS I am not some kind of socialist but rather someone who is only pointing out some possible reasons for the decrease in boat sales.

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