A rebound in retentionPosted on Written by Reagan Haynes
Exhibitors at New England show say fewer deals are being lost to buyer misgivings, loan denials
Attendance was relatively flat at Februarys Progressive Insurance New England Boat Show in Boston, but some exhibitors say the number of deals that were closed at various price points signals the return of the long-sidelined qualified buyer.
My sense after talking to exhibitors was just about everyone agreed that the quality of the audience was the best theyd seen in three or four years, says Joe ONeal, who manages the show for the National Marine Manufacturers Association. About 95 percent say they took more qualified leads that they are certain are going to turn into sales, ONeal adds.
That was true for Larry Russo, the owner of Boston-area Russo Marine. Despite relatively flat sales at the show, February was the best month the dealership has had in five years both in units and in dollars. Russo says business was up 30 percent from February 2011, which itself was a good month for the dealership.
Russo thinks that is because most of the deals written during the show went through something dealers refer to as retention.
At the show people often get caught up in the moment, make a purchase commitment and go home and change their minds, Russo says. Or in the environment weve been in the last four years, they very much want the boat but arent qualified for financing and we lose the sale.
Retention for February was 87 percent in units and 92 percent in dollars, Russo says. Thats a very significant signal about buyer intention, commitment and qualified buyers returning to the marketplace, he adds.
February 2009, which also included show sales, saw 71 percent retention in units and only 57 percent in dollars, Russo says. We were losing almost half the business we were generating and most of them back then were due to unqualified financing, he says. Clearly the people who are more qualified are coming back to the market.
More exhibit space
This years show, held Feb. 11-19 at the Boston Convention & Exhibition Center, added more than 100,000 square feet of exhibit space from the 2011 show, to roughly 360,000 square feet, ONeal says. That was because some dealers expanded their space and offerings, and others who had taken a few years off from exhibiting decided it was time to return.
The sailboat portion, which was new last year, also grew, featuring two 43-foot vessels and three 45-footers, ONeal says.
The show typically has to deal with at least some bad weather, but this year there were nine glorious, sunny days, Russo says, so exhibitors were expecting a sharp rise in attendance more than the 2 percent increase the NMMA reported. Thats the disappointment, but were not disappointed after examining the numbers, Russo says.
That disappointment could have contributed to less-than-thrilled feedback from one exhibitor.
Although attendance was reported to be up slightly, there didnt seem to be any sense of urgency to complete sales at the show, says Dawson Farber, CEO of Nauset Marine on Cape Cod. Our sales were off from last year, and follow-up the week after the show was just so-so. A good number of the follow-ups confirmed they were going to buy a boat, but not right that second.
Cataumet Boats, a longtime Grady-White dealer, had a very productive show, says John Huether, assistant general manager of Cataumets Cape Cod location. All of the salesmen sold boats, which is not typical even in a good year, Huether says.
With the unusually mild Northeast winter, Cataumets three locations in Massachusetts and Rhode Island not only have been busy chasing leads and preparing new customers for the boating season, but they are getting current customers ready for spring, too.
As far as were concerned were going to have a very busy spring something we havent seen in years, Huether says.
Buyers were shopping for bigger and more expensive boats as well, Huether says. That represents a change from last year, when most boats sold were at the less expensive end of the spectrum. This year, the purchases spanned the 18- to 36-foot range, Huether says.
It was just a fantastic show, probably our best in four years, Huether says. It makes us very happy and very optimistic for the rest of the year, too.
A happy lender
Sterling Associates, a Massachusetts-based finance and insurance company, also had a good show, says president Tom Smith. The first week, there was a lot of energy people waiting in line to get in, sales happening, people with great questions and no hesitation about whats going on, he says.
Smith was at the New England show during its first week. He spent the second week at the Miami International Boat Show.
For Sterling, the New England show was the stronger of the two and was, in fact, stronger than many of the 11 shows the company has attended this season, Smith says. Fewer Miami attendees seemed to have come from great distances than had been the case in prior years, Smith says.
I think Massachusetts is in a little bit better shape than the rest of the country, Smith says.
The Miami show, which Sterling has attended since 1983, is always lumpy, Smith says. Sterling might do two or three financing deals there, but one will be for $2.6 million while another is for $200,000, he says. In New England, a show at which the company has had a presence for 19 years, Sterling typically writes 50 or 60 such deals for an average of $150,000 a number that has crept up for the last two years after dipping during the recession.
Customers have been slow to return to the $250,000 to $600,000 range, Smith says.
But crazily enough, were getting customers who werent borrowers before those buying very big borrowing because of such favorable rates, Smith says.
A nine-day run
The New England show often runs concurrently with school vacation week in the Boston region, but this year it did not. Some think the vacation helps draw families to the show, but the counter-argument is that many serious buyers use that week for family vacation. Then again, some say, its hard to make a sale to parents who are chasing their children to prevent sticky fingers from making contact with supple leather upholstery, for example.
Although the NMMA tries to avoid running the show during vacation week, it will do so next year because its tough to schedule so much space in the convention center for nine days, ONeal says.
Huether thinks there are positives to both time frames, although he did say that the final day of the show (the Sunday preceding vacation week) was the only one without sales.
Salespeople can more easily talk to customers when they arent focused on their children, but when a whole family falls in love with a boat its easy to seal the deal later, Huether says.
The convention center, a 517,000-square-foot facility with 100-foot-high ceilings and tons of natural light streaming into showrooms, is a favorite of Smiths, who attends shows nationwide.
There are often rumors that the shows nine days will be pared, but ONeal says that unless theres an overwhelming consensus among exhibitors to cut back, the NMMA wont do it. My understanding is there is not [such a consensus], he says.
Nauset Marine is one advocate of a shorter run. The team there has concluded that nine days is too long to run a boat show, especially when 95 percent of the activity happens on the two weekends, Farber says.
But others remain happy with the extended run.
Most dealers want two weekends, ONeal says. The cost of moving boats in and out is the same, and if you lose a weekend because of the snow and thats the only weekend of the show, thats a big concern.
The NMMA will always take suggestions about tweaking the hours from year to year to make the show as productive for dealers as possible, ONeal says.
This article originally appeared in the April 2012 issue.