High fuel prices are giving boaters pause

Posted on Written by Gary Beckett

Some are shortening trips or tying up longer, but few appear to be bailing out altogether

With gasoline prices at the dock close to $5 a gallon — even $6 or more in some coastal markets — the debate over whether high fuel prices or fuel availability has a greater negative impact on boating has been re-ignited.

The conventional wisdom for years was availability determined whether boaters would skip a season or get out of the discipline altogether. Price was considered a less important factor, since it was argued boaters would simply absorb the higher costs, change how they used their boats and keep on boating. And over the last couple years, as fuel prices at the pump crept up, that’s largely what they did.

But with prices skyrocketing in recent months, many in the industry have expressed concern that very high fuel prices, on top of a list of other economic negatives, could tip the scale and force many die-hard boaters out of the market.

But a random survey of dealers and marina operators nationwide suggests this is not the case. They say boaters continue to adjust their boating habits while remaining very loyal to the lifestyle.

“People are not using their boats as much,” said Bill Anderson, president of Westrec Properties, the world’s largest marina owner-operator in Encino, Calif. “They’re not going out as much, so they’re using their boats in the marina more.”

But, Anderson said, the important point is they are still using their boats.

“People don’t want to get out of boating, but when it costs you $1,500 to $2,000 to fill up your boat, it gets expensive,” he said. “I think people are selectively using their boats now … rather than just casually deciding to get out for the weekend.”

It’s not unlike what many Americans are doing these days with their cars. Where once people jumped in their cars anytime to make a run for something, now they coordinate trips and think more carefully about their daily car usage. The same holds true for boats.

That sentiment was echoed over and over again by a range of people in the recreational boating industry, most of whom are on the front lines of the issue. They said boaters have changed their habits and either are boating less often, taking shorter trips or, in the case of owners of larger boats, keeping them tied at the dock.

Meanwhile, they are taking better care of their boats, trying to squeeze more fuel efficiency out of their engines. Boaters also are lightening loads, removing carry-on items and rarely-used accessories to reduce weight and increase fuel efficiency.

Owners of bigger boats are enjoying the marina lifestyle and using their watercraft more like waterfront condos than boats, experts said.

“Our yacht club is packed,” said John Sima, owner of Sima Marine, which operates two marinas and boat dealerships along Lake Erie in northern Ohio, adding that even his customer-rendezvous and boating-excursion trips are fully booked. “The short cruise here is to Mentor from Put-In-Bay, which is about 60 miles, and everyone is going.”

The good news for marina operators is they are generating more business from ancillary services, such as restaurants, ship’s stores and repairs. And they’re still taking in generous slip fees, thanks to the ongoing shortage of available slips, especially in major boating markets. That being said, Anderson points out that boaters aren’t coming to the marina as often, which has limited how much extra service revenue they’ve seen.

The bad news, however, is higher fuel prices definitely are hurting boat sales; especially sales to new entrants to the discipline.

“It’s just one more barrier that has to be overcome,” said Thom Dammrich, president of the National Marine Manufacturers Association. “It’s certainly not helping.”

Dammrich, like many others in the industry, said the recreational marine industry’s current historic slump shows no immediate signs of abating until perhaps next year. But the good news, according to Dammrich, is most boaters remain devoted to the lifestyle and will make adjustments to remain on the water.

“Gas prices have been rising over the past couple of years, and boating participation has been rising along with it,” said Dammrich. “So my expectation is people will use their boats as much as ever. They just may use them differently. They may stay closer to home. They may take shorter trips. But they will spend as much time with their boats as they ever have.”

That said, marina operators, dealers and manufacturers are offering a host of perks to help make boating more affordable, either by reducing fuel prices for “preferred” customers or sacrificing margin at the pump to keep people on the water.

“Historically, many marinas nationwide have had a percentage of profit they wanted to keep on every gallon sold,” Anderson said. “Now they’re looking to make a reasonable profit, but not necessarily a high-percentage profit.”

Many dealers also are offering service department specials aimed at generating extra revenue, but also helping boaters get as much fuel efficiency as possible.

“Dealers are really playing up the fact that you ought to get your boat tuned up, and that your prop’s right for the boater’s use and is in proper condition,” said Phil Keeter, president of the Marine Retailers Association of America. “A lot of dealers are talking to people with older outboards and telling them that now is the time to trade up to a more fuel-efficient outboard.”

And while long boating outings may be passé given the high cost of fuel, especially diesel for users of bigger boats, rendezvous and shorter trips remain highly popular, Keeter said.

“Dealers will get owners of a certain brand together and arrange for them to meet on a lake, raft up, cook hot dogs and have fun on the lake,” he said. “It keeps people on the water and builds some good customer relations. It’s something they should have been doing for years.”

Westrec’s Anderson said marina operators also are creating loyalty programs where they offer discounts to slip customers of anywhere from 3 to 5 percent on fuel.

These measures help, but dealers and marina operators acknowledge there’s only so much they can do to cushion boaters from the pain of higher fuel prices. So the big question heading into the summer is how much more will fuel prices increase, and is there a point at which even the most devoted boaters wave the white flag?

Few will hazard a guess about future prices, noting that predictions ultimately rest on economic factors that are far beyond the industry’s control, including the future direction of oil prices. If predictions of $200 a barrel for oil (compared with the mid-June price of about $135) hold true, the price of gas pumped into cars, trucks and SUVs could top $5 a gallon. One can imagine the price of fuel at the dock.

But even then, industry experts are convinced boaters will continue boating so long as the supply is adequate. Still, for those who find fuel prices more than they can take, there is another remedy that could help keep them on the water.

“For the folks who own sailboats (the high cost of fuel) has little or no effect on their boating,” said Anderson.

This article originally appeared in the July 2008 issue.

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