Research points MarineMax to chartersPosted on Written by David Shaw
Retailer launches its large-scale premium operation in a popular Caribbean destination
Talking with customers can sometimes spur big company initiatives. Thats the case with MarineMax, the worlds largest powerboat retailer.
In January, the company began operating a premium yacht charter business out of Tortolas Hodges Creek Marina in the British Virgin Islands under the umbrella of MarineMax Vacations. The venture was launched, in part, because Clearwater, Fla.-based MarineMax recognized that its customers were enthusiastic about chartering high-end powerboats in the Caribbean or had bought a charterboat there to go cruising without the expense of taking their own yacht to the islands.
We have a database of over a million powerboat customers who bought boats from us, and our market research indicated that many of our customers were interested in powerboat charters. Many owned charterboats in the Caribbean and were going on charters, says William McGill Jr., MarineMax chairman, president and chief executive.
An informal focus group with select MarineMax customers supported data that showed charters were of interest, especially aboard luxury power yachts in the Caribbean. McGill says top management at MarineMax had been eyeing the charter business for roughly three years, mindful of an emerging trend that marked the beginning of a shift in yacht charters from a monohull sailboat business to one that was moving into the powerboat business, McGill says. [Our data showed] that a lot of consumers were wanting to move from sail into power for charters. McGill says the emerging trend reflects the fact that the traditional customer in the sailboat charter market is getting older.
Delayed by the recession
Planning for the charter program was put on hold after the Great Recession hit new-boat sales hard worldwide. MarineMax is a dealer for Sea Ray, Hatteras, Cabo, Meridian, Grady-White, Boston Whaler and others, and the company saw its gross revenue drop from $1.2 billion in 2007 to $480 million by the end of fiscal 2011 in September. Store locations dropped from 96 to 54 and the number of employees went from 2,600 to 1,350 during the same period, McGill says.
The performance of the charter industry during that period tended to validate the companys belief that a large-scale premium charter operation in a popular Caribbean destination was potentially rewarding. In 2009, the charter business plunged about 20 percent, says Lex Raas, MarineMax Vacations president of charter and special initiatives. Globally, the charter business was flat in 2010, but it has started recovering pretty quickly. The business was up 2 to 3 percent in 2011 and bookings are on track for 2012 to be even better, he says.
McGill says buyers of new luxury powerboats are more likely to defer a purchase in tough economic times than they are to put off going on vacations with family and friends. He cites the cruise ship industry as an indication of how some vacation-business segments have weathered the financial storm. Cruise ship industry statistics from Cruise Market Watch show that the number of passengers carried annually during the recession grew more than 7 percent. The charter business wasnt as strong as cruise ships, but people were still going boating, Raas says. It doesnt matter how hard times are. Theyre still going to go.
Last year, the timing finally looked good to launch MarineMax Vacations (www.marinemaxvacations.com), which offers crewed and bareboat charters. There is also a megayacht segment and a charterboat ownership program is an important part of the business, as well. We learned more about the mechanics of the [charter] business and we determined that the business model for charters was definitely a good move for us to get into. Some of the reasons why we made the decision was to diversify, McGill says. New-boat and used-boat sales tend to have sharp ups and downs, whereas the charter business has less precipitous fluctuations.
Filling out the fleet
Although the broader strategic focus will be on powerboat charters in the long run, McGill says, the first step MarineMax Vacations made regarding its fleet was to order 13 Dufour sailboats, a mix of 41- and 43-footers. The boats were ready for charter in January.
Power charters will begin in June with the arrival of 10 customized Aquila 38 catamarans from Sino Eagle Yachts, a builder based in Fuyang City, China, that had experience building Leopard sailing catamarans. The MarineMax 382 will feature two cabins and two heads and will be packed with creature comforts and equipment.
In addition, MarineMax Vacations is developing a new design for a 46-foot luxury power cat that will be a showcase boat in the fleet. The 46-footer is exclusive to MarineMax Vacations worldwide, Raas says. Were designing the boat from the ground up, including tank testing for the hull.
The larger power cat, announced at a press conference during the Miami International Boat Show, was designed and engineered by Slovenia-based Seaway and will also be built by Sino Eagle. The MarineMax 464 will be offered for charter in the British Virgin Islands as well as for private ownership under the model name Aquila 46. The MarineMax 464 will change the charter industry, MarineMax Vacations vice president Raul Bermudez said in a press release. Bermudez says the company has ordered 30 of the 46-footers. The first is expected to be delivered in late December and additional boats will arrive every 21 days thereafter.
In March, MarineMax Vacations announced it was expanding its charter operation to the inland waterways of Europe through a partnership with Locaboat Holidays (www.locaboat.com). The 35-year-old company offers bareboat charters in France, Germany, Holland, Italy, Ireland and Poland. The well-equipped Penichette and Europa models in the Locaboat fleet are based on the commercial barges that once were common on Europes canals.
Factors for success
Raas joined MarineMax Vacations in December. As the former CEO of TUI Marine, which operates The Moorings, Sunsail and Le Boat, hes no stranger to the charter business and says he has always believed in the value of luxury power and sailing cats as charter platforms. Hes particularly dedicated to the focus on power charters, saying the MarineMax 46 is an example of how that commitment is playing out.
The boat will be offered in two layouts. The charter version will have four staterooms with en-suite heads, and the private layout will have three cabins with en-suite heads. To tap into the market, its vital to make the boat super-comfortable, like a hotel or an upscale cottage, and it has to be easy to use, Raas says. The 46 will have normal mattresses, full upright refrigerators, watermakers and other amenities.
The potential success of a new venture such as MarineMax Vacations is dependent on a number of factors, Raas says. Branding, economy of scale, new charter products such as the MarineMax 46, excellent customer service, good base infrastructure and the ability to generate yacht sales and offer financing are among them. Theres going to be excellent synergy between the charter business and the boat-sales side of MarineMax, Raas says. Its a natural fit because the ability to sell boats quickly, efficiently and profitably is vital to the continuation of a large-scale charter business such as the one were starting. If you cant sell boats, you cant have a successful charter business since you wont be able to continuously replenish the fleet to keep new inventory on line all the time.
McGill says he expects the MarineMax charter fleet to exceed 100 boats within three years. We believe in the charter business, he says. Were making the financial commitment to buy the boats, set up the base and to keep growing the business.
This article originally appeared in the May 2012 issue.