More services is the new approach, and one is even cutting fees
There was a time when boaters looked at Joe Frohnhoefer with disdain. To them, he was a glaring example of what had gone wrong with America.
Frohnhoefer was one of a new breed of entrepreneur who charged boaters for non-emergency towing assistance — a service they had become accustomed to getting free and one to which they felt they had a God-given right.
It was in 1983 that the Coast Guard began focusing solely on emergency rescue and handed off non-emergency towing services to the private sector. A new industry was born, and Frohnhoefer was among the first to seize the opportunity.
Frohnhoefer and his wife, Gloria, founded Sea Tow International that same year in Southold, N.Y., setting up shop on the second floor of his electrical business — just a few blocks from the local dock.
The work was demanding and seldom appreciated by boaters, who grumbled about paying for what had been a free government service. But it wasn’t long before attitudes began to change, as Sea Tow expanded through an aggressive franchise program and offered memberships that provided free tows to boaters who paid a modest annual fee. The business flourished as boating’s popularity exploded in the 1980s, attracting many competitors. And, slowly but surely, the business model began to evolve.
Fast forward to 2008 and the non-emergency towing business has been transformed. In addition to towing services, these companies offer an array of value-added services, such as marine insurance, boat loans, charter and travel services and more. They also offer boater education classes and help underwrite lobbying efforts to support boating in Washington, D.C. and at the state level.
“We’ve quietly added a variety of services over the last few years,” Frohnhoefer says, pointing specifically to Sea Tow’s “Sea Insure” and “Sea Loans” programs, which were added through partnerships last year, and its Boating Safety & Education Foundation, launched this year. “Today, we do a variety of things and we do them quite well,” says Frohnhoefer.
To drive home that point, Sea Tow in April launched a rebranding effort called “Where Boaters Belong” that Frohnhoefer says reflects the company’s metamorphosis into a full-service marine assistance provider.
“It pulls everything together under one marketing program,” Frohnhoefer says. “We’ve added a variety of services over the last few years, but many people still think of us primarily as a towing service. However, we’re there all the time, 24 hours a day, and it’s time for us to start taking credit for everything we provide our members.”
These services are available to Sea Tow’s 170,000 members through its 120-plus worldwide franchise locations.
“It’s a statement, ‘Where Boaters Belong’ — you belong with Sea Tow,” explains Frohnhoefer. “It’s also a statement of … something that members join and belong to.”
Two big players
Sea Tow’s rebranding strategy also reflects the consolidation and increased competition in the market between Sea Tow and BoatU.S., the Alexandria, Va.-based consumer boating organization, which for years has provided member towing services through its TowBoatU.S. operation. BoatU.S. also offers marine insurance, boat loans and other services to its members.
As the towing business matured and consolidated through the 1990s and into the early 2000s, leaving Sea Tow and TowBoatU.S. as its leaders, the need to add services and provide more value to boaters intensified. The quality of towing services also has improved markedly, especially over the last several years.
“In the early 2000s we saw the market getting tighter, meaning there was better professional service and the rogues, who were kind of the pirates of the past days, were weeded out,” says Jerry Cardarelli, BoatU.S. vice president of towing services.
Cardarelli says TowBoatU.S. also has educated its service providers to do a better job of telling boaters in distress whether the service will be a tow or a salvage operation. Under maritime law, the latter can lead to drastically higher fees and, in some circumstances, give the tower a claim to the boat. “If we tell them that the case is going to be a salvage or a tow right away, there’s no question in their mind and it gives them the right to decline if they don’t want to proceed.”
Another important factor has driven changes in the business — a vastly improved relationship with the U.S. Coast Guard and Coast Guard Auxiliary.
Frohnhoefer and Cardarelli say their companies are now seen as full partners in providing assistance to boaters. The races to distress calls and battles over who had claim to assistance are in the past, both say.
“They (Coast Guard) are excellent about the rescue side,” says Cardarelli. “They look to commercial, non-emergency assistance when the boat is either sinking or they’ve rescued the people off the vessel.”
Franchise vs. license
Unlike Sea Tow, which operates a vast network of franchises, TowBoatU.S. partners with independent towers, who are licensed to operate as TowBoatU.S. providers.
“They don’t have to pay us for a license,” Cardarelli says. “We check them out and make sure they are fully equipped, well-trained, good captains and are insured.”
Once licensed, the providers can use the TowBoatU.S. trademark on their boats and on the radio, and will bill BoatUS when towing any of its 650,000 members.
In five western states — California, Oregon, Washington, Arizona and Nevada — and the Canadian province of British Columbia, the program operates as Vessel Assist. The name was retained when Vessel Assist was acquired by BoatU.S. in the fall of 2003.
With the economy heading into recession and the recreational marine market slowing down, the pressure is mounting on all marine assistance. In January, TowBoatU.S. responded to cries from boaters about escalating costs by cutting prices on its freshwater, “inland” towing services by 70 percent. It now charges $34 a year, plus $19 for a BoatU.S. membership, to inland boaters subscribing to its “Vessel Assist” service — a discount of $86 off the $139 fee they once paid. Additionally, TowBoatU.S. cut its annual membership fee to boaters in saltwater markets to $135.
“A boater on the Great Lakes really only gets to boat three or four months out of the year,” says Cardarelli. “So why should he have to pay the same price as someone boating down in Florida?”
But there’s more than an appeal to simple fairness going on here. Cardarelli says the fee reduction is designed to help TowBoatU.S. expand its presence in the nation’s heartland.
“The majority of our members are coastal,” he says. “But we want to reach out to the bass boaters and those on inland rivers and freshwater lakes. To do that, we had to have a significant price drop.”
This article originally appeared in the May 2008 issue.