Fight Club

With bigger players coming on board, boat clubs and other alternatives to ownership could see serious competition — and growth
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P2P firms such as Boatsetter and GetMyBoat offer different styles of boats for rental in hundreds of locations.

P2P firms such as Boatsetter and GetMyBoat offer different styles of boats for rental in hundreds of locations.

Not long ago, dealers viewed boat clubs as competitors that lured away potential new-boat buyers with less-expensive membership programs. But as baby boomers sell their boats and cash-strapped millennials show interest in the boating experience, a growing number of companies are trying to reach both demographics through boat clubs and peer-to-peer rental companies.

Proponents say time and money are the two big advantages that boat clubs and P2Ps (think tech companies like Airbnb for the water) offer compared to traditional boat ownership. Boat clubs typically manage everything except the member’s fun on the water, and the cost of entry to shared-experience business models is far lower.

“The boat club model is unlike any other part of the industry,” says John Giglio, CEO of Freedom Boat Club. “So much of what we do is service oriented, from meeting the members at their cars, going through the boats with them, and seeing them off at the end of the day. It’s not the boats that differentiate us, but the experience.”

Giglio says boat clubs target different customers than dealers. “Neither takes sales from the other,” he says. “We’re growing on parallel tracks with different clients.”

No reliable estimates exist about how large the boat-club or P2P segments are, and while the two don’t view each other as competitors, they both seem to be growing.

Freedom is by far the largest player in the boat-club segment, with 175 corporate and franchise locations in the United States and Canada. The company is also partnering with the Jeanneau division of Groupe Beneteau and recently launched six Freedom locations in France. Giglio’s company buys about 800 boats each year to replace about a third of its club boats in North America. Last year, Freedom members took 260,000 cruises.

“The fleet size and scope of the business tend to be bigger than you’d expect,” Giglio says.

Until recently, Freedom’s only national competitor was Carefree Boat Club, with 75 locations in the United States and Canada. It also plans to expand into Europe.

Carefree also has seen growth in the millennial and boomer segments. “Historically, we’ve tried to go after the dual-income families with kids, but those two other groups are now moving into the clubs,” says Doug Zimmerman, president of Carefree Boat Club. “That’s not surprising, since 10,000 baby boomers hit retirement age every day.”

Impressive Statistics

Those kinds of statistics impressed newcomers such as Brunswick Corp. and Beneteau America, which is partnering with a French company called Dream Boat Club to establish clubs across North America. Smaller U.S. businesses such as Nautical Boat Club also have set up networks. The Texas company, calling its business model the only “boating country club,” has 16 locations in Texas, Tennessee, South Carolina, Georgia and Wisconsin.

Brunswick has been working with Suntex Marinas for two years to develop its OnBoard club and rental business and went public with the information at the International Marina & Boatyard Conference in January.

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“Suntex has 23 locations, which gives the program a good reach,” Craig Friedrich, manager of strategy and business development at Brunswick, said at the time. OnBoard has about 400 boats in 20 locations.

Most boats in the OnBoard fleet are Bayliner and Princecraft models. The clubs will have access to 10 Brunswick brands. Dealers and marinas that set up clubs also will have access to Brunswick Acceptance Co.’s financing, which, according to Bijoy Jha, Brunswick vice president of finance, is “better than anything out there.”

“We’re also different from other clubs using franchise models,” Jha said at IMBC. “We’re a license program that works via revenue sharing. It’s a great way for smaller operators to get in and see if they like the program.”

Dream Boat Club is a subsidiary of Dream Yacht Charters, one of the world’s largest bareboat and crewed charter operators, with annual revenues of about $200 million. At the Miami International Boat Show, founder Loïc Bonnet launched Dream Boat Club North America, which will be partnering with Beneteau America and Zodiac Nautic as its boat suppliers.

A Complicated Business

“Loïc was watching Freedom and put together 15 boat clubs in France and Spain,” says David Aldrich, Dream Boat Club’s director of North American operations.

The company plans to offer first right of refusal for its clubs to Beneteau America’s 35 North American dealers, Aldrich says, and eventually will extend the offer to other dealers and marina owners. He expects to open 10 boat clubs this year and 10 more in 2020.

“Ten to 12 dealers have given us a yes,” Aldrich says, “while about that many are on the edge of saying yes.”

The partnership with Beneteau America gives the club access to Groupe Beneteau’s U.S. brands (Four Winns, Wellcraft and Glastron) but its main focus will be on the French-built Flyer, Barracuda and Antares outboard lines.

“These boats will be used very heavily by club members, so increasing recognition for these brands will be part of this,” Aldrich says. “Plus, we know that one out of five club members eventually buy a boat and tend to buy the brand they know.”

Aldrich says the biggest challenge with starting boat clubs is finding marina slips, whose supply is tight in popular areas. Zimmerman says another challenge is that boat clubs need to provide training for members who are often driving boats that cost $60,000 to $130,000.

“This business is a lot more complicated than just buying a bunch of boats,” says Zimmerman. “Besides training, we invest a lot of science into our back-end systems. We also need to constantly create member events. There’s also the challenge of always having the right boats for the right markets.”

App wars: The P2P tech firms are investing heavily in their apps to make reservations and financial transactions seamless anywhere in the world.

App wars: The P2P tech firms are investing heavily in their apps to make reservations and financial transactions seamless anywhere in the world.

In cities and on protected lakes, a subgroup of boat rentals and clubs are being built around electric engines, often the Torqeedo brand.

“Electric motors are moving from being novelties into the mainstream,” says Steve Trkla, president of Torqeedo. “There are thousands of inland lakes or environmentally sensitive coastal waters where outboards are restricted or even forbidden. We expect more and more boat clubs to either add an electric boating option or even go to all-electric fleets.”

A Changing Tech Segment

In the past eight years, tech companies including GetMyBoat, Boatsetter, Clickandboat, and many others have been offering P2P boat charters across the United States, Europe, Asia and the Caribbean. The business model is part Airbnb and part Uber, matching clients with boat owners via website or app.

Bryan Petro, chief operating officer of GetMyBoat, says the segment has changed since the company launched in 2012.

“The biggest challenge wasn’t finding the boat owners,” says Petro, noting the company has 130,000 boats in 184 countries. “It was more about bringing an older demographic into the fold of technology and then connecting them to a younger demographic with tech skills.”

Petro says the lack of transparent information and inability to compare pricing were big issues that GetMyBoat addressed early on. “The early days of pitching people on listing their boats could be challenging,” he says. “We spent a lot of time educating the owners on how to integrate themselves into new technology.”

Now, as owners see incoming revenues and repeat business, Petro says, the rental process has become easier. Many P2P boat startups are national, but Petro says GetMyBoat wanted to be global from the start.

“It’s hard to run a sustainable business when you’re tied to one locale,” he says, adding that the company has seven web domains. “Right now, they’re all in English, but we’re looking at multiple languages and a single app to make transactions as seamless as possible anywhere. A key to differentiating ourselves is by having the best app.” GetMyBoat has found some heavy-hitter backers, including Yanmar, which has invested an undisclosed sum.

Its list of 130,000 boats is “not anywhere near where we want to be,” Petro says. “I don’t know how anyone can survive with less than that number. The demand side is definitely there, so there is room to grow.”

Boatsetter CEO Jaclyn Baumgarten echoes the same sentiment when asked about her company’s boat listings, which total about 5,000 in 600 locations.

“It’s nowhere near as large as I’d like it to be,” she says. “My goal is for Boatsetter to be the global destination for anyone who wants to have a boating experience anywhere in the world.”

Despite new competitors, CEO John Giglio expects continued growth for Freedom Boat Club. “We’ll be watching them closely in our rearview mirror,” he says.

Despite new competitors, CEO John Giglio expects continued growth for Freedom Boat Club. “We’ll be watching them closely in our rearview mirror,” he says.

Raising $17 Million for Expansion

Boatsetter is headquartered in downtown Fort Lauderdale, with a staff of 30, many of them tech workers. During the summer season, it operates an office in Spain’s Balearic Isles for the European market. The company has raised $17 million since it was launched in 2013. Last year, it acquired one of its main rivals, Boatbound. (Boatsetter merged with Cruzan in 2015, a P2P marine business Baumgarten launched in San Francisco.)

Baumgarten says sales have grown more than fourfold in the past year, with significant growth expected this year. Both Boatsetter and GetMyBoat declined to give annual revenues or say whether they were profitable.

Boatsetter differentiates itself, she says, by offering insurance through BoatUS-Geico that protects the owner, boat and renter during the course of the rental.

“That’s the first time a company like ours has been able to do this,” she says. “We’re the only P2P provider with that type of insurance.”

Training members is a major line item for boat clubs since new boats can cost $60,000 to $130,000.

Training members is a major line item for boat clubs since new boats can cost $60,000 to $130,000.

Boatsetter also has a list of more than 2,500 licensed U.S. Coast Guard captains for non-boating clients. That may be one reason the company reaches a much younger demographic than most boat dealers: 79 percent of clients are younger than 45, and 50 percent are younger than 35. “We’re providing a gateway for people who want to enter the industry,” she says.

The company has directed its marketing toward that younger demographic, Baumgarten says, with big investments in new technologies, including a new app (right now, bookings go through a website.)

“The consumer app will streamline the process,” she says. “It’s a significant investment for the future.” 

This article originally appeared in the May 2019 issue.

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