The Future of Marinas

Transcription

1 The Future of Marinas WPPA Spring Meeting Vancouver May 14, Agenda Challenges Participation Trends & expectations Financial considerations Economic impacts Closing thoughts 1

2 3 Top Long-Term Challenges to the Boating Industry Affordability Competition with other activities Water access Aging boaters E15 (15 percent ethanol fuel) Lack of minority participation Dealers Retailers Marinas 0% 20% 40% 60% 80% 100% Manufacturers Suppliers Source: Boating Industry January 2014 Boating Participation 2

3 5 Participation in Boating One of top three waterrelated activities Of Washington residents: > 35% boat 25% motorboat 29% freshwater > 13% saltwater Photocredit: WashingtonDepartment of Ecology Source: Washington State Comprehensive Outdoor Recreation Planning (SCORP) document. 6 Participation in Boating Of Washington boaters: 70% motorboat 84% freshwater 39% saltwater 78% <26 in length Days of Participation ~ 15 days/yr Latent Demand Would like to participate: 5.5% Would like to do more: 4.2% Photo credit: jrwave.wordpress.com Source: Washington State Comprehensive Outdoor Recreation Planning (SCORP) document. 3

4 7 Percent of Boaters by Income Category $35,000-$49,999 12% $50,000-$74,999 17% $25,000-$34,999 6% $20,000-$24,999 3% $15,000-$19,999 3% $10,000-$14,999 2% $75,000 or more 39% Under $10,000 2% Refused 13% Don't know 3% Source: Washington State Comprehensive Outdoor Recreation Planning (SCORP) document. 8 Multiple Responses Allowed Q342. How come you don't do that activity(ies) in Washington now? (Asked of those who indicate that there is an activity(ies) that they do not currently do but would like to do in Washington.) (Statewide) Lack of time / other obligations Financial reasons (except travel costs) Health / age Don't have equipment necessary Not aware of opportunities / not enough opportunities Distance to travel / travel time (including travel costs) Lack of access No one with whom to participate Don't know where to go Poor quality of opportunities / facilities Top 3 are "personal reasons" Participate in activity elsewhere 1 Other 9 Don't know Percent (n=882) Source: Washington State Comprehensive Outdoor Recreation Planning (SCORP) document. 4

5 9 Competition with Other Recreation Activities (Index of Gross Business Income) Index 1994= Marinas Fitness and Rec Sports Centers Golf Courses and Country Clubs Skiing Facilities Bowling Centers Other Recreation West Marine has identified competition as a key risk factor affecting the boating industry: We believe there is increasing competition for our customers' time, and we do not expect a meaningful change in this longerterm trend. Boating Markets 5

6 11 U.S. Wholesale Boat Shipments and Consumer Confidence Source: NMMA 300, Number of Boats 250, , , ,000 50, Consumer Confidence Wholesale Shipments Consumer Confidence There is a strong link between boat sales and consumer confidence. Consumer confidence has grown since the great recession but has experienced big swings. Boat sales are increasing with improved confidence but have tapered slightly in national markets. 12 Retail Sales of Traditional Powerboats 1965 to 2014 (est. by NMMA) 600, , , , , , , , Average 400, Average 311,000 - US new recreational boat sales have fallen to a new lower plateau. NMMA forecasts 150,000 to 160,000 boats in the next few years. 6

7 13 Washington New Boat Sales by Range Source: NMTA data 600 Number of Boats > 70' 67' - 70' 63' - 66' 59' - 62' 55' - 58' 51' - 54' 47' - 50' 43'- 46' 39' - 42' 35' - 38' 31' - 34' 27' - 30' Growth averaged 9.7%/year from 2003 through 2007 (~490 boats added per year on average). Then sales dropped each year from 2008 to 2012 and then increased slightly (10%) in Approximately 144 new boats per year ( ). 14 New Boat Sales % of Total Sales Source: NMTA Under 27 feet Percent New Sales of Total Sales 14% 12% 10% 8% 6% 4% 2% 0% Under 27 feet 4 per. Mov. Avg. (Under 27 feet) New boats sales represent ~8-9% of total sales under 27 feet. 27 feet and over Percent New Sales of Total Sales 14% 12% 10% 8% 6% 4% 2% 0% 27 feet and over 4 per. Mov. Avg. (27 feet and over) New boats sales represent 5-6% of total sales 27 feet & over. 7

8 Demographics 16 New Boat Buyer Age Distribution Source: InfoLink, Trade Today Percent of Total Buyers 2012 Buyers Twice as many new-boat buyers are over 65 as are under 40 Used-boat buyers also are aging, albeit not as quickly. Since 1997, the age of the average new-boat buyer has increased from 45 to 53. During the past 15 years, the percentage of new-boat buyers under 40 has shrunk by half from a third to 16 percent. 8

9 17 Generational Shifts Source: Urban Land Institute, Trade Today Generation Born Age Population % of US Population Eisenhower's Before M 13% Baby Boomers M 26% Gen X M 20% Gen Y (Millennials) Gen Z (?) M 27% 2000 and After M 14% Still a relatively large share of Boomers in the boat buying age group. Gen X represents 20% of the population. The Gen Y (Millennial) group represents 27% of the US population. Knowing what GenXers and GenYers want is critical for the long-run health of the industry. 18 Millennials Situation Source: Pew Research Center Millennials have higher levels of: student loan debt, poverty unemployment, and lower levels of: wealth and personal income Than Gen Xers and Boomers. Still, they remain upbeat. 9

10 Financial Issues 20 How old is your facility? Source: 2013 Survey by American Marina Institute 0 to 15 years 16 to 25 years 26 to 35 years 36 to 44 years >45 years Nearly half of marinas surveyed nationwide are more than 35 years old & will need replacement soon. Owner concerns: Acquiring permits and funding for upgrades. Compliance with the ever-changing regulations of state and federal agencies. 10

11 21 Key Concerns for Marina Owners Replacing/maintaining existing dock facilities that have exceeded their lifespan. Providing access for boats 32 feet and under. Many marinas are redesigning their moorage to accommodate larger boats because there is high vacancy of moorage slips in the smaller boat categories; therefore, marina s revenues have declined, making it difficult to cover expenses. Increased dry moorage has dominated moorage supply increases in the past twelve years. Change in Moorage Inventory Source: Individual marinas & BST Associates 1, , Includes public and private marinas between 2000 and King County Snohomish County Skagit County Wet Moorage Slips Dry Storage In King, Snohomish and Skagit Counties, there were approx 1,200 additional dry moorage spaces added between 2000 and 2012 compared to only around 300 new wet moorage slips. Facilities size ranges from 100 to 400 slips. Success depends on rates, low operating costs and high level of service (high customer interaction)

12 23 Pacific Marine Center - Anacortes Pacific Marine Center on Fidalgo Bay in Anacortes is a full marine yacht service center including, dry land storage of yacht's up to 60' in length on approximately 36 acres with a large refit building ~34,000 square feet and private access to the water along with 350' of service dock. Adding new 250 ton Travelift. 23 Revenues from Permanent Moorage Unadjusted for Inflation $30 24 $25 $20 $ millions $15 $10 $5 $ Permanent moorage revenues across selected major public marinas (Everett, La Conner, Cap Sante, Squalicum Harbor, Edmonds, Shilshole Bay, Des Moines) increased by 2.9%/year from 2005 to Revenues have increased 0.2%/year from 2008 to 2012 (-1.3%/year after inflation). 12

13 25 How do your expenses compare to those of 2012? Source: 2013 Survey by American Marina Institute Stay the same Decrease Increase Salaries/benefits growing faster than moorage rate increases. Other expenses also growing as fast if not faster than rates. Additional concerns: Allocated security costs Accounting for capital projects both annual maintenance and replacements. Concluding Thoughts 13

14 Economic Impact of Recreational Boating in Washington 2012 Source: NMMA 27 Category Washington District 2 District 4 District 5 Number of Recreational Boats 254,775 27,060 26,319 34,092 Rec Boating Industry Businesses 1, Total Jobs 25,585 3,104 2,075 2,852 Annual Rec Boat Spending (Million) $1,300.0 $158.5 $143.2 $153.5 Total Economic Impact (Million) $3,180.0 $381.0 $337.4 $362.0 Category District 6 District 7 District 9 Other Number of Recreational Boats 32,866 16,706 15, ,689 Rec Boating Industry Businesses Total Jobs 3,709 2,690 1,866 9,289 Annual Rec Boat Spending (Million) $188.7 $132.6 $95.2 $428.3 Total Economic Impact (Million) $454.0 $323.2 $229.4 $1, Revenue Considerations Demand Limited capability to increase demand beyond forecasts Demographic uncertainties/challenges in the future Rates Limited opportunity to adjust rates Consider rate packages to increase occupancy Other sources of revenue Find/enhance other sources of revenue 14

15 29 Financial Considerations Construction costs: Consider less expensive design options Eliminate elements when reach end of useful life (covered moorage, floats and fingers) O&M costs Evaluate your profile relative to peer marinas Consider means to lower costs Privatize portions of the marina, Reduce staff/expenses Subsidize marina using other Port resources 30 Questions? Paul Sorensen BST Associates PO Box Kenmore, WA (425)