Inside Self-Storage Magazine 6/98: Marina vs. Boat Storage
|Copyright 2014 by Virgo Publishing.|
|By: Dennis Kissman|
|Posted on: 06/01/1998|
Marina vs. Boat Storage
By Dennis Kissman
There are approximately 10,000 marinas in the United States today with space to accommodate about 1,100,000 boats, according to a recent survey conducted by the National Marine Manufacturers Association. This represents about 8 percent of the total registered watercraft in the United States.
Now, before you rush out to get into the marina business, be aware that even though there appears to be an imbalance in the supply and demand, less than 6 percent of the registered watercraft is dependent upon marinas for safekeeping. The balance can be kept elsewhere--often away from the water.
On the surface, it appears that anyone with space available could attract boats for storage. To a certain degree this is correct, particularly as the boat population continues to expand and waterfront property becomes too valuable to store boats. The rather new concept of off-water storage facilities--often referred to as dry-land marinas--is becoming a hot commodity. Why? There are three reasons:
If you are considering getting into the dry-land marina business, recognize that these watercraft and boat owners do not require or expect the same levels of service that waterfront marinas typically provide. The questions now become, "How can I capture this market?" and "Is it compatible with my self-storage business?"
People often assume that a marina and a boat storage facility are synonymous. This erroneous assumption has been the downfall of many owners of marinas over the years and could be for self-storage owners anticipating getting into the marina business. The definition of a marina is: "a harbor or basin providing berthing, supplies and services to pleasure craft." By definition, a boat "stored" at a marina is in the care, custody and control of the marina owner while the boat is there.
On the other hand, in the self-storage business, the owner rents out space for storage purposes to tenants and does not take control of the tenants' property. This seemingly minor difference can open a Pandora's Box of liability issues if you are not careful.
To put it another way, you must realize the marina owner is in a service business, while the self-storage owner forms a landlord/tenant relationship with his customer. If you are a self-storage operator and you offer boat-retrieval services--using your own equipment and employees to transport the craft--then you are crossing the line from a storage business to the marina business. More importantly, your liability increases exponentially.
What does the dry-land marina customer expect from the facility? Although he won't expect the convenience and ambiance that waterfront marinas offer, he does expect security, detailing and repair services. Other amenities, such as fuel or elaborate marine-retail stores are going to be site-specific, while restaurants, pools and tennis courts are not usually necessary. The customer is also indifferent to such things as boat brokerage or new boat sales. This means the dry-land marina owner must generate income from fewer profit centers than the typical waterfront marina. In the full-service marina, it is not uncommon for the owner to generate half of his income services from other than storage fees.
To get an idea of some of the major operating costs associated with a typical dry-stack marina--regardless of whether it is on or off the water--we need to establish the number of racks from which we can base our costs. From our operating and consulting experience, we believe a facility accommodating approximately 260 boats in racks is the most efficient to operate, considering the investment that must be made in fixed direct-operating labor and benefit costs, as well as the investment required in boat-handling equipment. A facility that can accommodate more than 260 racks will be more economical to operate, providing you have the market to fill the racks.
To give you some idea of the direct costs related to operating a dry-stack marina, let's look at the largest group of costs and their relationship to the operation. This group includes direct labor and benefits, equipment operating costs and marina operator's liability insurance. Each of these costs has a relationship to some other aspect of the operation. Using the example of a 260-rack waterfront marina as our most efficient operation, let's look as to how these costs relate.
The operating costs per rack for direct labor and benefits should range between $0.068 to $0.103 per hour for an average 10 hours per day in a seven-day-week operation. Equipment-operating costs, unlike labor costs that can be determined by the number of racks, are in direct relationship to the occupancy. Assuming the operation uses a forklift to handle boat launches directly into the water, the costs should approximate 26 cents to 30 cents per boat stored per month.
If you plan to launch boats from the rack directly onto a trailer, your labor and equipment-operating costs could be 20 percent to 50 percent higher due to the increased time required to properly position the boat. There are other launching methods to consider to reduce the increased costs associated with a dry-land marina, but the investment will have to be weighed against the ongoing operating costs on an individual location-by-location basis to determine economic impact.
The third significant cost to consider is marina-operator's liability insurance, which is based on total revenues from all sources, plus payroll costs. Current rates are between 0.9 percent and 1.2 percent of these totals. Be aware that insurance rates are a function of the insurance industry's overall loss-experience ratio in a geographic area. These rates can change frequently, so always check with your local insurance representative.
A dry-land marina can be a very profitable investment given the underlying land value for off-water sites. If you believe that a dry-land marina may be right for your location, make sure you develop a solid marketing plan that accomplishes the following:
More importantly: Don't try to compete with the waterfront marina; they are not your competition. Finally, remember that operating a dry-land marina is not the same as operating a storage business; don't try to make it the same. Consult with professionals in the marina industry to determine the feasibility of your project before you begin. The time and money spent up-front will outweigh the cost of living with a poorly conceived project.
Dennis P. Kissman is president of Marina Management Services in Boca Raton, Fla. He serves on the Facilities Development Committee of the National Marine Manufacturers Association. In addition, he is on the Boating Facilities Committee of the International (European) Council of Marine Industry Associations and is chairman of the Marina Accounting Standards Committee of the International Marina Institute. Mr. Kissman may be reached at (516) 391-6447.