June 1, 1998

6 Min Read
Inside Self-Storage Magazine 6/98: Marina vs. Boat Storage

Marina vs. Boat Storage
A primer on the differences between in-water and dry-land storage

By Dennis Kissman

There are approximately 10,000 marinas in the United States today with space toaccommodate about 1,100,000 boats, according to a recent survey conducted by the NationalMarine Manufacturers Association. This represents about 8 percent of the total registeredwatercraft in the United States.

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Now, before you rush out to get into the marina business, be aware that even thoughthere appears to be an imbalance in the supply and demand, less than 6 percent of theregistered watercraft is dependent upon marinas for safekeeping. The balance can be keptelsewhere--often away from the water.

On the surface, it appears that anyone with space available could attract boats forstorage. To a certain degree this is correct, particularly as the boat populationcontinues to expand and waterfront property becomes too valuable to store boats. Therather new concept of off-water storage facilities--often referred to as dry-landmarinas--is becoming a hot commodity. Why? There are three reasons:

  • Not enough in-water storage space.

  • Environmental concerns regarding the use of waterfront property.

  • Population density increases and restrictions being placed on trailer and boat storage in residential communities.

If you are considering getting into the dry-land marina business, recognize that thesewatercraft and boat owners do not require or expect the same levels of service thatwaterfront marinas typically provide. The questions now become, "How can I capturethis market?" and "Is it compatible with my self-storage business?"

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People often assume that a marina and a boat storage facility are synonymous. Thiserroneous assumption has been the downfall of many owners of marinas over the years andcould be for self-storage owners anticipating getting into the marina business. Thedefinition of a marina is: "a harbor or basin providing berthing, supplies andservices to pleasure craft." By definition, a boat "stored" at a marina isin 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 storagepurposes to tenants and does not take control of the tenants' property. This seeminglyminor 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. Ifyou are a self-storage operator and you offer boat-retrieval services--using your ownequipment and employees to transport the craft--then you are crossing the line from astorage business to the marina business. More importantly, your liability increasesexponentially.

What does the dry-land marina customer expect from the facility? Although hewon't expect the convenience and ambiance that waterfront marinas offer, he does expectsecurity, detailing and repair services. Other amenities, such as fuel or elaboratemarine-retail stores are going to be site-specific, while restaurants, pools and tenniscourts are not usually necessary. The customer is also indifferent to such things as boatbrokerage or new boat sales. This means the dry-land marina owner must generate incomefrom 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 thanstorage fees.

To get an idea of some of the major operating costs associated with a typical dry-stackmarina--regardless of whether it is on or off the water--we need to establish the numberof 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 efficientto operate, considering the investment that must be made in fixed direct-operating laborand benefit costs, as well as the investment required in boat-handling equipment. Afacility 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. Thisgroup includes direct labor and benefits, equipment operating costs and marina operator'sliability insurance. Each of these costs has a relationship to some other aspect of theoperation. Using the example of a 260-rack waterfront marina as our most efficientoperation, let's look as to how these costs relate.

The operating costs per rack for direct labor and benefits should range between $0.068to $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 ofracks, are in direct relationship to the occupancy. Assuming the operation uses a forkliftto handle boat launches directly into the water, the costs should approximate 26 cents to30 cents per boat stored per month.

If you plan to launch boats from the rack directly onto a trailer, your labor andequipment-operating costs could be 20 percent to 50 percent higher due to the increasedtime required to properly position the boat. There are other launching methods to considerto reduce the increased costs associated with a dry-land marina, but the investment willhave to be weighed against the ongoing operating costs on an individuallocation-by-location basis to determine economic impact.

The third significant cost to consider is marina-operator's liability insurance, whichis based on total revenues from all sources, plus payroll costs. Current rates are between0.9 percent and 1.2 percent of these totals. Be aware that insurance rates are a functionof the insurance industry's overall loss-experience ratio in a geographic area. Theserates 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 valuefor 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:

  • Focuses on the reasons your market exists;

  • Profiles your customer base; and

  • Highlights your own areas of expertise.

More importantly: Don't try to compete with the waterfront marina; they are not yourcompetition. Finally, remember that operating a dry-land marina is not the same asoperating a storage business; don't try to make it the same. Consult with professionals inthe marina industry to determine the feasibility of your project before you begin. Thetime and money spent up-front will outweigh the cost of living with a poorly conceivedproject.

Dennis P. Kissman is president of Marina Management Services in Boca Raton, Fla. Heserves on the Facilities Development Committee of the National Marine ManufacturersAssociation. In addition, he is on the Boating Facilities Committee of the International(European) Council of Marine Industry Associations and is chairman of the MarinaAccounting Standards Committee of the International Marina Institute. Mr. Kissman may bereached at (516) 391-6447.

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