Marinas

SIC 4493

Companies in this industry

Industry report:

This category covers establishments primarily engaged in operating marinas. These establishments rent boat slips and store boats, and generally perform a range of other services including cleaning and incidental boat repair. They frequently sell food, fuel, and fishing supplies, and may sell boats. Establishments primarily engaged in building or repairing boats and ships are classified in SIC 3731: Ship Building and Repairing or SIC 3732: Boat Building and Repairing. Establishments primarily engaged in the operation of charter or party fishing boats or rental of small recreational boats are classified in SIC 7999: Amusement and Recreation Services, Not Elsewhere Classified.

Industry Snapshot

Marinas are usually very small operations, with about half of marinas employing between five and nine workers, most of whom are seasonal. The National Marine Manufacturers Association (NMMA) estimated that in 2008 there were more than 800,000 boat slips in the United States at the 12,000 marinas, boatyards, yacht clubs, dockominiums, parks, and related facilities.

The number of marinas in the U.S. has held steady in the first decade of the twenty-first century after an expansive period between 1992 and 1997 when the number of marinas increased 26 percent, showed a 53 percent increase in revenues, had an increase in employees of 27 percent, and had a 49 percent increase in annual payroll. The number of people who enjoyed boating was 78.4 million in 1997 before declining to less than 70 million in 2001. By 2006, the number had risen to 73 million.

According to industry statistics, there were an estimated 3,851 marinas, 1,766 boat yards (storage and incidental repair), 794 marine basins, and 59 yacht basins catering to boaters that shared an estimated $2,538.8 million in revenues for 2009 employing 34,370 workers.

In 2009, the industry reported new boat sales declined 19 percent to 572,500 units as the economy worsened. New boat and motor sales fell 24 percent compared to 2008, as did the total number of recreational boaters from an estimated 70 million in 2008 to 65.9 million.

Organization and Structure

Marinas, always on or adjacent to the water, have varied physical shapes and sizes, offer a diverse range of services, and lend themselves to different ownership arrangements. Each marina has limitations and options to serve the boating public.

A marina rents, leases, or sells slips, usually in a boat basin with piers and stationary or floating docks. More than 8,000 marinas, with about 400,000 slips, sell marine services. There are moorings and anchorages for about 33,000 boats. More than 200 dry slip or land-based, often stacked, boat facilities store up to 150,000 boats on racks in buildings or on open land. Approximately 1,100 boatyards provide wet slips. More than 100 dockominiums berth boats in clusters of individually owned docks. More than 80 percent of the marinas provide yard services to maintain, repair, or build boats.

Financial Structure.
Marinas are located on gravel pits, reservoirs, lakes, rivers, coastal waterways, and oceans. All marina ownership is held by the owner of the associated upland. Water rights are leased from the government. In many states, a government body holds coastal water rights for the public interest.

About 70 percent of marinas are privately owned, for-profit businesses that sell services to the public. About 1 to 2 percent of the marinas are cooperative or condominium housing development or yacht club marinas, which serve their members and offer reciprocity privileges to other associations. The remainder are municipal, state, and federal government marinas, which are open to the public at minimal or no cost, although some federally owned marinas are exclusively used by the military.

More than 70 percent of marinas are owner-operated, stand-alone facilities. Corporations, families, and retired business owners provide slips and sell fuel and minimal provisions. Investment sources are often friends, family, or local banks and savings and loans establishments. Larger marinas are often expanded owner-operated facilities.

Full-service marinas are owned by private or publicly traded real estate corporations. Some offer extensive boatyard services. Others are development complexes. They showcase marinas in two architecturally consistent mixed-use categories that maximize land-bound sales. Urban revitalization complexes integrate commercial space with residences. Resorts emphasize water- and land-based recreation and sports. Investment sources are banks, savings and loans establishments, venture capitalists, private and public industrial and recreational development bonds, investment banking, pension funds, and life insurance companies.

Full-service marinas have broad profit centers. Product sales are derived from slip and building fees, diesel, gasoline, propane and alcohol fuels, engine oil, vending machine products, marine and grocery goods, electronics, custom-built equipment, and boats. Services available include boat washing and cleaning; wood, fiberglass, rigging, and engine maintenance and repair; propeller painting; haul outs; and diving.

Marinas rent or lease wet or dry storage by the boat's or slip's length or slip's square footage. Marinas charge transient boat owners a daily or weekly rate. Permanent customers pay a monthly, seasonal, off-season, or annual rate based on competitive and comparable local prices. Therefore, other sales usually account for a significant amount of marina profits.

Full-service marinas draw the demanding boating public with amenities including, but not limited to, deep water for boating; safe tie-ups; launching ramps; dock hand and concierge service; water, electricity, television, and telephone service to the boat; sewage pumping; and storage facilities.

Background and Development

The early concept of the marina, including public access and common ownership of waterfront property for commerce and transportation, dates to Roman Law of 2,000 years ago. The concept was lost during the Dark Ages. The Magna Carta restored public rights to coastal tidelands in 1215 A.D.

In the United States, marinas developed slowly. The U.S. Congress passed The River and Harbor Act of 1899, which authorized the Secretary of the Army, through the Army Corps of Engineers, to approve the building of any structure on or over navigable waters. Recreational boating increased. The wealthy built private harbors in the early 1900s. By the 1930s, the term marina (Italian for small craft harbor) described the recreational boat facility.

After World War II, the middle class bought recreational boats with discretionary income. The marine industry used lighter-weight aluminum and fiberglass developed during World War II to mass-produce durable low-maintenance marina docks and other products. Simpler welding techniques refined steel construction for hoists. Inexpensive concrete was also available for piers, docks, and pilings.

Until the 1960s, most marinas were owner-operated. Then developers showcased the marina as the first stage in long-term, mixed-use plans for urban revitalization and resort complexes. As a result of the increased recreational boating across the country, Congress broadened The River and Harbor Act in 1968 to require approval for building recreational structures, further protecting U.S. waterways.

In the 1970s, a series of devastating events rocked the marine industry. Double-digit inflation, 20 percent interest rates, fuel pump lines, the Arab oil embargo, a federally proposed weekend energy conservation motor boating ban, and environmental regulations all adversely affected the marina economy.

Legislation.
The 1972 amendments to the federal Water Pollution Control Act required permits to regularly discharge waste water. The Coastal Management Act controlled development to protect water quality and coastal and inland wetlands. The Clean Water Act of 1977 further protected natural resources. The Environmental Protection Agency and the National Oceanic and Atmospheric Administration released guideline documents to control non-point source pollution.

The early 1980s provided the marina industry with a friendlier business environment. Increased discretionary spending, tax changes, declining interest rates, and laxly enforced regulations all spirited growth. Amendments to the Federal Tax Reform Act of 1986 allowed private marinas on port district property to continue tax exempt financing for equipment, docks, and marina-related buildings.

The marina industry has remained non-standardized. According to Neil Ross, past president and co-director of the International Marina Institute, the marina industry, in its evolution, can be compared to the roadside service industry when motels were replacing family-owned cabins. However, it is changing rapidly in response to management, environmental, and real estate demands and opportunities.

Approximately 80 percent of tidal flow and inland coastline is private commercial and residential space. Marinas only allow access to their customers and service workers due to security and insurance regulations. Actual public access to the waterfront is limited to the 20 percent of municipal, state, and federal marinas. With an increase in use, this limited shoreline began proving insufficient to meet the needs of the expanding boating public.

The marina industry began coordinating with government, banks, and insurance companies to maximize cost-effective, yet creative, business procedures. Financiers consolidated foreclosed marinas into $100 to $150 million portfolios for publicly traded real estate investment trusts (REITs), freeing banks from the responsibility of disposal. Developers submitted long-term plans to accelerate the three- to five-year complicated government permitting process for dredging and filling. Brokers began selling dockominiums and other large facilities so developers could immediately recoup some investment costs. Investors replaced owner-operated businesses with retail chains and franchises to cut costs. In addition, cash-strapped municipalities increasingly investigated the sale of public marinas to private owners. Dry stack marinas, which required less waterfront volume, were an increasing presence as well.

According to 1998 statistics, 13 million families owned boats in the United States, and 570,000 new boats of all types were sold that year. The NMMA reported that another eight million persons were interested in buying a boat some time in the future. In 1997, some 9,967 marina facilities provided storage space and sold marine-related services and products to recreational power and sail and commercial watercraft owners. No standardized format for determining marina industry assets existed, because a "marina" may refer to a facility with only four docks or one with thousands of slips as part of a larger facility.

The marina industry experienced rapid growth and increased annual sales in all climate zones from 1982 through 1987, the year retail sales topped $8 billion. This was the longest period of uninterrupted growth in the industry's history. From the late 1980s through the early 1990s, the industry suffered increasing financial difficulties. In 1992, boat slip vacancies averaged from 20 to 30 percent, although this figure was lower in the Sunbelt states. By 1996, even marinas in southern California were experiencing increasing vacancy rates, some exceeding 40 percent, and generally, vacancies signify additional marina retail losses. A slip customer purchases more products and equipment from the marina than the boating public based elsewhere. Marina expansion and development slowed in the early 1990s, a reflection of a stagnant national economy as well as poor weather conditions. By the late 1990s, the number of marinas in operation had stabilized, with a prediction for increased growth due to the positive economic outlook.

Boating Industry 's 1998 random survey of marinas around the country indicated stable occupancy rates, with a slight increase, and a 90-plus percent occupancy rate during peak seasons. In the 1990s, marina owners and operators began to address several challenges to the industry, including periods of economic instability, increased marina insolvencies, stringently enforced environmental regulations, a lack of natural waterfront with adjacent land, and the loss of traditional lending sources. Conversely, market forces created more demand for marina facilities, especially in the Southeast and the West.

Despite a tough economic climate and the increased cocooning of Americans in a post-September 11, 2001 environment, boating was still enjoying relatively clear sailing in 2002. Estimates from the NMMA showed that in 2002, there were 68.8 million boating participants in the United States, down slightly from 69.4 million in 2001. However, the number of boats in use rose during 2002, from nearly 17.2 million in 2001 to 17.4 million in 2002. Retail boat sales were also up for the year, from $28.5 billion in 2001 to $29.2 billion in 2002, as were pre-owned boat and motor sales, which rose about $130 million during the same time period.

To address ongoing environmental issues and limit future contamination, many states have formed incentive-based marina pollution prevention outreach programs. One such program is the Clean Marina Program, which involves states and organizations including California, Connecticut, Florida, Massachusetts, Maryland, North Carolina, South Carolina, Texas, Virginia, and the Tennessee Valley Authority. The program includes an advisory committee, a coastal nonpoint source management program, guidebooks, educational outreach, grant funds, and coordinates with other programs. Similar partnerships include Boat US, Ocean Conservancy, Marina Environmental Education Foundation, States Organization for Boating Access, and the National Clean Boating Campaign.

During the mid-2000s Florida marine associations were fighting back against developers who were scooping up marinas to build high-priced condominiums. In February 2005 Palm Beach approved a $50 million bond that provided the county with the ability to buy out existing private marinas and expand public boat ramp facilities in an attempt to combat a growing shortage of public dock space. The docking shortage in Florida has been aggravated by the need for marinas to update and expand facilities to accommodate more--and bigger--boats. Often, the smaller, privately owned marinas lack the funding to underwrite expansion and expertise to wade through the environmental regulations necessary for upgrade approval. As a result, they are enticed to sell to large corporations who have the ability to redevelop the facilities, often into hotels and other commercial waterfront endeavors, rather than improving the marinas.

Marina options for smaller boats included "dockominiums." Boat owners purchase a slip, pay property taxes, retain the title to the slip, and must provide their own maintenance, much like an owner of a condominium. The dockominium concept began to catch on as slip owners saw their property appreciate in value by about 15 percent annually. Such ownership options are expected to be popular as demand continues to outpace docking space.

California, the state with the most boating registrations, was also experiencing more boat traffic during the mid-2000s. San Diego marinas were operating between 85 and 95 percent capacity during late 2004, with slip rentals running between $12 and $20 per foot while Newport Beach slips rates averaged about $32 per foot. California's megayacht traffic also expanded, especially after the state repealed its luxury tax in the late 1990s.

In February 2005 New York-based real estate development firm Island Capital Group LLC announced plans to redevelop existing marinas as well as build new marinas at various resort locations around the world. According to David Moin in WWD, Island Capital's plans "will encompass state-of-the-art docking for mega-yachts, smaller cruise ships and other craft as well as upscale shopping, dining, hotel and recreational facilities. The intent is to create 'lifestyle destinations' that draw the rich, the super rich, and the aspirational, from land or sea." The prototype marina, located in St. Thomas, was in its first phase of redevelopment in 2005. "There is tremendous pent-up demand for high-level marina facilities. Most don't have a retail experience that's any fun," Andrew Farkas, chairman and CEO of Island Capital told WWD. "Marinas used to be about storage. Now they're about hospitality and entertainment."

The fears of losing significant marina space did not come to fruition by the late 2000s. While some Florida marinas sold to budding condominium projects, Florida was the state with the most marinas in 2006, followed by New York, Michigan, Vermont and California. Those five states accounted for almost half of the marinas in the nation and approximately 40 percent of the boat slips.

The number of boats in use in 2006 was approximately 18 million, with roughly 73 million Americans enjoying recreational boating. Boat registrations surpassed 13 million for the first time since 2001, and the boating industry grew to a record $39.5 billion in sales and services. Even with the economy and rising fuel prices a concern, it was estimated that 75 percent of all boat owners in 2006 had a household income of less than $100,000 annually.

At a time when some marinas were worried about self preservation, many others were concerned with conservation. The voluntary Clean Marina Program grew to encompass more than twenty states and Washington, D.C., enabling the number of certified Clean Marinas to increase 36 percent since 2005. "One of the most useful parts of the Clean Marina guidebooks is that they serve as a 'one-stop shop' for the busy marina staff, outlining all applicable environmental laws," Glenn Dolphin, Clean Marina Coordinator for the Oregon State Marine Board, told BOAT/U.S. Magazine. "You can learn how to start up a realistic recycling program in your marina, and figure out if you need to have an oil spill prevention plan, all in one guidebook." Five marinas in the Northeast might have wished they got on board with the program sooner. In July 2006, the federal Environmental Protection Agency (EPA) issued enforcement actions and fines to five marinas and boatyards with penalties of up to $52,300 imposed on facilities for failure to properly label and handle hazardous waste, failure to have oil spill prevention plans, and failure to have stormwater plans.

Whether the individual states will be able to maintain their Clean Marina programs is a concern, however. The National Oceanic and Atmospheric Administration (NOAA) and the EPA have provided the bulk of the funding. The NOAA has directed a total of $2.9 million to Clean Marina programs since 2001 and had a peak of more than $1 million in 2002. As of 2007, though, the NOAA Clean Marina budget was zero.

Current Conditions

According to the National Marine Manufacturers Association's (NMMA) 2007 U.S. Recreational Boat Registrations Statistics report, there were 13 million vessels registered in the U.S., up slightly from 12.9 million in 2006. In addition, the top 10 states based on registrations in 2007 were Florida (992,000 registered vessels); California (964,881 registered vessels); Minnesota (866,496); Michigan (830,743 registered vessels); Wisconsin (617,366 registered vessels); Texas (599,567 registered vessels); New York (494,020 registered vessels; South Carolina (442,040 registered vessels); Ohio (415,228 registered vessels); and Illinois (379,454 registered vessels).

During 2009 marina operators were faced with "row upon row of empty slips." One such marina was Marina del Rey in Florida with 4,731 slips where the vacancy rate climbed from 2.8 percent in 2008 to nine percent in 2009. Santos Kreiman, director of the Los Angeles County Department of Beaches and Harbors and owner of Marina del Rey told the Los Angeles Business Journal in April of 2009 they had gone from long waiting lists for what was viewed as "...hot property is now going begging."

If the recession wasn't enough for Florida marina owners and operators, the worst oil spill disaster in American history that occurred in mid-2010 threatened their livelihood further. "When you can't go out in your boat because of oil...you basically stop using your boat," John Sprague, president of the Florida Marine Industries Association told the Palm Beach Post in June 2010, adding that "When that stops, direct sales like fuel, ice and sodas and beer and fishing tackle stop...if you were in the Gulf right now, would you go buy a boat?"

The same story played out in Orange Beach, Alabama where the oil spill forced the Intracoastal Waterway to be totally closed off to boaters while the oil spill was cleaned up. That news sent boaters escaping while they still had the chance. Of Orange Beach Marina's 161 boat slips, only 68 were rented. While the marina's occupancy had plummeted 68 percent compared to the previous season, gas sales also fell 80 percent year over year. Marina operations manager, Sarah Armstrong said "if things don't improve by next season, a lot of people in this industry will lose their jobs and some marinas may even go out of business,' cited in the June 2010 issue of Marina Dock Age.

On a national level, marinas were having to deal with yet another issue; abandoned vessels brought about from the economic downturn. While individual states were busy putting laws into place to deal with the overwhelming problem, it was no comfort to marinas. Richard Moore, chief of the Florida and Wildlife Commission's boating division told USA Today in August 2010, "...marinas have had to close or raise prices, pushing boat owners out." In fact, in San Francisco Bay the total number of abandoned vessels in just the first quarter of 2009 alone reached the total for all of 2008.

Industry Leaders

Marinas vary widely in terms of size, services, and dockage capacity. However, the largest marina businesses provide full services. The largest marina in the United States is Marina del Rey in California, which boasts more than 8,000 slips, the majority of which are occupied by large yachts.

Westrec Marinas, Flagship Marinas, and California Yacht Marina are among the larger of the some 50 operators that own more than one marina.

Workforce

The marina industry's lack of standardization is reflected in its employment practices. Marinas generally employ staff and bring in independent contractors or concessionaires to whom the marina may lease space or charge to work in the facility.

The stand-alone marina labor force includes the self-employed owner-operators and additional staff as needed, who serve as dock masters, retailers, maintenance managers, and bookkeepers. Often workers are part-time or seasonal. During slow times of the year, the staff repaired facilities or worked at other marinas, often in a warmer climate zone. Full-service marinas often employed highly specialized employees as well. Various general managers, service managers, operations managers, and controllers were often part of the payroll of larger establishments.

Large, full-service marinas can have up to 100 employees, but most marinas have fewer than ten workers. The annual average revenue per worker is approximately $120,000.

The industry as a whole was standardizing employment and training. The International Marina Institute began a certified marina manager program in 1992, which emphasized standard accounting and other financial procedures, environmental processes, and education of customers. In 2005 the Marina Operators Association of America's membership included more than 1,500 marinas, boatyards, yacht clubs, and other boating facilities.

Research and Technology

New technologies boost marina profits and management efficiency, provide weather protection, meet environmental regulations, and expand space. Marina franchises and management companies are fledgling innovations. Management retraining and computer software lead in office and on-the-dock changes.

In the realm of structural changes, docks and other structures were increasingly made of refined composite structures designed to withstand the elements more effectively than wood. Marinas have increasingly turned to new products with environmental and fire-resistant attributes. Engineers in the 1990s also redesigned boat yard and dockside disposal systems to meet environmental regulations. Space limitations were resolved with offshore islands for docking, refueling, and mixed-use facilities such as floating hotels. Another area of enhanced development in the late 1990s was increased space for dry-dock storage created by new technology and equipment facilitating dry-stack storage. Older marinas continued to utilize large vacant parcels of real property to store boats off-season. However, new technology, including the development of powerful forklift-type vehicles, permitted the lifting and stacking of boats into shelf-like racks for off-season storage.

© COPYRIGHT 2018 The Gale Group, Inc. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. For permission to reuse this article, contact the Copyright Clearance Center.

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