As I go about surveying marinas as part of our market analyses, one question I ask of owners/managers seems to surprise them. When I ask them what their market position is, I usually get an answer that is a question, like “what do you mean by market position?” Marina owners/managers are savvy and know what their competition physically has, but do they know where they lie in the spectrum of demand? Too often, the day-to-day operations take precedence, so it’s not surprising that I don’t get an answer to this question.
I believe every marina should have a survey in its file that it updates once every few years, if not annually. That survey should be a table that shows each major marina component of their competitors (fuel, hauling available, types of repairs, etc.). Services should also be included (how many single 30-amp slips, how many double-30 amp slips, etc.). When combined with rates for various slip size ranges and occupancy, some very clear patterns just stand out on the page.
Why do this survey? For one, so when a marina competitor upgrades its services as the result of demand that may be a signal that the marina owner/manager needs to change their mix as well. More importantly, this survey shows the position of the marina within the demand spectrum. It can help answer questions such as “why do I always have a 10 percent vacancy rate”, “why are my on-site amenities not getting as many customers as I would like” (yes, there can be other factors here too), “what slip rates should I charge” and it can show how at risk the marina is to changes in demand.
Speaking of which, the old Economics 101 concept of marginal demand is affecting select marinas in various sub-markets. Those that benefited as the next marina in line when their superior customers were 100 percent full are “marginal demand marinas”. Their demand is elastic, meaning their occupancy goes up by material amounts when demand is increasing or high, but drops down by large amounts when demand declines. Inelastic demand marinas are those that always do well regardless of the economy.
The key to the “marginal demand marina” is cost containment. Knowing your marina will be more adversely affected from a recession necessitates cost conservatism. Over-expanding, over-leveraging, over-hiring and over-investing at the wrong time for these marinas is risky.
The issue is not whether a facility is a “marginal demand marina” but whether owners and managers recognize it and act accordingly. The only way to know is to have this type of survey, update the rates and occupancies annually, look at how your competitors are changing, and examine the relationship between rates, occupancy and services and to use this as a part of your planning process. And if you happen to have one that makes my job easier, so much the better!
