State of the Industry Post Covid-19 Boom

While mask-wearing, obsessive hand washing and lockdowns may seem a long-ago memory, the impact on the country from the pandemic still lingers. The recreational boating industry is no exception. The industry celebrated the surprise boom that hit as boaters chose to escape isolation by heading to the water, but then the boom subsided. Where does that leave the boating industry today and how does the COVID-19 boom factor into the overall evolution of recreational boating?

Impact on Marinas
Rick Chapman, general manager at Sunnyside Marina in Minnesota and the Association of Marina Industries, chairman of the board of directors, has seen many changes in the industry in his career. He’s spent 19 years at Sunnyside, which is a full-service, 256-slip facility, owned by its slip holders. “I work at the pleasure of the board of directors and that means I have two roles, as GM of the marina and employees, but also the manager of the association,” he said.

When Covid hit, the marina went from 100% occupancy occurring towards the end of the boating season each year to slips being full in January. Since then, the marina has retained a 100% occupancy. That wasn’t all that changed.

Chapman said that for years the industry complained that boaters were just getting older and there was not a next generation coming aboard. “Covid happened and we got hit with brand new boaters like crazy. But now our industry must figure out how to keep them. So far, we’re doing a good job. We haven’t lost the boom, but we must continue to give them everything they need and convince them the boating lifestyle is cool,” he said.

Catering to boaters is something Chapman said has been one of the biggest changes he’s seen in his career. He explained that when he started at Sunnyside in 2005, the marina held old houseboats and it was a do-it-yourself facility. “Today we’re full of very high-end cruisers, starting at 50 feet, and the boat owners have no interest in DIY. The change happened slowly, but it’s amazing where we are. The demands on our time and skill are so much higher. So much more is expected,” he said.

Compounding the drive for more service is a lack of marine technicians and other marina personnel. The marine industry shares the same challenges seen in the automotive and aviation fields, but Chapman believes boats come in last of the transportation manufacturing options. Everyone is exposed to cars and planes, but the world of boats remains foreign to many. That makes the challenge to find technicians even harder, so those in the industry must be creative and nimble in bringing people aboard. “I have a 21-year-old working for us who started washing boat bottoms here when he was 18. He came to me at the end of the season and said he’d like to be a technician, so I made him my first apprentice. If someone walks in your office and says this is what I want to do, you need to be ready,” Chapman said.

Chapman agreed that the marine industry is cyclical and there will always be boom and bust times because boats are bought and sold depending on the economy. “Having managed through the 2008 collapse and the four years it took to recover, no matter how good things are, I’m always afraid the other shoe could drop,” he said. But for now, he sees the expansion of corporate-run marinas as continuing to grow, ushering in changes in how marinas operate and look, as well as a steady stream of funding. That he believes, along with lifelong boaters will keep the industry afloat.

Impact on Dealers
Matt Gruhn has been working in the marine industry for 27 years, eventually working his way up to lead the Marine Retailers Association of America (MRAA). His comment on the time he’s spent in the industry was,” If you look at the industry as a whole, the more things change, the more they stay the same.”

He said the conversations right now are the same as they were during the Great Recession in the early 2000s. While boats were flying out of showrooms and manufacturers couldn’t keep up with demand during Covid, the brakes have come on. Gruhn said dealers are getting back to the fundamentals of running a business — how to get customers interested in the product, through the front door and turned into buyers. Marketing and service are back at the forefront of operations.

He said he isn’t worried about the state of the industry because he too believes the marine industry is cyclical and responds to the economy. Gruhn commented, “In 2008 it felt like the sky was falling. We lost 35% of dealers. That was an extreme part of the cycle. But we had the same conversations that it was a time to get your house in order. What efficiencies could be incorporated to help you outperform the competition? We have recession lows and pandemic highs, but the fundamentals are the same. Discipline, the culture of your business, your operational systems and processes, are the things that matter,” he said.

While the culture of marinas has changed through the years, dealerships still serve the same need, to sell and service boats. What has changed is how that work is done. Where customer management was done through boxes full of index cards with contacts, now everything is automated. Gruhn said that has enhanced the sophistication and professionalism of dealerships, making them better able to work with today’s more knowledgeable and discerning buyers. AI data management, CRM systems and texting platforms, all streamline how dealers and buyers interact.

However, despite everything going online, Gruhn said dealerships will always have a place. “People will always go into dealerships or attend boat shows to see the boat live. They need to understand what boating looks like and feels like and how their family fits into the vision. It’s a physical experience being on a boat and that must be felt firsthand,” he said.

How to get those customers in the door is the concern of dealers today. Gruhn said the high interest rates have had a significant impact. He pointed out that sellers not wanting to pay a higher rate is just part of the equation. “Dealers are paying that higher interest rate on their floorplan line of credit. Their expenses have gone up and their revenues down. If a boat sits for long, the bank reduces the value of it and dealers have to pay down the value. They maybe spent $50-60,000 a year during Covid and now they can spend that each month,” he said.

Despite the choppy waters now, Gruhn believes rates will go down soon and he expects customers to feel better about taking out loans. He’s hopeful that will spark interest in boat buying again. He also sees an exciting future ahead for boating with enhanced technologies making boating that much easier and better. He commented that joystick steering and docking alone took away one of the biggest fears about boating and he expects more innovation to come.

“When we’re slow in retail markets, it inspires companies to innovate and figure out how to generate more consumers. We’ll see more new things come out of this current environment and those new things will attract new people to boating,” he said.

Impact on Manufacturers
As chief administrative officer & senior vice president of operations at NMMA, plus 20 years in the industry under his belt, Robert Newsome has had a front-row seat to watch the changes in the marine industry. “We’ve seen tremendous innovation, adaptation and resiliency, producing incredibly durable products that can last over 40 years,” he said. He cites advancements in marine technology that have reduced engine emissions by 90% while increasing efficiency by more than 40% along with a myriad of innovations that have enhanced and simplified boating for both experienced and new boaters.

Newsome credits the NMMA certification program for helping boost the innovations. “The NMMA Certification program has helped manufacturers build safer and higher quality products for the millions of boaters who take to the water each year,” he said. The NMMA Certification program is a globally recognized product certification program for boats, yachts, boat trailers, PWCs and marine oils that serves as the benchmark for product safety in the recreational boating industry.

While the manufacturing industry has responded to new environmental pushes and technological demands to create safer and more efficient boats, the industry remains tied to the economy—no matter how great the boat, if the economy is shaky, boat demand drops. Newsome said more than one million first-time boat buyers entered the market between 2020-2022 despite supply chain challenges. Those unprecedented numbers have cooled under high interest rates and low consumer confidence, but Newsome sees this as an eventual outcome after an unexpected boom. “The state of consumers’ wallets impacts new boat sales. While the availability of retail credit remains healthy, the higher cost of credit is driving an oversupply of small entry-level boat categories,” he said.

To compensate for lower demand, manufacturers and dealers closely manage the pipeline of new boats to the market, watch credit availability and consumer demand, and lean into customer engagement and marketing. There are, however, other challenges that may not be as simple to compensate for.

Newsome sees the largest threat to the entire industry now as NOAA’s proposed expansion of its North Atlantic Right Whale Vessel Strike Reduction Rule. Under this proposal, recreational boats 35 feet and longer could not travel faster than 10 knots (11mph) in the Atlantic Coastal waters from Massachusetts to central Florida for up to seven months of the year. In some areas, those slow zones could extend out to 90 miles offshore. “This rule would have severe impacts on local economies, jobs and boater safety. There is a better technology-driven solution that can protect boaters and marine life,” said Newsome. He pointed out that NOAA and the recreational boating industry have long collaborated to protect waterways and marine life, and he was disappointed NOAA didn’t engage the industry when they created the rule. “If it goes into place, the rule is expected to halt boating activity and sales along the Atlantic, and create a ripple effect across the country,” he said.

The entire marine industry, dealers, manufacturers and marinas are working together to thwart this threat and better ensure bright days ahead. It’s not the first time the industry has faced a challenge and it likely won’t be the last, but it will survive and thrive. Just as the industry changes with the times, it also relies on the steadfast desire of boaters to step away from shore and spend some time on the water.