To Maximize Profit, Give Your Marina an Annual Check Up

Just as doctors recommend that people get annual wellness exams to stay healthy, the brokers at Colliers Leisure Property Group suggest marina owners have their properties analyzed each year to keep them operating at peak performance. Whether selling the property is top of mind or not, proactively conducting a strategic analysis can create value and increase the bottom line when the time comes to sell.

Year to year the economy changes, docks, buildings, and equipment age, and unforeseen events can occur. For marina owners today, rising interest rates have compressed cap rates and profit margins are much tighter than in previous years. Having an outsider take a good hard look at how both external and internal factors impact operations can help make the most of your investment.

Increasing Value
Colliers’ strategic analysis provides a look at the current market activity for marinas and the financial performance of the business, as well as what can be done to add value. The team looks at all aspects of the business such as insurance plans to ensure the marina has the best rate and coverage; untapped revenue streams that can come from adding services; and capital improvements that will make the property more appealing but not break the bank. The goal is to provide marina owners with valuable information on where their property sits in the current market environment and help them understand ways to increase the value moving forward.

“Our reports show marinas where they are and where they are situated for the future. There’s so little information on the marina industry for owners to gauge their value that we want to provide them regular guidance much like a stockbroker gives clients reports on how stocks are doing relative to the market,” said Dan Grovatt, national director of Leisure Property Group and vice president of Colliers. He said that whether owners have short or long-term plans to retire, by tracking the value of a marina year over year they can protect themselves from leaving money on the table when it comes time to sell.

The strategic analysis includes a deep dive into a marina’s financial reports, a look at opportunities within the property for added income or savings, and through Collier’s appraisal division, a look at comp data to see the state of the marina market. The process generally takes two to three weeks the first time but can be accomplished much faster in succeeding years. Grovatt said there are common areas where marina owners fall short of getting the most value from their property.

He said owners often don’t take opportunities to expand. “Marinas guess they could expand, but they don’t take the next step to see if an expansion is viable or permittable. We help them determine if a true expansion is possible and project what it would do to the marina’s value and bottom line,” Grovatt said.

Raising Rates
Another area he said marinas don’t explore is raising rates. “Marina owners are not fully tied into the market rates and what their potential opportunity rate-wise can be,” he commented. Collier’s analyzes how a marina can increase rates to meet the market and therefore generate more revenue from the same number of slips.

The third area Grovatt sees marinas fall short is in finding ancillary revenue streams like adding a boat club or boat rentals or finding a tenant to lease a part of an otherwise unused building. “Typically, there’s some opportunity onsite to make more money. We investigate what value an ancillary service could bring and if an owner can recoup his investment in a reasonable amount of time,” Grovatt said.

The team at Collier’s doesn’t charge marinas for conducting a strategic analysis because they know there’s so little marina market information available otherwise. Their goal is to build relationships with owners whether or not they have a sale on the horizon. Those relationships can be extremely beneficial as Grovatt indicated by a story of a client he had in Florida. The owner called Colliers because his insurance premium had nearly doubled, and he thought the rates seemed high relative to the market. Colliers was able to use their market data to back up his thoughts and they then introduced the owner to one of their trusted insurance brokers who found him the same coverage at half the cost. “That savings probably saved him about $1 million on the eventual sale of his property,” Grovatt said.

A strategic analysis is just one way that a marina broker can be a valuable contact for owners. And while there are some brokers that just represent buyers, there are many who represent sellers. Just be sure to ask. “Sometimes owners feel there aren’t brokers who advocate for them in a sale. Identify someone who represents you, your interests, and your goals,” said Grovatt. He suggests asking potential brokers how they’ve added value for other owners and requesting some specific examples of how they’ve worked with other marinas.

Whether selling a marina is key to retirement plans or owning one is an investment as part of a larger portfolio, an owner only gets one chance at maximizing the value of their asset.  The strategic analysis program is meant to be a tool for an owner to ensure that when the time does come to sell, they can be confident they have a plan in place to accomplish that goal.