Marina Dock Age, May/June 1998

Rental Boats: Predict the Pitfalls
by Dennis P. Kissman

Today’s marina owner must often look to sources of revenue beyond slip and storage fees to make a marina profitable. There are a number of ways to increase revenues that should be considered before making the final decision about which to pursue. The question then becomes: Which one should you choose and why?

There are a few rules of thumb that I recommend to our clients. First, is there a market for this service? Second, is it compatible with your existing revenue streams? Third, can you use existing assets to generate the additional revenue without requiring a large capital outlay? This may include staff, equipment and facilities. If the answer to these questions is yes, the change may improve your bottom line.

One of the sources of revenue that I am often asked about is the rental of boats or personal watercraft. This can be a very good source of additional revenue, but when it comes to profits, it may be a different story.

There are several factors that can make boat and personal watercraft rentals either a success story or failure. Rentals, by their very nature, are high maintenance. Unless you already have a service department that is qualified and ready to continually service your rental pool, the chances of being profitable are rather slim. When the equipment is down for servicing, it can’t be rented, so not only do you have an outlay of expenses, but also a revenue stream to cover the cost.

If the craft you intend to put into your rental fleet is not designed to meet the rigors of a rental operation, down time will probably exceed rental time. This is particularly true when your rental fleet begins to age. Marinas that have a boat dealership connected with their operation want to put their outdated inventory or trade-ins into the rental fleet. I strongly recommend against this practice. If you can’t sell the boat in your market, why would somebody rent it? I’m not implying that it’s not a good boat; it’s just not a good boat for your market. Continue »