When COVID-19 struck down the economy in 2020, it was the marine industry that converted crisis into opportunity as customers seeking a safe mode of recreation bought or rented boats in droves.
Now, as the Fort Lauderdale International Boat Show approaches its 63rd edition, industry sales are slowing, some brokerage firms say, as war continues to flare in Ukraine, inflation grips the economy, and supply chain problems slow vessel production.
The confluence of events appears to have dampened the surge of COVID-driven business that was caused by limited travel options over the previous two years. A large number of people, industry officials note, turned to yachting and other forms of boating as an alternative mode of leisure travel.
But last week, the National Marine Manufacturers Association reported that new powerboat sales year-to-date were down 18% through July against the same period in 2021.
Still, several categories “continue to outpace pre-pandemic [year-to-date] sales levels, including new pontoons, wake sport boats and yachts,” the association said in a statement.
“In the first seven months of the year, new boat sales have dipped below our 2019 pace, demonstrating that the combination of economic uncertainty and the expected return of competition for consumers’ attention are starting to show their impact,” said Frank Hugelmeyer, NMMA president. “This is not unique to boating as most industries are experiencing pressures such as inflation, a volatile stock market and talk of a global recession have grown.”
But the association sees a silver lining in “persistent supply chain turbulence” and other challenges.
“They have prevented us from overproducing as some other industry sectors did throughout the past two years,” the association said in a statement. “Marine dealer inventories remain fairly lean signaling that pipelines are still being refilled, leaving the industry in a healthier position than past slowdowns in recent history.”
“What we’re really watching is that over-arching shift in consumer behavior,” added Ellen Bradley, chief brand officer and senior vice president of marketing for the National Marine Manufacturers Association in Chicago.
In an interview last week, she pointed to how the growing remote work culture has paved the way for boat owners to use their vessels more because they have more access to their vessels from their offices at home.
“The remote-work lifestyle has been something positive for our industry,” she said. “[Consumers] are able to leave the home office and get down to the marina earlier than they could. They can get out to their boat and use it more frequently.”
She said the decline in sales volume numbers from the first two pandemic years is “something we anticipated as an industry.”
Cooling yacht sales
Yacht sales this year are also trailing a robust 2021, according to Fraser Yachts of Monaco, which maintains a regional office in Fort Lauderdale.
Last year, said Fraser CEO Raphael Sauleau, “was an exceptional year for super yachts.”
“Now in 2022 we see a slowdown of about 33.5%, but we are still up 68% on average over the last 13 years, when the industry started to record numbers,” Sauleau told the South Florida Sun Sentinel in a telephone interview.
“We are going through some tormented times, the conflict in Ukraine, the macroeconomic situation where no one understands what is going to happen in the next six months,” he said.
But Sauleau sees robust demand in the U.S. market as an encouraging sign. At the recent Monaco Yacht Show, he encountered Americans who reside in both New York and Palm Beach trolling for potential boat purchases.
The firm’s yacht charter business is also growing, he said. Americans constitute close to 50% of it, and the clients are getting younger, with the clients’ age range dropping from 55-65 to 45-55.
Through Aug. 31, an estimated 40% of the customers were first-timers in the luxury charter segment.
What does it all mean for the Fort Lauderdale show?
FLIBS as indicator
“I expect good attendance,” Sauleau said. “The last time I checked the inventory for FLIBs, it’s not that great, but again, I think we will see a lot of potential buyers walking the docks. I think it is a good show coming up to test the waters and see what is coming next.”
Last year’s show delivered $1.79 billion to Florida’s economy, including $899 million in direct sales over five days, according to a study by Thomas J. Murray & Associates. It generated $85.4 million in sales taxes to the state of Florida and $24.5 million to Broward County.
This year’s show will have six venues with the return of the redeveloped Hilton Fort Lauderdale Marina on the west bank of the Intracoastal Waterway. The other locations include the Bahia Mar Yachting Center, Broward County Convention Center, Hall of Fame Marina, Pier Sixty-Six Marina and the Superyacht Village at Pier Sixty-Six South.
The Las Olas Marina is not available because it is in the middle of a redevelopment project, said Phil Purcell, CEO of the Marine Industries Association of South Florida, which owns the show.
In an interview last week, Purcell said he expects a surge of international visitors who bypassed previous shows due to COVID-related travel restrictions, which have been lifted by various governments and airlines.
“If you look at Europe, all of those big [yacht] builds in the Holland yards and German yards, they’re filled with American buyers,” he said.
He said the builders count on the Fort Lauderdale show and others on the show circuit to keep them connected with the North American market.
All told, there will be 30 vessels making debuts at the show, Purcell said.
One of the foreign manufacturers returning to Fort Lauderdale is X Shore of Sweden, which makes electric boats and is developing a distribution network around the United States. It will be showing off 21- and 26-foot vessels for lakes, rivers and near-shore coastal waters.,
“We are, relatively speaking, new in the U.S.,” company CEO Jenny Keisu said by phone from Sweden.
“We are building out with new resellers and we are at the boat shows,” she said. “What we are seeing is that more and more consumers want to make the shift to electric. We see a lot of growth for us despite everything we were talking about — inflation, the war, etc.”
She said her company stocked up its factory with boat-building materials before the Russian invasion of Ukraine, thereby mitigating supply challenges faced by builders elsewhere.
Behind the scenes
Many buyers won’t be visiting the booths and tents at the show’s exhibition sites to do their deals.
A fair number of high-end yacht sales will unfold at nearby waterfront mansions that have been rented for the occasion by brokerage firms such as Fraser Yachts.
The company will be operating tenders to transport its clients from the house to the show’s venues.
“We find it much more convenient for our guests,” said Sauleau. “We keep it strictly private for customers only.”
