However, government entities often hire private operators to manage their marinas. This means that marina management situations can be fluid because government entities rarely provide management contracts in perpetuity. Instead, management contracts usually are of limited duration and the contractor may have to bid competitively for renewal of the contract after a few years.
Consolidation of government-owned  marinas is possible if operators have long-term leases with options to buy, says Bruce Blomgren, president of Brandy Marine, Inc., Orlando , Florida.
Brandy, which does not own any marina properties recently announced it will manage the 199-slip marina owned by the city of Port St. Joe, Florida. If renewal options are exercised, Brandy can operate the marina for 40 years and it also has the option of buying the real estate, Blomgren says.
However, Blomgren agrees the pace of marina consolidation has slowed dramatically. | Price disputes
"The owners and consolidators are far apart in price," Blomgren says. "Consolidators can't get the 15 percent return they way. Ten to 11 percent is the top end [return on equity], and the cost-cutting opportunities are more limited that people expected."
One reason for the disputes about prices come from the fact few marina operators have set aside funds for capital improvements, Blomgren says.
"We looked at 160 [marina] properties from Norfolk [Virginia] to Mobile [Alabama] and 95 percent didn't have capital reserves," Blomgren says. "So we had to recast the financials."
Marina consolidation for the purpose of developing "brand loyalty" among boaters also has proven itself to be an illusion, Blomgren says. Instead, cruisers will stop repeatedly at a particular marina because they know its fuel prices are low or they like the golf course or the restaurant that is part of the marina development, not because of brand loyalty. | Buy by region
Despite the obstacles, if one wants to consolidate the marina sector, the buying several marinas in close proximity appears to be the most effective way to achieve economics of scale, according to Blomgren.
"Marina consolidation probably will occur market-by-market, as [Florida Panthers Inc. Chairman Wayne] Huisenga did in Fort Lauderdale [Florida] with [the purchase of] Pier 66 and Bahia Mar," Blomgren says. "If you control a single market, you can control prices." |
