When COVID-19 hit the economy in 2020, it was the marine industry that turned crisis into opportunity, as customers looking for a safe mode of recreation bought or rented boats in droves.
Today, as the Fort Lauderdale International Boat Show nears its 63rd edition, industry sales are slowing, according to some brokerage firms, as war continues to erupt in Ukraine, inflation soars grips the economy and supply chain issues slow ship production.
The confluence of events appears to have dampened the boom in COVID-related business that was caused by limited travel options over the previous two years. Large numbers of people, industry officials note, have 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 year-to-date new powerboat sales were down 18% through July compared to the same period in 2021.
Yet several categories “continue to overtake pre-pandemic [year-to-date] sales levels, including new pontoons, wake sport boats and yachts,” the association said in a statement.
“During the first seven months of the year, new boat sales fell below our 2019 pace, demonstrating that the combination of economic uncertainty and the expected return of competition to attract consumer attention are starting to show their impact,” said Frank Hugelmeyer, NMMA. President. “It’s not unique to boating as most industries are under pressure such as inflation, a volatile stock market and talk of a global recession has increased.”
But the association sees a silver lining in “ongoing supply chain turbulence” and other challenges.
“They have stopped us from overproducing like some other industry sectors have over the past two years,” the association said in a statement. “Ship dealer inventories remain quite lean, indicating that pipelines are still being filled, leaving the industry in a healthier position than past downturns in recent history.”
“What we’re really seeing is this overall 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 on Friday, she highlighted how the growing remote working culture has paved the way for boat owners to use their vessels more as they have more access to their vessels from their home offices.
“The remote work lifestyle has been a positive thing for our industry,” she said. “[Consumers] can leave the home office and get to the marina sooner than they could. They can get out of their boat and use it more frequently.
She said the drop in sales volume in the first two years of the pandemic is “something we anticipated as an industry.”
Yacht sales this year also lag behind a strong 2021, according to Fraser Yachts of Monaco, which maintains a regional office in Fort Lauderdale.
Last year, said Fraser CEO Raphael Sauleau, “was a banner year for super yachts.”
“Now in 2022 we’re seeing a downturn of around 33.5%, but we’re still up 68% on average over the last 13 years when the industry started recording numbers,” said Sauleau at the South Florida Sun Sentinel during a phone interview.
“We are going through turbulent times, the conflict in Ukraine, the macroeconomic situation where nobody 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 company’s yacht charter business is also growing, he said. Americans make up nearly 50% and the clientele is getting younger, with the age range of the clientele increasing from 55-65 to 45-55.
Until August 31, about 40% of customers were new to the luxury charter segment.
What does this all mean for the Fort Lauderdale show?
“I expect a good turnout,” Sauleau said. “Last time I checked FLIB inventory it wasn’t great, but again I think we’ll see a lot of potential buyers walking the docks. I think it’s a good show to come to test the waters and see what’s next.
Last year’s show brought in $1.79 billion to the Florida economy, including $899 million in five-day direct sales, according to research by Thomas J. Murray & Associates. It generated $85.4 million in sales taxes for the State of Florida and $24.5 million for Broward County.
This year’s show will have six venues with the return of the redeveloped Hilton Fort Lauderdale Marina on the west side of the Intracoastal Waterway. Other locations include Bahia Mar Yachting Center, Broward County Convention Center, Hall of Fame Marina, Pier Sixty-Six Marina, and Superyacht Village at Pier Sixty-Six South.
The Las Olas Marina is unavailable as it is in the midst of a redevelopment project, said Phil Purcell, CEO of the Marine Industries Association of South Florida, which owns the saloon.
In an interview on Friday, Purcell said he expects a wave of international visitors who have bypassed previous shows due to COVID-related travel restrictions, which have been lifted by various governments and airlines.
“If you look at Europe, all these big [yacht] built in Dutch and German yards, they are filled with American buyers,” he said.
He said automakers rely on the Fort Lauderdale show and others on the show circuit to stay connected to the North American market.
A total of 30 ships will debut at the show, Purcell said.
One of the foreign manufacturers returning to Fort Lauderdale is X Shore of Sweden, which manufactures electric boats and is developing a distribution network across the United States. It will feature 21 and 26 foot vessels for lakes, rivers and near shore coastal waters.,
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“We are, relatively speaking, new to the United States,” company CEO Jenny Keisu said by phone from Sweden.
“We’re building with new dealers and we’re at boat shows,” she said. “What we are seeing is that more and more consumers want to go electric. We see a lot of growth for us despite everything we were talking about – inflation, war, etc.
She said her company had supplied her factory with boat building materials before the Russian invasion of Ukraine, easing supply problems experienced by builders elsewhere.
Many buyers will not visit the booths and tents of the show’s exhibition sites to do their business.
Many of the high-end yacht sales will take place at nearby waterfront mansions that have been rented for the occasion by brokerage firms such as Fraser Yachts.
The company will organize tenders to transport its customers from the house to the venues of the show.
“We find it much more convenient for our guests,” Sauleau said. “We keep it strictly private for customers only.”