Interview: F3 Marina
For many marina operators, hiring a third-party management company is the ideal route to ensuring optimal success, premier customer service, and consistent profitability. Our interview with F3 Marina (a leader in professional marina management and consulting services to marina owners in the United States and internationally) dives into some of the best practices for marina owners and excellent marina management. F3 Marina’s expertise, seasoned team and in-depth consultation process helps owners and communities maximize occupancies and revenues, while providing boaters with a superior boating experience.
Brett Murphy: John, how did F3 get started in the marina space?
John Matheson: Racine County, Wisconsin owns Reefpoint Marina, a formerly iconic marina on Lake Michigan between Chicago and Milwaukee. They took over the marina operations in 2012 after a slow decline from the former private operator. The County took over with a 20% occupancy and poor financials, which is when we came in. We were hired on a one-year trial basis to see if we could stem the decline. It went extremely well and we were awarded a 5-year contract (currently on the second 5-year term now).
Murphy: What was that project like?
Matheson: What we found was that our existing systems and processes transferred over very well to marinas. We focus on being the best at: 1) the physical well-being; 2) marketing; 3) financial controls and reporting; and 4) client communication and goal-setting. Today, the marina is back to its former luster as one of the top marinas in the Great Lakes with over 500 boaters and an extremely strong transient business. Since then, we have expanded our marina footprint all over the U.S. including Central America. We hired one of the most experienced marina professionals in the business, Alain Giudice, to run the division and now are involved with marina development, design, and operations.
Murphy: What are some of the services you provide owners to help their operations?
Matheson: As we do with all our clients, the first step is to discuss the strategy for the asset. Sometimes marina owners don’t know where to start or what the possibilities are for their marina. We perform a marina and market evaluation then make recommendations for a long-term strategy. This could be a repositioning, changing the branding, or just improving and building upon what the owner already has created. Our services include everything from marina planning and design, reconfiguration, new marina commissioning and all aspects of operations.
Murphy: What are some of the similarities and differences between inland marinas and coastal marinas from a management perspective?
Matheson: Some similarities are the family destinations and desire to provide a high level of service. Whether an inland or coastal marina, exceptional customer service is always expected by boat owners and guests. On the management side, and in particular for marinas located in a colder climate with harsh winters, I would say that planning, logistics, and execution is more intense due to a shorter season, dealing with commissioning and decommissioning the facility before and after the boating season. The majority of our inland marinas on lakes or rivers have a short seasonality, and therefore, during the five- or six-month season boat owners and their families will take the maximum advantage of spending quality time at the marina, using their boats as a summer destination. The other aspect with inland marinas is the greater effect of the weather on the actual marina infrastructure especially with the latest high-water levels or icing for the northern marinas.
Giudice: Differences start with the fact that coastal marinas realize more transient business than inland facilities, the only difference perhaps is the type of transient. Both coastal and inland transient traffic have similarities driven by specific events that a city or region would offer, such as boating events, regattas, rendezvous, etc. The costal transient marinas may have more traffic with boats traveling along the coast to reach a warmer climate during the winter season, and vice versa heading back north for the summer. Transient business can vary from a few days to a seasonal stay, depending on the range of amenities that the marina offers, the number of activities provided by the marina and the communities, and other services such as technical services and nearby airports.
Murphy: What challenges are unique to each [coastal vs. inland] that you may see owners struggling with or that you have successfully maneuvered since your management arm was launched?
Matheson: There are no major challenges for owners that are unique to inland vs. coastal marinas. In my team’s experience, most owners do not possess the knowledge base needed when it comes to managing a marina. They hire us for our expertise, to guide them through the struggles they face. I think that one of the main drivers that made us successful in maneuvering the challenges is our ability to demonstrate the value of having a professional team working together with the clients and the community to re-energize a marina or waterfront development.
Giudice: Another challenge is providing the support and expertise in developing, training staff both on the technical and service side, and providing the financial expertise and support to deliver good returns and planning ahead for capital improvements. Our system is simple: from the infancy of the relationship, we work closely with the client and their team to ensure that we are all in line with the vision and objectives of the project.
Murphy: How has marina management differed from or mirrored other product types your company is involved with?
Matheson: F3 Marina is a division of Founders 3 Management Company, providing a full-range of real estate services since 1995. Many of the same metrics and more sophisticated processes from traditional real estate can be applied to marinas. Incorporating the latest marketing techniques, processes for property maintenance, financial controls and cash management transfer over well. However, marinas are unique of course in many aspects and require very specialized knowledge of boater behavior and trends in a wide variety of markets. This required us to add experienced talent to our leadership over the years, today led by Alain. No two marinas are the same and each requires an individualized approach. Our culture is to pull from our collective experience of many marina situations to find a creative way to meet the vision of the clients.
Murphy: Does your team prefer a certain size or type of marina in which you will manage (i.e. 250+ slips, superyacht marina, boatyard on-site, etc.)?
Matheson: Our threshold for marinas is based on a number of factors. First, we look to revenue potential vs simply number of slips. Some big boat marinas of only 100 slips can provide more revenue than a smaller boat marina of 250 slips. We also focus on marinas where boat slip rental is the primary revenue source vs boatyard. Importantly, we look for those marinas where we can establish a long-term client relationship built on trust. We don’t mind putting a portion of our fee at risk based on performance.
Murphy: F3 has an extensive track record and proven success for turning around under-performing marinas. What steps have you found to be vital in making a marina well-occupied and profitable again?
Matheson: Each marina is different but it all starts with understanding the market, the marina and the potential for improvement. We have turned down assignments where we felt that we can’t offer a path to improvement. It is also important for the owner to be willing to look at the marina differently. Often, it means changing staff leadership if there is resistance to change. To turn around an underperforming marina, it often takes bold measures that at first may meet resistance. Once the ownership is on board and the right staff is in place, almost anything can be accomplished. From there, we involve the local marina manager as part of the team with our experienced staff to form a long-term strategy. Creative strategies must be coupled with detailed financial analysis to see that it makes sense. Once the plan is determined and ownership approval is gained, its all about execution.
Murphy: What is the general appetite for marina amenities when you take on new projects?
Matheson: From a boater perspective, it is clearly where the market is going. The key is to get the amenities right. Amenities bring boaters to the marina and strong staff relations with boaters keep them there. In other words, once in the marina, it is the way staff interacts with boaters that becomes more important. Owners that we have worked with are open minded to any amenities as long as we can demonstrate the return in value over time.
Murphy: Regarding marinas that are too small or that do not have the necessary revenues to justify a professional management team, what is some advice you would give those owners for continuing to provide an excellent guest experience?
Matheson: An owner with a small marina (less than 100 slips) is in a tough position because boaters still expect the same level of service and require good marketing. Hiring a strong “working” marina manager that has great customer service skills is a good start.
Murphy: Alain, when your team is hired by a marina owner what seems to be the biggest challenge you encounter?
Alain Giudice: I would not call this a challenge, but the main objective is providing honest feedback to a marina owner who has spent a lifetime and a great deal of money to build a dream. When we take a new assignment, we spend a large amount of time evaluating a marina and providing a detailed report on the current status of the property, both financially and physically. Sometimes the expectations of the client do not match the current realities or market changes and we must work with the client to find middle ground.
Murphy: What are common mistakes or shortfalls that you see in marina operations, where your experience can help the business recalibrate?
Matheson: In no specific order, some of the key mistakes we see are: 1) invest back into the marina—owners do not invest in updating amenities to keep the marina fresh; 2) heavy focus on the restaurant without the expertise—we see too much focus on operating a restaurant when the operator does not have the experience or expertise to do so efficiently. It is better to hire an outside operator so the marina owner can collect rent and focus on the marina; 3) staff with poor customer service skills – while it is important to hire technically competent staff, it is imperative that employees are trained in customer service. Boaters do not tolerate being treated poorly and will leave the marina if that is the culture; 4) poor marketing – professional website, regular use of social media along with a marketing strategy is important to maximize occupancy; and 5) lack of competitive awareness – owners do not regularly compare amenities and fees with the competition and make adjustments when needed.
Giudice: Other areas of improvement that we commonly observe involve the lack of synergy between the shore and water operations. These include services that are specific to the needs of the vessel and crew and the amenities/facilities provided to the boaters and their guests. Not having specific processes, operating procedures, or ways to measure performance both related to guest satisfaction and on the condition of the marina infrastructure are also common oversights. On the financial side, there is a lack of tracking good information and using tools that could facilitate better understanding on the marina’s financial performance. Sales and marketing are also a common challenge for some marinas, we often see that the investment in marketing dollars is not always allocated to the right market or not taking advantage of using social media as an additional tool that can provide you with good Intel on your marketing effort. Family-owned properties, specifically, could gain much value from using analytics to understand key performance indicators, financial performance, and CRM data. We often see static websites and social media, and understanding that marketing efforts are key drivers of better returns is important for owners.
Murphy: What additional trends do you see in saltwater and lake marinas?
Giudice: The main trend we have observed is the difference in seasonality for saltwater and lake marinas, and the effect it has on customer habits. Our portfolio of lake marinas mainly consists of properties on the Great Lakes and rivers in the Midwest. These marinas see a high concentration of boaters over a shorter season due to harsh winters. Saltwater, or coastal, marinas, especially in warmer climates, are less dependent on seasonality for business. Boaters can enjoy the benefit of having year-round boating conditions and mobility. Lake boaters often use their boats as a summer residence on the water, meaning their stays are longer as they take full advantage of ideal boating conditions and amenities offered on the lakeshore. Coastal boaters use marinas as a springboard for travel and exploration, and are more migratory than lake boaters who are often confined to a single body of water.
Murphy: On another topic, F3 has been spearheading the automated dry stack marina concept with great success and impressive facilities on the East Coast of Florida. What prompted the focus to this specific segment of the industry and what trends do you see moving forward for the concept?
Matheson: The boating market continues to shift to larger boats (50’+) taking the wet slips, displacing smaller boats. The requires the boats in the 30’-45’ range to seek alternatives. Particularly in the Fort Lauderdale market where there is a lack of marinas for boats looking for quick access to an inlet, hurricane rating storage, and high-end service. The automated marina which involves a computer-controlled crane lift storing boats up to 30,000 lbs and 17’ tall and 46’ long in a rack facility six stories high. Not only does the automated lift system provide the “cool” factor, but it allows a very efficient use of land to maximize the number of boats in a great location but with a small footprint. A traditional fork lift facility would require twice the space to achieve the same result. As boaters continue to look for ways to enjoy their boats with the minimal effort, this type of use with just continue to become more popular.
Murphy: If you could leave our readers and investors with one final piece of advice for operating a successful marina, what would that be?
Matheson: The marina business is changing. The average boater in many marinas is over 50 years old and younger boaters are looking for different experiences. Owners must be prepared to adapt to this changing market to remain relevant. This could mean changing slip sizes to accommodate boat preferences and different amenities to attract these boaters.
Giudice: Understand that marinas have evolved from just a marina on its own, with docks, a fuel dock and a small ship store. The demographics are changing rapidly and therefore the new marinas need to adapt to the new generation of boaters, providing an affordable and exciting lifestyle for the existing boaters but also for the younger generation. Marina design and engineering have evolved for the past 20 years, as boats are evolving in size, requiring larger and more costly infrastructure such as state of the art floating docks, electrical services, Wi- Fi, fuel facilities, etc.
My advice to a potential investor is to have a reliable and experienced team around them to guide and support them from the infancy of the project. They need to understand the market. demand and ensure that both the shore and water amenities have a carefully planned synergy.