Yacht brokers navigate choppy economy
Pleasure boat sales are slumping across the region with yacht brokers and marinas extremely reluctant to describe what amounts to a steep decline in sales.
But a few brave dealers in Santa Barbara and elsewhere are optimistic about the long-term future of an industry that’s been as hard hit as General Motors, Ford or Chrysler thanks to the economic slump.
“Like anywhere else in the economy, sales are kind of slow right now,” said Sunset Kidd owner and founder Dennis Longaberger. “The economy has had a tremendous impact on the yacht market.”
Lauren Cicileo, sales administrator at The Chandlery Yacht Sales, said her company is bucking the trend.
“Business is good right now,” Cicileo said. “The economy doesn’t seem to matter much in Santa Barbara. We’ve got enough rich people to keep sales alive. It seems like the rich just keep getting richer and the poor get poorer.”
Though Sunset Kidd’s sales are down by 60 percent, Longaberger said he’s not worried.
“The people of money with investments in stock lost 45 percent of their equity in the last year,” he said. “They just have less money to spend right now than they did this time last year. Sure, we’re not getting as many people through the door and we’re not making as many deals, but from my perspective this is still an exciting and interesting time to be in this industry.”
Cicileo said The Chandlery hasn’t been experiencing any of the problems that have plagued Sunset Kidd.
“The Chandlery has been having a great year,” she said. “In fact, this year we’ve sold more than we have in any of the last 30 years.”
The jump in sales was unexpected, especially considering that high fuel prices nearly scared many people out of the buying market just a little while ago.
“There was a drop in powerboat sales for a short period, but people shouldn’t focus on that because that’s no longer the case,” Longaberger said.
Instead of potential buyers showing interest in engine-powered boats, Cicileo said she’s seen a small jump in other forms of recreational yachting. The focus on “green” technology may give a boost to sailboats and other alternative fuel watercraft.
“I’ve noticed a gradual increase in sailboat sales,” she said. “I think people were turning to them because they’re more cost-efficient.”
Longaberger said the real way to be cost-efficient is to purchase used watercraft while the market is in a lull.
“Buying a boat is like making an investment,” he said. “You can buy a $3 million boat for $1.5 million right now. It’s not like buying a house or a stock. When the market comes back up, that boat is still worth $3 million. You can sell it for twice as much as you paid for it – as long as you take care of it, that is.”
The repair and service business seems to swell as owners invest to keep their boats shipshape in case the market turns around. Bill Hopper, sales manager at West Point Marine in Santa Barbara, has seen quite a few people pouring money into maintenance and repairs.
“A lot of folks fix up their boat before they sell it,” he said. “And then people fix them up again right after they buy them. So really, we’re getting them on both ends.”
Hopper said West Point’s sales are up about 8 percent from this time last year. He attributed the company’s constant business to the fact that ownership turnover rates are so high.
“I think everyone’s just excited about all these incredible deals,” Longaberger said. “I’ve seen some unbelievably gorgeous yachts come on the market for 25 or 30 cents on the dollar. Owners are just unloading their yachts. These are practically giveaway boats.”
With the Los Angeles Boat Show fast approaching, the tri-county boating industry is counting on weathering the stormy economy in time for the show’s February opening.
“Santa Barbarans tend to be the higher-end customers,” Hopper said. “So in the grand scheme of things, it seems that the economy doesn’t really have a bearing on them or the community.”
And if the financial troubles do start to dampen the mood, Longaberger suggests pulling out of the day-to-day struggle and retreating to the sea.
“Speaking as a sailor who loves the ocean, there are always going to be some rough storms, but there’s always the gorgeous day after,” he said. “Instead of worrying about the stock market, you should spend your days doing something you love. Put your need to earn money on hold and go enjoy life. Take a cruise. Prices are great, so buy your yacht and top off.”
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