Issue link: https://read.dmtmag.com/i/459238
MARKET FOCUS SECTION { BOAT CLUBS } 42 | Boating Industry | January 2015 www.BoatingIndustry.com options, price points and other things to keep track of. Firstly, there is the cost of setup. For Freedom Boat Club franchises, most everything is up front and a 6 percent royalty fee after the first year for ongoing training, in- surance and marketing support. "Initial franchise fee is $38,000, and that gets them all the training, the startup package," said Giglio. "We give them the business in a box so on day one, they have everything they need to open up the doors. Then beyond that, they have to purchase a minimum of four boats." The consumer then pays directly to the dealer or marina hosting the club. "The consumer is looking at — based on the location -- anything from $4,000 to $7,000, then a monthly fee after that," said Giglio, add- ing that there are various seasonal packages for dealers that don't operate in the winter months starting at $149 per month. The Legendary Boat Club offers similar pricing for the Destin area. "I usually bring that up very first thing. I'm very proud of what we charge," said Holcomb. "We've kept it very simple: unlimited boating, five types of boats, come as often as you like 365 days a year. We offer the same package all around, $6,500 is your initiation fee then $299, there's no surcharges — it is what it is." So with Legendary's 43 current members, that's a hair under $12,900 gross income each month in fees alone. Insurance is another thing to think about. While many peer-to-peer options and Free- dom Boat Club franchises offer insurance, dealers creating their own club are responsible for protecting themselves and their club mem- bers should something happen on the water. Far-flung marinas or dealers that might not find what they're looking for in a standard boat club setup can still benefit from rentals through the peer-to-peer marketplace. Deal- ers can make a small profit with the occasional renter without all the hassle of creating a true rental fleet or fussing with insurance. While a club, even a great club, won't re- place new boat sales as the No. 1 profit center, it could buoy a business through economic bumps with an additional revenue stream. "It's a great business segment," said Gi- glio. "While the rest of the industry has been struggling over the five to six years, we've ex- perienced double-digit growth over the last seven years." PEER-TO-PEER RENTALS AS A SALES TOOL One can't dig into boat clubs and rentals without talking about the nascent peer-to-peer segment. Like traditional boat rentals and boat clubs, peer-to-peer rentals were seen as a major source of competition for boat dealers. But stakehold- ers in traditional boat ownership are finding that the concept is useful on the sales floor and can bring new boaters into the industry. "The first thing that we've been testing with dealers is getting them to understand how Boatbound can help them sell new boats," said Aaron Hall, CEO and founder of Boatbound. He said if a customer is waffling about a purchase, the concept of peer-to-peer income might be the push they need. "Our strategy is to really be using Boat- bound as a reason to push people over the edge to make a buying decision," said Hall. "If it's a financial decision -- that they can't quite afford it -- or to upgrade someone to a bigger boat, it's a way to offset some of those costs." If done right and in the right market, Hall said that a couple rentals a month can actually mean a free boat at the end of the dock. "The obvious benefit is that the typical boat is unused 95 percent of the year," said Hall. "So you can offset the storage, maintenance or the financial cost of owning a boat by renting it one or two times a month -- you can offset the whole burden." He said sales staff could use the popular home and apartment-sharing platform Airbnb as a successful example. "Like Airbnb, you'll start to see people building around it. Our platform is designed to create micro-entrepreneurs all over the place," said Hall. "There's a half a dozen people that are doing something to create their own little rental fleet and market it through Boatbound." In 2014, Boatbound made it easier to add a knowledgeable captain to a rental to make things even easier for renters and new boaters. "We now have 30 to 40 percent of our rentals can come with a captain. So it doesn't take any experience to get out on a boat," said Hall. "That's one of the main barriers to entry in boating is that people think they have to be an expert boater." He said those options could keep new or in- experienced boaters coming into the commu- nity without a steep learning curve or big cost. "As we continue to push that option and that experience, we get people into boating. And after they do that once or twice, the next logical step is to go learn how to do it themselves," said Hall. "Ultimately, that puts them into the ecosystem and hopefully turns them into future boat buyers. And everyone is happy about that." Club members chatting after a day on the water. PHOTO COURTESY OF FREEDOM BOAT CLUB