‘Shared economy’ aspects drive segment change
John Giglio has been beating his head against the boating industry wall for the last seven years. The Freedom Boat Club CEO said he’s tried to explain his business to others as complementary, not competitive.
Giglio had an opportunity to drive that point home during a panel discussion during the 2018 International BoatBuilders’ Exhibition and Conference.
“I made an early comment [during the Sounding Trade Only roundtable] that Freedom Boat Club was part of the sharing economy even before there was anything called a sharing economy,” Giglio explained. “We still consider ourselves a service business that just happens to share assets. The boat club concept was always looked at as a competitor to traditional dealership boat sales.”
Joe Lewis, Mount Dora Boating Center owner and past chairman of the Marine Retailers Association of the Americas Board of Directors, and Larry Russo, senior vice president of MarineMax Russo Marine, agreed with Giglio.
During the roundtable, Lewis said boat clubs continue to provide a stepping stone that can move first-time boaters deeper into the on-water experience.
Russo said it’s time for the industry to start embracing rental options because they represent a lower-cost, minimal-risk opportunity to try boating.
“In that forum, having Joe and Larry say that was a validating moment,” Giglio said, adding that 2018 could rightfully be called The Year of the Boat Club.
“People started having wholesale acceptance of the concept,” he said. “We are excited about whatever the next potential sharing model that’s out there.”
Russo said MarineMax currently owns several marinas that have Freedom Boat Club locations.
“If a first experience with a boat club is a good one, then it’s possible to move a boater to the next stage,” he said. “They may remain a member forever, but that’s OK. But there has to be a percentage of them will say, ‘I want a boat for myself.’ or ‘I want something a club doesn’t offer.’”
Giglio said about 20 percent of the people who leave FBC purchase boats.
“We retain about 90 percent of our members annually. Our goal is to build boat owners. People now look at boat clubs, rentals, and peer-to-peer as being collaborative. With the evolution of the sharing economy, the boat club concept is now becoming much more mainstream as well as visible.”
Freedom Boat Club continues to grow across the U.S. with 28 new locations conducting grand openings in 2018, Giglio said.
“We were pushing 180 locations effective this January,” he reported. “We’ll reach about 2,500 boats this spring when everybody launches; that’s about a 20 percent increase over last year.”
Freedom Boat Club’s alliance agreement with Jeanneau to cooperatively develop franchises among its European dealer network continues to gather momentum.
Giglio said the FBC franchise model is now being offered to Jeanneau retailers in Europe who have the opportunity to develop FBC locations in their local market using Jeanneau outboard-powered boats.
A group of Jeanneau dealers attended the 2018 Miami International Boat Show to meet with Freedom Boat Club executives and tour a large Florida-based Freedom Boat Club franchise operation.
Boat clubs are a real trend that Jeanneau dealers are keen to develop, said CEO Jean-Paul Chapeleau earlier this year. For Jeanneau dealers, the business relationship represents a unique opportunity to benefit from an experienced partner while launching a new service to its customers.
“We are officially on onboard in Europe,” Giglio said. “We’ve been working on that since September of 2017. We have our first few agreements signed and sealed. Opening up France in 2019 was anticipated, but we’ve been getting a ton of interest in the United Kingdom, and it looks like we will have between four and 10 U.K. franchises that will open there this spring as well.”
SailTime Group, a fractional boating membership franchise, announced the opening of a new base in Concarneau, France, at the 2018 Paris Boat Show in mid-December. It is the third European base to open since September 2018, when SailTime launched new bases in Tuscany and Salerno, Italy.
“We couldn’t be happier with how our European expansion is taking place,” said SailTime CEO Todd Hess said.
The opening of SailTime of Concarneau comes on the heels of SailTime’s inclusion in Entrepreneur magazine’s 2019 Top Franchise Categories, the annual predictions by Entrepreneur’s experts regarding what will be the hottest franchise sectors of the year along with leading brands.
“It’s always an honor to be recognized by esteemed business publications like Entrepreneur,” Hess said. “Our European expansion, along with the recognition from Entrepreneur, are just the latest examples of the staying power of the sharing economy and the desire for business owners in the marine industry to add SailTime to their offerings.”
In August 2017, Boatsetter acquired fellow boat sharing marketplace brand Boatbound.
The announcement came as the company added $4.75 million in funding to the $13 million the company raised in December 2016.
Acquiring Boatbound was a key step for Boatsetter as the company began to accelerate its operations in the U.S. and prepare for international expansion in 2018, focusing first on the Caribbean and Mediterranean, the company stated.
“Our goal is to dominate the U.S. boat rental market to make boating more affordable and accessible for consumers nationwide, no matter what type of boating experience they are seeking,” stated Jaclyn Baumgarten, Boatsetter co-founder and chief executive officer.
In February 2018, Boatsetter launched its new website succeeding the Boatbound acquisition. Boatsetter expanded its market presence to more than 600 rental locations domestically and 66 locations internationally.Advanced technology enhancements on the Boatsetter site now include an improved search algorithm, better fleet management tools, insurance coverage integration and competitive pricing option tools.
At year’s end, Boatsetter made two key executive-level appointments.
Christian Martinez was named chief operating officer and Julien Geffriaud, chief growth officer.
Martinez oversees Boatsetter’s day-to-day business operations and long-term strategy and goals, and is also directing Boatsetter’s traditional, digital, programmatic, mobile and eCommerce corporate efforts.
He comes to the company from Facebook, where he was the country director for Mexico and, previously, its head of U.S. multicultural sales.
Geffriaud is responsible for leveraging customer insights, product analytics and marketing performance data to create new product features. He is a mobile growth expert with experience in generation strategy and campaign optimization for large, multinational advertisers.
Freedom Boat Club also made two important corporate appointments in 2018.
Marine industry veteran Louis Chemi was named to a new corporate position of chief operating officer for Freedom Franchise Systems and Freedom Outdoor Adventures in February.
Chemi currently serves on the boards of the National Marine Manufacturers Association and the American Sportfishing Association. He brings global expertise from more than two decades at senior management posts for leading industry manufacturers, most recently a 10-year stint at Navico, Inc.
In March, Giglio announced the promotion of Barry Slade from vice president of business development to chief operating officer of the corporate-owned Freedom Boat Clubs, and the newly launched division of Freedom Marine Sales.
Slade assumed daily management responsibilities for the 17 southwest Florida corporate-owned clubs. He is overseeing corporate club expansion, real estate/marina acquisition, charter/sales initiatives, plus spearheading new member programs.
“It was a big windfall for Freedom Boat Club to get both of them,” Giglio said.
Their Segment Activity
Boating Services Network is the new boating services division of Brunswick Corp.
Its OnBoard Boating Club and Rentals is a turnkey business platform that empowers marine dealers and marinas to expand operations and serve the emerging and growing boat club and rental consumer market segments.
“We can take advantage of the strong and growing interest in boating lifestyle experiences, while participating in sharing-economy trends,” said Cecil Cohn, vice president, Boating Services Network. “We believe that by offering the best value and experience, we can grow and cultivate interest as a gateway to boat ownership across a broader cross section of consumers.”
The launch of OnBoard follows the successful alliance between Boating Services Network and Suntex Marinas over the past few years.
The success with Suntex is rooted in a common objective to grow boating participation and ownership while providing exceptional consumer experiences, according to Bijoy Jha, vice president of business development and finance, Boating Services Network.
Boating Services Network will be working with dealers and marinas across the U.S. and Canada to introduce the OnBoard offering,
“One of our primary goals at Boating Services Network is to introduce an array of initiatives to bring more boaters into our industry and contribute to the growth and success of our marine partners,” Cohn said, adding OnBoard Boating Club and Rentals will continue to seek solutions and services to set the standard for exceptional boating experiences.
In June 2018, Suntex Marina Investors, LLC announced the planned addition of a new Suntex Boat Club location at Cross Timbers Marina, located north of Tulsa, Okla., bringing the company’s total to nine U.S. boat club locations.
In addition, Suntex Watersports, the company’s boat rental program, now offers six new locations in Northern California and Tennessee, bringing the total to 25 boat rental locations.
Further, in response to growing demand, the company significantly expanded both its boat club and rental fleets by purchasing more than 300 new boats.
The Suntex Boat Club is a private, members-only organization that allows full access to an entire fleet of boats.
Boat club members also get complimentary access to a complete inventory of accessories such as wakeboards, kneeboards, tubes, skis and more.
The Suntex Boat Club offers an affordable introduction to the boating lifestyle, as boaters pay the membership dues along with the fuel they use.
“Our goal with the Suntex Boat Club and Suntex Watersports is to introduce people to boating and to promote the boating lifestyle,” said Stephen Lehn, principal and head of operations, Suntex Marinas. “Our members use these programs as ways to enjoy their time on the water. These experiences allow them to build confidence in their boating abilities and ease into the decision of purchasing a new boat to become a long-term Suntex slip member.”
And in early August 2018, Suntex Marina Investors, LLC launched a boat rental operation at Laurel Marina & Yacht Club, located on South Holston Lake, situated in the mountains of Northeast Tennessee. The Laurel Marina fleet includes recently acquired pontoon and tritoon boats.
Boat Club Prospectus
It’s been an interesting few years in the boat club business, said Freedom Boat Club’s Giglio.
“You have Mom and Pops that are marina owners. They are looking for an additional revenue stream,” Giglio said. “The biggest threat to our business is losing slip space. We’ve started purchasing marinas. We have four of them in our corporate portfolio.”
MarineMax’s Russo agrees water access is a huge issue for entire industry.
“When a housing developer comes knocking at the door of your little marine dealership, the price goes up,” Russo told IBEX roundtable attendees. “The boatyard is expendable, and along with it, boater resources shrink. If there’s a good marina out there that’s sustainable, we’ll consider buying it before a real estate or other developer comes in and we lose the opportunity.”
According to Giglio, Freedom Boat Club has morphed into other lines of business.
“We purchased about 800 boats last year, and sold about 400 boats,” Giglio said. “We are in the used sales business, but we still have components that make up the traditional club model. We recently launched an RV business. We are hoping to take the sharing model and move it into other industries. We are slowing starting to roll out those opportunities to franchisees.”