NetworkNewsWire
Editorial Coverage: With the global economy booming, the
wealthy are making the most of their earnings by buying boats.
- Yacht sales are rising, with both new and pre-owned yachts in
high demand.
- This trend is creating a boom for associated services such as
brokerages, consultancies, financing, aftermarket extended
warranties, and trailer manufacturers.
- Other boat-building businesses are also profiting, including
yacht charters, boat rental clubs and other sea-based leisure
activities that offer people a break from everyday life.
Savvy companies in the boating and yacht industry are
recognizing these unparalleled opportunities and exploring ways to
position themselves to make the most of them. Victory
Marine Holdings Corp. (OTC: VMHG) (VMHG
Profile) has expanded its brokerage team and is
looking into commissioning specially designed boats. America’s
largest retailer of yachts and recreational boats,
MarineMax, Inc. (NYSE: HZO), is expanding through
the acquisition of companies in the northeast. Malibu
Boats, Inc. (NASDAQ: MBUU) is maintaining its edge as a
manufacturer through state-of-the-art design and new technology,
including its award-winning docking trailer camera, as well as its
latest acquisition of Pursuit Boats based in Ft. Pierce, Florida,
for a sum of $100 million. The sale of a wide range of pleasure
boats has led to financial dividends for Marine Products
Corp. (NYSE: MPX). And Brunswick Corp. (NYSE:
BC) has incorporated boats into a wider set of
recreational holdings, developing new boats and new technology for
a growing market.
To view an infographic of this editorial, click here.
The Popularity of Yachts
Yachts are among the world’s greatest status symbols. Luxury
items affordable only by the wealthy, yachts represent both having
the money needed to purchase them and also having the time and the
skill to sail them — bringing great prestige to the owner. Someone
who can afford a yacht can clearly afford much more.
There are reportedly almost 4,500 individuals around the world
who own high-end “superyachts,” worth an average of
$10 million each. But there are plenty of yacht enthusiasts
living on more modest budgets, and for those who can’t own their
own yachts, rentals or charters offer opportunities to spend a few
weeks at sea.
The State of the Yacht Industry
The growing success of the yacht industry is
great news for companies such as Victory
Marine Holdings Corp. (OTC: VMHG). A surge in the
global economy has put more money in the hands of the world’s rich.
More people than ever can afford to buy and run a yacht, and many
of those individuals are looking for a chance to enjoy their money.
In America in particular, a yacht appears to be a symbol of a
happy, healthy life among the nation’s elite.
The economic upturn has led to increased sales of both new and
pre-owned yachts, each of which offers a different set of
advantages for buyers. New yachts are more expensive to buy and
insure than used models but less likely to need repairs or
refurbishment, while pre-owned yachts may need work to become ocean
ready and generally require more maintenance. This makes used
yachts a natural entry point for first-time yacht owners or those
looking for a more affordable options.
Pressure on demand is also buoying up the pre-owned market. Many
boat manufacturers are currently working at capacity, with lead times of 18 months or longer to produce a new
boat. Speed of delivery as well as price favor the pre-owned
market, on which Victory Marine Holdings subsidiary Victory Yacht
Sales is currently focused. With 25 years of experience selling
yachts in Miami, the yachting capital of the world, the company has
developed a wealth of knowledge and contacts to ensure a steady
supply of high-quality yachts to a market that keeps expanding.
Investing in a Yacht
The main reason for investing in a yacht isn’t financial, it’s
quality of life. For those who enjoy the seas, yachts are an ideal
way to get away from the pressures of the world. Whether relaxing
off the coast of a Caribbean island or racing through choppy seas,
yachts offer those on board a range of pleasures from active
sporting to gentle cruising.
Making a profit from owning a yacht is difficult without the
support and expertise of a professional yacht firm such as Victory
Yacht Sales. Upkeep costs amount
to around 10 percent of the buying price per year, meaning a
steady drain of money. And like cars, yachts depreciate in value
over time.
However, there are viable ways to make a yacht pay for itself or
even to turn a profit, including purchasing a yacht and using it
part-time but offering it as a charter vessel during times when it
is not in use. This can cover costs such as maintenance, insurance
and anchorage.
A second option is to buy a second-hand boat, renovate it and
sell it at a profit. Repainting and replacing soft goods can make a
significant difference to the value of an existing yacht, much like
flipping a house after making basic upgrades.
Whether made with an eye to a financial investment or a leisure
enjoyment, buying a yacht is a complicated business. The purchasing
process itself involves a memorandum of understanding, an offer,
financing, insurance, survey, sea trial and potential renegotiation
based on the results. Knowing what sort of boats are available and
when prices will be lowest is invaluable information. Consequently,
most buyers go through yacht brokers, specialists who understand
the details of these deals and are in demand. Victory Yacht Sales
recently added veteran broker
Gary Beaver to its team, bringing his 20 years of experience
and large portfolio of yacht listings into the company, according
to a Sept. 13 shareholder update.
Yacht Companies
For those looking to invest in yachts for profit, an even better
option may be to invest in a yacht company.
The best yacht companies don’t simply act as brokerages. They
provide all the services needed to buy, sell or run a yacht. For
example, Victory Yacht Sales does this by offering brokerage and
consultancy services as well as a range of boats. And as the market
continues to grow, the company is increasing its options.
In response to the growing demand for boats, Victory Marine is
expanding beyond its current sales of pre-owned yachts into new
models with its own custom design. “Victory Marine Holdings is
currently in negotiation with several yacht manufacturers to build
and distribute our own unique, private label design, which would
allow us to deliver a superior product in the most expeditious
fashion,” CEO Orlando Hernandez stated in the shareholder update press release. “In pursuit of this
opportunity, our management team will be visiting several
manufacturing facilities in Asia, Europe and the Middle East to
continue these talks and pursue a final deal.”
The company also owns a subsidiary, Excalibur Trailers USA,
which is soon to produce and sell custom aluminum trailers for
boats of all sizes. Excalibur recently
received approval from the Society of Automotive Engineers to
produce custom trailers for recreational boats, expanding its range
of products.
With consultancy services to help with the running of yachts, a
brokerage selling both new and used models, and subsidiaries
providing equipment such as trailers, Victory Marine Holdings is
now positioned to cover all the needs of potential yacht
owners.
A Rising Tide
The saying that “a rising tide lifts all boats” is particularly
relevant for the yacht industry, where rising demand is benefiting
a range of boat-related companies.
America’s largest retailer of yachts and recreational boats,
MarineMax, Inc. (NYSE: HZO) is using the market’s
good fortune to expand its operations. Following a successful
merger with Boston’s Russo Marine in 2016, the company is now
acquiring Bay Pointe Marina in Massachusetts.
This expands the company’s ability to provide services to its
customers, including winter storage for more than 300 boats.
Storage is one of the larger expenses of owning a yacht and a
potential valuable source of income for yacht companies.
Since its inception, state-of-the-art boat manufacturer
Malibu Boats Inc. (NASDAQ: MBUU) has been focused
on using technology to provide the best possible designs in the
boating sector. Its docking trailer camera, which improves
captains’ views of what’s happening, allows safer docking and
handling, and the company won an Innovation
Award for Safety Equipment at this year’s International Boat
Builders Exhibition and Conference. In addition, Malibu Boats is
also expanding, with the acquisition of
Pursuit Boats.
Yachts aren’t the only boats doing well in the current economic
climate. Marine Products Corp. (NYSE: MPX), a
manufacturer of jet boats, pleasure boats and outboard sport
fishing boats, has been using premium brands and an increasingly
diverse product line to capture a good share of the market. Its
success has led to regular dividends for shareholders over the past
year, as well as giving the company the cash to repurchase its own shares.
A market leader in the marine, fitness and billiards industries,
Brunswick Corp. (NYSE: BC) combines an investment
in boats with other recreational and lifestyle brands. Its Sea Ray
brand is heading to the Fort
Lauderdale International Boat Show this October to show off its
latest developments in boating technology. This includes Sea Ray
Connect, a system that provides peace of mind by letting users
check the location of their boats and the condition of the
systems.
From boats and trailers to consultancy services, the continued
strength of the global economy is providing opportunities for all
sorts of yachting and marine leisure company investment.
For more information about Victory Marine, please visit Victory Marine
Holdings Corp. (OTC: VMHG)
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