Marina fees

[Moodyman]

.....it's that time again.

I know of a marina operator that as well as offering the usual discount if you pay 12 months berthing upfront - 2.5% in this case - is also offering the 2nd year (2014/15) at 5% discount, presumably on the 2013/14 rates, as long as you pay the whole amount in advance.....in this case by end of January 2013.....which would be quite a significant sum.

Now, in all the years I've had a boat there has always been a deal to be had although I've not come across one with 2 years payment upfront. In the 1990's there were various long term "leasing" offers to be had but I think they proved to be a disaster all round. I've also heard of, and been offered, 2/3 year fixed rate deals, or where you agree a longer berthing contract at an increased discount, but never where you have to pay for more than 1 year in advance.

Am i wrong in my thoughts?

 

[[2574]]

There used to be short lease berthing arrangements; IIRC as short as three years, where you purchased the "lease" upfront.

I have to say that I would need a much greater discount than 5% to entice me to pay up front for berthing as there is considerable risk to that money. Many marina businesses are highly geared so who knows what might happen.

rob

 

[emsworthy]

A marina operates along the same lines as any other commercial property venture in as much as its success or otherwise is based on two factors; cashflow and capital value.

The cashflow is a simple one and with "tenants" paying annually in advance a marina owner is unlikely to have too many issues in this department.

However the question of value is a more complex question of how much for how long? i.e. if I have 150 bertholders paying me an annual rental of say £500k (150 x 3.5K) but they could all bugger off next year, I don't have much surety of income, whereas if they were tied to a longer term then I could value that income and increase the capital value of my investment. (Put very simply it could be doubled in value if they all signed a two year agreement.)

With with the current economic situation backers and investors are taking a long hard look at the risk/rewards of all ventures and marinas will be no different.

I guess the simple answer is, if you have the money to pay for two years up front sitting in the bank earning you no interest, and you have no intention of selling your boat or changing marinas, then pay up front, take the discount and avoid a potential uplift in fees for the next two years. With inflation running at 2.6% that could be a fair saving.

 

[gjgm]

.....it's that time again.

I know of a marina operator that as well as offering the usual discount if you pay 12 months berthing upfront - 2.5% in this case - is also offering the 2nd year (2014/15) at 5% discount, presumably on the 2013/14 rates, as long as you pay the whole amount in advance.....in this case by end of January 2013.....which would be quite a significant sum.

Now, in all the years I've had a boat there has always been a deal to be had although I've not come across one with 2 years payment upfront. In the 1990's there were various long term "leasing" offers to be had but I think they proved to be a disaster all round. I've also heard of, and been offered, 2/3 year fixed rate deals, or where you agree a longer berthing contract at an increased discount, but never where you have to pay for more than 1 year in advance.

Am i wrong in my thoughts?

If this was a development company, the enclosed letter was also a bit loaded with "we can't keep prices this low for much longer"...
You are paying two years of premium to a privately held company, too ...I'm sure some will be sleepless over that.
I did a few sums, and the actual saving was pretty small in monetary terms. I might be wrong, but with the number of empty berths, I would think it risky to push up prices too hard, and I dont see austerity disappearing any time soon . About 5 years according to the Gov.
Edit- dont forget you can also earn interest etc on the second years premium if you dont pay it now...that eats up a bit of that supposed 2 year deal saving.

 

[[2574]]

I dont see austerity disappearing any time soon . About 5 years according to the Gov.

And don't forget that the marina industry's economic circumstance tends to lag the mainstream economy by about four years. The marina industry is only now seeing the beginnings of austerity and it will get much worse. Occupancy will fall and that is why marina operators will be offering discounts for two/three year berths - maintaining occupancy at all costs as occupancy is the primary driver of cashflow. I would think that I would want a 15% discount for two years up front and maybe 25% discount for three years up front -we need to keep the risk/reward ratio in balance here.

When renewing our berthing contracts this year we should all be bargaining and seeking berthing cost reductions in response to providing secure cashflow to the marina businesses. When strong occupancy returns we will see berthing costs increasing ahead of inflation; now is our opportunity to drive prices down in the recession. High berthing fees are driven by a requirement for an industry standard return on capital values. What needs to happen right now is a downward adjustment of capital values to more properly reflect the economic worth of the asset class. The downward valuation will happen if we drive berthing fees down. For evidence in support of the argument look at the commercial property marketplace.

 

[[70521]]

2.5% in this

Only 2.5%! I get more in a Tesco Instant access account.

 

[longjohnsilver]

.....it's that time again.

I know of a marina operator that as well as offering the usual discount if you pay 12 months berthing upfront - 2.5% in this case - is also offering the 2nd year (2014/15) at 5% discount, presumably on the 2013/14 rates, as long as you pay the whole amount in advance.....in this case by end of January 2013.....which would be quite a significant sum.

Now, in all the years I've had a boat there has always been a deal to be had although I've not come across one with 2 years payment upfront. In the 1990's there were various long term "leasing" offers to be had but I think they proved to be a disaster all round. I've also heard of, and been offered, 2/3 year fixed rate deals, or where you agree a longer berthing contract at an increased discount, but never where you have to pay for more than 1 year in advance.

Am i wrong in my thoughts?

Is the letter dated April 1st? They are joking, aren't they? 5% discount for something that you won't be receiving for another 12 months. They must think all boat owners are very financially naive. Then again, perhaps we are, or else why own a boat!

When I was marina based a few years back I always thought they were missing a trick in not offering an increasing discount based on time berthed with them, say an extra 5% discount each year up to a max of 20% after 5 years, but not payable in advance. Would certainly encourage loyalty and make it difficult and less attractive to move elsewhere.

 

[sighmoon]

I have to say that I would need a much greater discount than 5% to entice me to pay up front for berthing as there is considerable risk to that money.

Not if you pay by credit card

 

[pvb]

Only 2.5%! I get more in a Tesco Instant access account.

That's odd, the maximum interest rate they offer is 1.25% for balances over £50,000.

But I'm sure they would have arranged something special for you.

 

[sailorman]

we get a 5% discount if we pay in full by 31/12/12
rather that when normally due 31/01/13

 

[doris]

Credit cards

Not if you pay by credit card

My marina now only accepts up to £500 by credit card.

 

[wotayottie]

Am i wrong in my thoughts?

No - its a warning sign. The only possible business logic behind such an approach is to raise cash because you have a cash flow problem. It might just be someone's daft idea but I would suspect that the marina are in diffi9culties and I would not want to pay even year 1 in advance.

 

[sailorman]

My marina now only accepts up to £500 by credit card.

i pay the whole lot on the card ( we are allowed & no extra charge).
i get 7 weeks to pay & covered if the marina goes pop

 

[gjgm]

i pay the whole lot on the card ( we are allowed & no extra charge).
i get 7 weeks to pay & covered if the marina goes pop

Some companies charge you for c/card, so there goes even more of your "saving".
I am not sure how the punter is supposed to drive down the berthing costs. I hardly think the larger marina co.s are going to start a fight to the bottom, and you have to put your boat somewhere. Add to that, you may actually like your marina and dont want to go to somewhere else to save a few hundred.

 

[sailorman]

i pay the whole lot on the card ( we are allowed & no extra charge).
i get 7 weeks to pay & covered if the marina goes pop

Some companies charge you for c/card, so there goes even more of your "saving".
I am not sure how the punter is supposed to drive down the berthing costs. I hardly think the larger marina co.s are going to start a fight to the bottom, and you have to put your boat somewhere. Add to that, you may actually like your marina and dont want to go to somewhere else to save a few hundred.

 

[flawed_logic]

Have been talking to a number of other berth holders to "float the idea" of a a syndicate, so instead of negotiating for one berth we are talking about 8. However it means all members must do what the syndicate says and if that means everyone switch then they must ..... this has proven the must difficult part to pin down.

 

[photodog]

At the beginning of all this...must have been 2008... We were in Plymouth and PYH offered substantial discounts. For up front payments... Iirc they were giving a big chunk off for each year in addition to one... We paid just for 2 years up front and it brought down our fees by something like 20%..... It was definetly worth it... I would have paid for a third year as well... But I was not as happy with the risk three years out as the downturn was just getting underway...

 

[Stork_III]

That's odd, the maximum interest rate they offer is 1.25% for balances over £50,000.

But I'm sure they would have arranged something special for you.

Currently 2% Online Account, (0.75% bonus), I get 2.6%, the rate in Nov, (1.35% bonus for 1 year). Bonus is guaranteed rets is variable.

 

[pvb]

Currently 2% Online Account, (0.75% bonus), I get 2.6%, the rate in Nov, (1.35% bonus for 1 year). Bonus is guaranteed rets is variable.

But that's not the Tesco Instant Access account which Camelia said he had but which pays a maximum of 1.25%, not the 2.5% he claimed. You can check the interest rates here if you don't believe me.

 

[[2574]]

I am not sure how the punter is supposed to drive down the berthing costs.

By negotiating.