A leading economic pointer makes waves: Boat sales up
The 50-foot luxury yacht towered above the showroom floor, its gleaming black hull masking three well-appointed bedrooms, mahogany cabinets and six TVs inside.
The Galeon 500 Fly, weighing 55,000 pounds and listed for $1.6 million, is the largest and most expensive boat at the 2019 Houston Boat Show held this week at NRG Center. Johnny Timmons, a dealer who sold five yachts totaling $4 million at last year’s expo, is confident he can find a local buyer for the Polish powerboat.
“I have no doubt it’s going to sell at this show,” said Timmons, a salesman with luxury boat dealer MarineMax, which has a private marina in Clear Lake.
Local dealers anticipate another year of strong boat sales, buoyed by a robust national economy and healthy consumer confidence. After seven consecutive years of sales growth, however, industry leaders are worried the tide may soon turn amid recent fears of a looming recession, aluminum tariffs that are increasing
costs and rising interest rates. The marine industry forecasts boat sales will rise by 3 percent or 4 percent this year, down slightly from 4 percent to 5 percent sales growth seen last year.
“Everyone is expecting some softness late this year and into 2020,” said Thomas Dammrich, president of the National Marine Manufacturers Association. “But we don’t expect a rapid decline in boat sales.”
Boats, a discretionary purchase made by those with disposable income, are a leading indicator of where the economy is headed. Boat sales, for example, were falling heading into the last recession, which became the worst in 70 years. Boat sales plunged 60 percent and manufacturing production declined 80 percent.
Since the Great Recession, sales of motorboats and other marine equipment in Texas have rebounded, growing 68 percent over the past decade to nearly $1.7 billion in 2017, according to the National Marine Manufacturers Association. The Chicagobased trade group represents 200 boat makers, 50 engine manufacturers and 700 marine accessories companies across the country.
“As long as boat sales are still growing, there’s still reason for optimism,” Dammrich said. “Recession is not imminent.”
Still, boat dealers nationally will be watching sales closely at the Houston Boat Show, the first major boat show of the year and a reliable bellwether for how sales will fare this year. Houston is one of the largest boat markets in Texas, which ranks among the top five biggest boating states nationally.
The 2019 Houston Boat Show features nearly 1,200 boats, including cruisers, center-console fishing and pontoon boats. Dealers at the expo lost a day of sales due to the Houston Texans playoffs game Jan. 5, but attendance is on track to hit last year’s records, said Kenneth Lovell, president of the Houston Boat Show and the local trade group, which oversees 50 dealers.
An estimated 80,000 people, many of them prospective buyers, are expected to attend the 700,000-square-foot expo, where some dealers can make as much as half of their annual sales in a little more than a week.
“There’s always a lot of eyes on Houston,” Lovell said. “The industry is always looking to see how we do.”
Dealers at the Boat Show said they have not seen any decline in interest or sales despite recent dive and wild swings in stock markets. Cole Starr, the owner of Coastline Marine based in Seabrook, said 2018 was his best year since starting his company in 2008. The dealer sold 70 custom fishing boats last year, each ranging in price from $60,000 to $110,000.
Starr is now building out a second dealership location in Kemah and nearly doubled his booth space at the Boat Show to showcase 13 boats. Starr said he hopes to sell at least 10 to 15 boats at the show. Within the first few hours of the boat show, he already had deposits on two.
“I don’t see any slowdown,” Starr said. “Everyone’s been telling me their sales are off the hook.”
In another sign of the industry’s health, dealers are hiring. SMG Boats, which sells about 350 boats locally each year ranging in price from $18,000 to $350,000, doubled its sales staff to eight. Within the first few days of the Boat Show, the Conroe-area dealer sold a $200,000 Bennington pontoon boat, featuring a fridge, speakers and party lights.
Texas Marine, which sells more than 1,000 boats annually in the Houston area ranging in price from $15,000 to $350,000, hired 15 additional full-time and part-time workers to its staff of 100. Jonathan Whitmire, the general manager of Texas Marine’s Conroe dealership, said he hopes to sell 250 boats at the Boat Show, a 30 percent increase from last year.
“We’re expecting a good show and a good year,” Whitmire said.
Most buyers shopping around the Boat Show said they were unfazed by the stock market gyrations in recent weeks. They said they saw a boat as a longterm investment in creating family memories, ones that will last longer than a Disney vacation.
David Delgado, 37, said he hoped to spend about $50,000 on a new ski boat, used by water skiers. The West Columbia resident grew up wakeboarding on the San Bernard River and wanted to introduce the water sport to his two children, 8 and 4. As a mechanic in the oil and gas industry, he said he was not worried about recent volatility in the stock market.
“Even when the market fluctuates,” Delgado said, “I’m pretty good.”
Rex Colorado, 55, recently lost his high-paying job as a general manager for a Houston-area mobile camera distributor but still came to the boat show with his 14-year-old son Lucas to check out the latest fishing boats. An avid fisherman, Colorado, of Royal Oaks, said he views boating as a passion and a lifestyle, one that few are willing to give up even when times get tough.
“The boat is one of the last things to go,” he said, “along with dinner on the table and gas in the boat.”