Sailboats are looking better. Trips on the motor yacht might be getting shorter.
Record fuel prices appear to be making an impact on the leisure-boat industry around Puget Sound. While sales continue to grow this summer due to low interest rates and a stronger economy, the high fuel prices appear to be cooling the rate of growth and altering the blend of watercraft attracting buyers' interest.
Brokers say they're seeing some buyers shift to sail or to more efficient diesels, and they say some yacht owners are shortening their trips and throttling back to a more fuel-efficient pace when underway. It's a trend that parallels the automotive world, where fuel costs are causing many buyers to move away from big SUVs and toward smaller cars and hybrids/
"I've had people tell me, 'We've just sold our powerboat and we're looking for a sailboat, due to rising fuel expense,'" said Brian Gross, CEO of Windworks Yacht Sales Inc. in Seattle. "Those who are more concerned, or have more of a monthly budget, are the ones leaning more toward the sailing side of things."
New-boat sales statistics from the Northwest Marine Trade Association indicate that sailboat sales were stronger than those of motor-powered vessels during the second quarter of 2005, as fuel prices have been climbing upward and the higher prices have been given much media attention.
Sail craft sales rose 4.3 percent during this period compared with the same quarter of 2004, while sales of new motor yachts dropped by 8.1 percent during the second quarter of this year, according to association statistics. Sales of new pleasure craft of all types were up just 1.1 percent in the second quarter of 2005, a substantially slower pace than the year before when overall growth hit 15.7 percent for the year.
Last year, sales of new motor yachts grew much more robustly than sail, with 763 sold for the year, up 14 percent over the year before, while the 141 sailboats sold were up 8.5 percent over the year before.
To be sure, high fuel costs seem to be a factor only for selected buyers, some observers say. With new 40-foot cabin cruisers costing $400,000 or more, they point out, the cost of fuel is only a small part of the substantial expense of owning and operating a large pleasure craft.
Furthermore, the figures cited above reflect only the relatively small base of new-craft sales, not including used craft.
Regarding gas prices, association President Michael Campbell said, "The phones don't ring and say boat sales are dead in their tracks because gas is $2.43 a gallon. People are reluctant to give up that pleasure when the cost is incremental." Campbell's Seattle association represents both boat builders and sellers.
Olympic Boat Co. Northwest regional manager Mike Helgen agreed with Campbell. He said he hasn't perceived many buyers backing away from buying larger boats due to fuel prices. Olympic, which specializes in mid-market boats such as Bayliners built by Brunswick Corp. of Lake Forest, Ill., is one of the industry's largest retail chains.
"It's a conversation piece but not a deal breaker," Helgen said about fuel prices.
But then he added, "Maybe it (sales) would be a heck of a lot better with lower fuel prices."
Tom Morrison, owner of Morrison North Star Marine, the only gas dock on Seattle's Lake Union, said he's seeing boat owners get much more conscious of how much they're spending for fuel, and more mindful about operating their boats more efficiently. He's now charging $3.24 a gallon for marine gasoline, while diesel is close behind at $2.89 a gallon.
"I used to sell more gas, now I'm selling way more diesel," he said. "Some people are retrofitting their boats, manufacturers are putting diesels in smaller boats now."
Diesels power vessels far more efficiently while lasting longer between overhauls, although the initial installation price is higher. Chet Craig, a broker for Adventure Yachts Inc. in Seattle, estimated a 40-foot gasoline-powered cabin cruiser will burn 15 to 18 gallons an hour at speed, while a diesel will burn only 10.
"That's quite a difference," he said, adding that he's finding gas-powered boats above 40 feet are "really difficult to sell; they burn a lot of fuel."
Robbie Robinson, president of Signature Yachts Inc. in Seattle, which primarily sells sailboats, said he's also been having unusual trouble unloading the gas-powered cabin cruisers that people bring to trade for sailboats.
"The gas-powered boats are sitting quietly, not being sold," he said.
Higher priced fuel also is causing owners to run their boats at slower and more efficient speeds, rather than push them to their full speed capacity.
Boats in general are much more efficient at what's called "hull speed," which is a function of their length. Many large cabin cruisers are equipped with dual engines that can push them beyond hull speed, but fuel consumption then drops precipitously.
Ray Rairdon, owner of Ray Rairdon Yacht Sales Inc., estimates a large vessel may burn 2 gallons to 4 gallons of fuel per mile at high speed, but about a gallon a mile at a slower 10 knots.
"A lot of the boats have very large engines running 300 to 400 horsepower," he said. "Instead of hurrying to get there, they're slowing down and enjoying the scenery along the way."
Large sailboats are pure displacement hulls, and when under power they're very efficient, using less than a gallon an hour, Robinson said. He said his company, which primarily sells sailboats, is having a "gangbuster year" with customers trading in power craft and leaving with sailboats. He said he's moving the trade-in powerboats out at a discount, and making his money from sailboat sales.
"We're not converting powerboat to sailboat people; we're taking people who were already predisposed," he said. "They had been thinking about sailing in the past, and this is just enough motivation."
Another way yacht owners are saving fuel money is by not traveling as far, observers report.
Owners are reducing trips into Canadian waters, where fuel is even more expensive than here, and also avoiding crossing the border, which has become more difficult and time-consuming with tightened security.
Even when they're staying in Washington waters, large-boat owners are staying closer to home or spending more time in one place, observers suggest.
"I don't think people are going as far this year; they're taking one big trip instead of two and three, and they're staying around home," said gas dock operator Morrison.
With long-term projections that fuel prices will keep climbing as world petroleum reserves dwindle, Windworks CEO Gross said he thinks the shift toward sail is just beginning.
"Assuming fuel costs will continue to escalate, I would assume this trend will become even stronger," he said.
© 2007 Puget Sound Business Journal (Seattle)