Now, rising gasoline prices are forcing him to cut back on his dream.

Higgins, who says he purchased his 56 foot power boat in 2002, says he cruised about 7,000 miles in it last year. This year, because it costs him about $4,000 to fill up the boat’s 800 gallon tank, he says he plans to cut his trips to about 2,500 miles.

“The price of fuel has really changed our outlook,” Higgins says.

High gas prices are hitting recreational boaters and the boating industry across the USA in a variety of ways, says Scott Croft, spokesman for the Boat Owners Association of the United States, which represents approximately 650,000 boaters.

Croft says boaters he’s spoken to say they are not running their engines as much as they were.

“They’re consciously making the decision to use less gas,” Croft says.

“A lot of people are spending more time at the slip,” added Mike Anderson, director of the American Boating Association.

Higgins says it is more cost effective to stay docked because he does not have to run his generator, which burns about 2 gallons of gas every hour.

Boat sales are also feeling the effects of rising gas prices.

Ellen Hopkins, director of marketing communications for the National Marine Manufacturers Association, says sales are down through May about 15%-16% compared with May 2007.

Kevin Ketchum, chief operating officer of California Yacht Marina near Torrance, Calif., says boaters spending less time on the water may be having one positive impact: an increase in marina business.

“We think the downturn of the economy is actually helping our business,” he says.

Tom Tate, a harbor master at Korth’s Pirates Lair Marina in Isleton, Calif., says that he has seen increased activity. “This was a busier Fourth of July this year than last year, and last year was a low fuel cost year,” he says.

Even with the increase in activity, though, Tate says gasoline sales at his marina have dropped about 30% from last year.

At the Seven Points Marina at Raystown Lake in Hesston, Pa., houseboat rentals are up, and there is a waiting list for the marina’s 946 boat slips, says Pam Prosser, the sales and marketing director. Prosser says she sees a lot of people vacationing closer to home from within the state, as well as from the surrounding Maryland, West Virginia and New Jersey areas.

Despite the overall boating downturn, Croft doesn’t believe the industry should worry too much. “Boating is a lifestyle,” he says, adding that boaters are “going to find a way to make it work.”

George Schneider, 56, of Branchville, N.J., has reluctantly found one way.

“I have to get my friends to contribute gas money,” he says.

The not so great news? The rising demand won’t lift all retailers equally. Luxury and value priced stores will fare best, while midprice retailers such as department store chains will continue to get squeezed. Home related stores should also have a strong year. But all retailers from apparel purveyors to electronics chains are fighting to be noticed in a landscape packed with too many stores, while growing online channels siphon away more spending. It all adds up to continued cutthroat competition. “Most public retail companies are desperate for growth” says Millard S. Drexler, chief executive of apparel retailer J. Crew Group and former head of Gap Inc.

Nowhere is that hunger greater than among the overcrowded midprice tier of retailers that sell a high concentration of apparel. The ongoing shift toward casual clothing only heightens the competition because many chains sell similar goods, from jeans to khakis. That includes department store chains such as Sears Roebuck, May Department Stores, and Dillard’s, as well as department store hybrid Kohl’s all of which are suffering weakened outlooks. Also slipping are some specialty clothing retailers, including American Eagle Outfitters, Abercrombie & Fitch, J. Jill Group, Talbots, and Charming Shoppes. Merrill Lynch & Co. forecasts that the major department stores in 2004 will post a 2.3% increase in sales at locations open at least a year.

The assault is coming from below and above. On the value end, mass discounters Wal-Mart Stores and Target, off price chains such as TJX and Ross Stores, the Old Navy division of Gap, and warehouse clubs like Costco Wholesale continue to gain market share. Moreover, Wal-Mart and Target are significantly boosting the quality and style of their products. Dowdy Wal-Mart has rolled out a stylish line of women’s career clothing under its “George” label. Merrill Lynch expects that sales by mass discounters will grow by 3.6% in 2004 and wholesale clubs will see a 5.3% uptick.

Midprice retailers also are feeling the pressure from above. Luxury counterparts, such as Neiman Marcus Group, Nordstrom, and Saks Fifth Avenue, all rely on better service to sell more distinctive, higher margin goods. Merrill Lynch thinks luxury sales will lead the retail growth race, with a 6.1% surge.

Many midmarket retailers are trying to break out of the pack by enriching their offerings with better, more distinctive stuff. May’s Lord & Taylor unit, Brooks Brothers, and Federated Department Stores, which operates Macy’s and Bloomingdale’s, are among those adding higher quality private label clothes. Federated is trying to land or extend exclusive deals with brands like H, a fancier apparel line from Tommy Hilfiger launching this spring to which Federated will have sole rights for a year. “With a reputation like Macy’s, you don’t need to slug it out on price,” says Stuart M. Goldblatt, senior vice president at Federated Merchandising Group.

One problem is that there are too many stores, both real and online. The situation will worsen this year. After slowing for three years, growth in new retail square footage jumped by 9% in 2003, estimates F.W. Dodge chief economist Robert A. Murray. “That strength will continue into 2004.” While new storefronts are slicing the retail pie thinner, online retail is taking a bigger share, too. Cambridge (Mass.) based Forrester Research Inc. forecasts that e-commerce sales will rise by 28% in 2004 from a year earlier, to $122.6 billion. That will work out to 5.6% of overall retail sales, up from 4.5% in 2003.

The two largest sellers of merchandise on the Internet, eBay Inc. and Amazon.com Inc., continue to expand by offering broader assortments of goods. Both now are selling apparel, putting yet more pressure on bricks and mortar clothing retailers. Bluefly Inc. and Blue Nile Inc. have also shown there is room online for focused sellers of luxury goods. But some analysts question how far Amazon can expand into new product categories. “It risks brand dilution and confusion,” says Forrester senior analyst Carrie A. Johnson.

The marina also provides rack storage for 20 boats. The business is multifaceted. New and used boat sales ($700,000) and services ($972,000) are the top sources of revenue, followed by slip rentals and rack storage ($580,000). Sales of items such as life jackets and fishing equipment augment the bottom line, as does a small charter boat service.

To ensure year round revenue the goal of all New England marina owners the business loads up on service work in the winter and offers favorable annual rates on slips and storage. The staff swells to about 22 in the summer, from 10 in the off season, and is trained to provide exceptional customer service. “Except for commercial fishermen, no one really needs a boat,” the owner says. “So it has to be fun for people.”

COMPANY FINANCIALS         2004             2005           2006

GROSS REVENUE        $2.2 million    $2.4 million    $2.7 million

EBITDA(*)                $773,397        $941,027        $973,052

NO. OF ANNUAL
SERVICE CONTRACTS             252             291             315

THE ASKING PRICE
$9.15 million. The main assets are two parcels of land: one waterfront acre that houses offices, boat sales, the slips, and a retail store; and another two acres inland for the storage and service facility. The deal also includes three charter boats, three trucks, and boat hauling, dredging, and repair equipment.

PRICE RATIONALE
With pricey real estate, seasonality, and multiple streams of revenue, marinas can be tricky to value. That said, they often sell for a multiple of 10 times EBITDA, according to Tom West, author of the 200.7 Business Reference Guide. Here, the asking price of $9.15 million is 9.4 times EBITDA.

THE PROS
Building a marina or even expanding an existing facility is difficult on the East Coast, enhancing this business’s value. And rather than maintaining a large inventory of new boats, the owner enjoys an unusual consignment deal with another dealer, which reduces inventory and insurance costs.

THE CONS
In the summer, this is a 24 hours a day, seven days a week business. And the marina’s upscale clientele is demanding, so a new owner would have to meet high expectations in a tough market. There’s no shortage of boat dealers on Cape Cod and at least three full service marinas are nearby.

THE BOTTOM LINE
Industrywide, boat sales have been down this year. Yet demand for boat slips has grown as many marinas have been sold and closed to make way for condo developments. As long as slip and storage revenue (now $48,000 per month) covers a buyer’s debt service, the deal makes sense.

(*)Earnings before interest, taxes, depreciation, and amortization.

Inc. has no stake in the sale of the business featured. The magazine does not certify the accuracy of financial or other information provided by the seller. Inquiries should be directed to Marc Anton of Richard A. Mathurin and Associates (800-909-7740 or marc@madnasales.com).

Inc. also publishes paid business listings in the back of the magazine.