Luxury Boating Industry Riding Wave Of Popularity
Susan Puleo, an interior architect, mixes glass spiral staircases, leather floors, fiber optics and African rosewood to set off antiques in clients’ salons. The stairs, entwining cockatoo cages, lead to master bedrooms with fireplaces and waterfront views, dance floors with smoke machines, hot tubs with wet bars, even to basketball courts that fold away when not in use.
Her creations also speed along at 20 knots, burn 400 gallons of fuel an hour, turn 1,200 gallons of sea water into fresh each day and spend the summer in the Mediterranean.
A new gilded age of yachting is dawning.
Five years after Congress repealed a 10 percent luxury tax on new boats costing more than $100,000 that had contributed to a plunge in sales, the boating industry is rebounding vigorously.
Led by an appetite among the newly rich for extravagant boats - costing $3 million to $30 million - new yacht sales, both motor and sail, last year roughly matched the record $2 billion in purchases reached in 1988. While still much lower in inflation-adjusted dollars, the total today reflects a smaller number of much more expensive boats.
The boating revival is a visible measure of the wealth created by the stock-market boom and yet another example of the widening gap between the rich and everybody else.
Sales of inboard cruisers, which are generally at least 35 feet in length, jumped 38 percent last year to $1.7 billion. Sales of sailboats over 35 feet long rose 40 percent to $350 million.
For almost a decade, the boat industry was dead, leading to the closing and consolidation of several companies and a drop in employment from 600,000 to 400,000 jobs. Even today, with employment back up to about 650,000, sales of smaller motor yachts, 35 to 50 feet, have only partially recovered.
Whether the two-year luxury tax can be blamed for causing the downturn still is debated. Signed by President George Bush along with a tax on expensive cars that was included in a deficit reduction bill, the luxury boat tax went into effect in 1991. After an immense cry from marine communities, and little to show in higher tax revenues, the tax on boats was repealed in August 1993, retroactive to January.
The National Marine Manufacturers Association, representing inboard motor cruisers, argues that sales would be nearly double today if the tax had never been enacted.
But boating began to drop two years before the tax went into effect and remained battered by fallout from the 1987 stock market crash, the 1990-91 Gulf War recession and the shock, however brief, of high interest rates and high oil prices. And for a while, the ostentation of the mid-1980s was passe.
Boating, once the favorite pastime of successful car dealers, lost allure - plagued by high costs, poor quality and competition from golf and other leisure-time activities like watching movies on elaborate home entertainment centers.
Shaken manufacturers, learning hard lessons from the auto industry, are only now beginning to stress better service, innovative financing and factory efficiency.
“We did blame the luxury tax,” said Frank Herhold, executive director of the Marine Industries Association of South Florida. “But while many in the industry slept, our market share slipped away.”
That was then. But now, here in America’s Venice, where there are canals chock-a-block with 17,000 boats, dozens of brokers and a small army of marine craftsmen, the recession seems a distant memory.
“It’s on a real good upswing,” said David Gennett, a sales executive with Allied Marine Group in Fort Lauderdale. Florida leads the nation in marine expenditures at $3.4 billion last year.
Nationally, there is a backlog of factory orders, spilling demand to used boats that sell for close to their original price.
“Since August we have taken in $90 million in net sales, as much as I took in in all of ‘96,” said Bryant Phillips, senior vice president for sales and marketing of Hatteras Yachts in New Bern, N.C., which dominates the 39- to 70-foot motor-yacht market. “It reminds us of the salad days of the late ‘80s.”