Ever wonder how a weekly houseboat rental can cost $12,000, or how many days are in a snow rental season? Or about the difficulty in getting insurance for motorcycle rentals? For car rental operators that want a look at a different rental universe, Auto Rental News examines recreational rental operations to see how they compare.
ARN profiles three powersports rental operations on land, lake and mountains: Harley Davidson motorcycle and scooter rentals at Route 66 Riders in Southern California, Yellowstone Adventures’ combination snowmobile and car rental in the Yellowstone National Park, and houseboat and personal watercraft rentals on Lake Powell on the Arizona and Utah borders.
The operators discuss the seasonality of their businesses, rates, fleeting and de-fleeting, liability issues and insurance costs, land access restrictions and strict rules that they face when renting vehicles for use on protected land.
Lake Rentals, from Personal Watercraft to Houseboats
Lake Powell, the 183-mile long man-made reservoir straddling the border between Utah and Arizona, has been called one of the greatest water recreation spots on earth. Vacationers can rent “anything that floats,” according to Bubba Ketchersid of Lake Powell Resorts & Marinas, including houseboats, powerboats and personal watercraft (PWC).
Operating under Strict Rules
However, as Lake Powell is under the authority of the National Park Service (NPS), public access is strictly controlled. “The Park Service’s objective is to preserve and protect,” says Ketchersid, a district manager for Aramark Parks & Destinations, owners of Lake Powell Resorts & Marinas and the sole concessionaire for the lake. “We have to manage our business so it fits that model.”
Moreover, the NPS not only restricts the number of boats allowed to rent out at any one time, it closely monitors and approves watercraft rental rates, marketing materials and consumer-facing collateral. Changes in rental rates for watercraft are initiated by comparability studies with similar businesses done every three years. “We have to justify our rates to the Park Service. We can’t just start charging more because we want more profit,” Ketchersid says.
Economy Causes Shift in Rentals
The company has managed fleet size to fit the economy. The houseboat fleet has dropped from a peak of 150 to 130 this year. The powerboat fleet has decreased from 150 units to 120. The economic slump has led to a change in not only the number of rentals but also the types of houseboats rented. In the past, Ketchersid says the largest 75-footers were always rented, whereas now, the 62-foot and 59-foot models are in the water more often.
The booking window has also narrowed from reservations a year in advance to now six or seven months in advance.
The largest and most luxurious houseboat, accommodating up to 12 people, rents for about $12,000 per week. PWC rates are $240 per day, or $50 per hour for a minimum of two hours.
During the boating season, from June 15 to Sept. 15, utilization is around 90 to 100 boats out at any one given time.
The lake is open during the winter, though rentals are minimal. (Two houseboats have been reserved for Christmas this year.) That doesn’t mean Ketchersid can rest easy in the off season. “I tell everybody we go back to a normal 40-hour workweek in the winter. In the summer, it’s blow and go, seven days a week,” he says.
Stretch Holding Times by Remodeling
The company keeps its houseboats in fleets for about seven years, though that holding period has been stretched to nine years for some boats. Last year, the company purchased 20 new houseboats. They’re not buying any boats this year, but rather remodeling their older models to get a couple more years out of them.
Their largest houseboat, a 75-footer, retails for about $400,000. Ketchersid says the goal is to keep the boats rented at least 12 weeks per year, which will generally pay the boat off within four to five years. The boats are sometimes self-financed through Aramark and sometimes leased.
PWCs cost about $8,000 and up.
Insurance and Safety
In the summer Lake Powell Resorts & Marinas has three boats out on the water every day servicing customers in a 50-mile radius for mechanical issues or emergencies. The company cooperates with rental agencies in other marinas, also operated by Aramark.
“We try to drive home that you always have a designated driver, and no alcohol for drivers,” says Ketchersid. “For the number of boats we rent out, we have very few major accidents.”
Aramark offers an insurance option for its renters, called a waiver liability. The insurance comes with either a $500 or $1,000 deductible. Because the concession is in a national park, the insurance cannot be mandatory.
Ketchersid has a total staff of 140 this year (down from 212 last year), including 20 mechanics in the summer. This winter he’ll retain 12 people on staff.
Finding New Houseboaters
Ketchersid says the competition isn’t necessarily other houseboat destinations, but different types of vacation venues such as Disneyland and cruise lines.
The company markets a customer loyalty program, which entails analyzing client demographic data and vacation travel patterns. They also partner with one of the boat makers, a Canadian company, to exhibit at boat shows that target the desired demographic.
Many houseboat rental customers own their own businesses and enjoy adventurous vacations. Ketchersid says 70 percent of houseboating customers are just the average upper-middle-class family who has been houseboating for generations. On the powerboat side, he estimates 70 percent of rentals are international guests.
“Our biggest challenge is finding new people and learning how can we get them into houseboating,” he says.