How do you properly set the rates at a marina? It’s not just guesswork. Instead, there’s a methodology that yields the correct rent based on market levels. So how do you do it?
What’s the market rent?
Before you can even start deciding on what your rent should be, you have to become a master of the market. You need to make a Google list of every marina in the market, and then call each (posing as a customer) and finding out what the rent is, what it includes, and if there are any specials. If someone doesn’t answer, you call back until they do. This is a scientific project, and you must get all the data. You will typically see a commonality in the rents – a number that many different marinas share – and this becomes kind of the benchmark. While your rent does not have to this exact amount, it’s safest to stay in-line with the market rents unless your marina has some outstanding advantage.
What’s the market vacancy?
This next step will require you driving the market and looking at your competition and seeing how full they are. While some may be 100% occupied, others may be struggling to be half full. What you’re doing is trying to get a handle on market vacancy. Obviously, the more full the competition is, the higher you can set your rents and still have high occupancy – mainly because there’s nowhere else for them to go. In the event that the market is fully occupied, then you can be much more aggressive.
What services does the competition offer and how do you stack up?
While you’re out looking at the competition, you must also take careful notes on whether they are nicer than yours or not. What are their amenities? When was it built? What condition is it in? The goal is to figure out how you stack up against the competition in property condition, appeal and location. Imagine yourself as a customer and ask yourself “how much more or less desirable is this marina than the one I own?”
Putting it all together and building your war map
The logical final step is to build a “war map” that shows all of your “enemy” locations and what their rates, specials, occupancy and desirability looks like. Literally, put this on a map so that you can figure out exactly where you fit in at a glance. Stare at this map and look for trends or commonality. For example, “the marinas at the north end of the lake charge higher rents” or “the occupancy in the southern marinas is higher”. Then come up with your final analysis of what your pricing should be based on all of these external factors. Now you have a scientific approach to setting your rents, and not just guesswork or – even worse – just blindly following the rates of your predecessor.
Setting the correct rental rates at your marina is vitally important. There is a science to it if you want to do it correctly. Follow this methodology to get off on the right foot.