Issue Revision Description Date Signed 1 0 Draft issue for comment AB 2 A 2 nd Draft issue for approval AB 3 B Final AB

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2 HERNE BAY MARINA November 2016 Revision and Issue Record This report has been written and revised as follows: Issue Revision Description Date Signed 1 0 Draft issue for comment AB 2 A 2 nd Draft issue for approval AB 3 B Final AB This report is for the use only of the party to whom it is addressed for the specific purpose set out herein and no responsibility is accepted to any third party for the whole or any part of its contents.

3 Contents 1 Executive Summary Introduction Approach Information Gaps Introduction Location Location Appraisal Transport Links Planned Developments Tourism, Visitors and Attractions Demographics SWOT Analysis Location Summary Market Demand Methodology Summary of and comments on Gifford Demand Appraisal Boater Profiles Local Market Overview Volume Statistics Nationwide Market Overview Competition Competitor Locations Competitor Service Offering Competitor Occupancy Competitor Tariff Other Planned Marina Developments Requirements of the Market Tidal Access Window Boat Yard Fuel Other Leisure / Tourist Components Other Marine Related Facilities Traditional or Contemporary Specification On-site Parking Other Facilities and Services Required...35

4 7 Market Summary Demand Competition Requirements of the Market Commentary On Proposed Design Key Dimensions Facilities and Services Sealing the Basin to Impound Water Breakwater Overtopping Ground Levels for Flood/Sea Level Rise Tidal Access Window Siltation & Future Dredging Existing Infrastructure Condition Risks Financial Introduction Initial Capital Cost Future Capital Costs Income Assumptions Operating Costs Land Acquisition or Rental and Crown Estate or Other Lease Profitability Discounted Cash Flow Investor Appetite Commercial Viability Improving Attractiveness of the Project Potential Investors/Developers Approach to Finding a Development Partner Summary and Conclusions Demand Essential Components to Attract Sustainable Demand Risks and Opportunities Financial Viability & Investor Appetite...54

5 Figures Figure 1: Herne Bay Development Location... 7 Figure 2: Herne Bay Harbour Development Site... 8 Figure 3: Herne Bay rail connectivity...10 Figure 4: Population distribution by age...12 Figure 5: Gross Disposable Household Income per Head Figure 6: Catchment for Chatham Maritime Marina...18 Figure 7: Catchment for Mercury Yacht Harbour...19 Figure 8: Map showing the prime catchment area for Herne Bay Marina...20 Figure 9: Boat size by local postcode area...22 Figure 10: Competitor Locations...26 Figure 11: Competitor Locations by Size...26 Tables Table 1: Gross Disposable Household Income (GDHI) per Head...12 Table 2: % Change in GDHI per head for East Kent...13 Table 3: Boat type by local postcode area: CT1, CT2, CT3, CT4, CT5, CT6, CT7, CT13, ME9, ME10, ME Table 4: Estimated number of households owning a boat in Kent and Sussex...22 Table 5: Boat size by local postcode area...23 Table 6: Comparison of Competitor Offering...28 Table 7 Breakdown of berth numbers by size...38 Table 8 Recommended shower ablution block facilities...40 Table 9: Tidal levels for Herne Bay (Source: Admiralty Tide Tables 2016)...41 Table 10: Tidal access window for Herne Bay...42 Table 11: Breakdown of estimated capital cost...45 Table 12: 5 year P&L...47 Appendices Appendix A MDL Draft Marina Layout Appendix B CCC Marina Concept

6 1 Executive Summary 1.1 Introduction MDL Marina Consultancy (MDL) was commissioned by Canterbury City Council (CCC) to conduct a high level feasibility study to provide evidence or give specialist opinion on whether a marina within Neptune s Arm at Herne Bay is likely to be technically feasible, whether there is adequate demand for the marina and investor appetite for the project. The background to this study is that: i. A marina development on the Herne Bay seashore has been considered for some time by CCC and other local stakeholders to be a potential catalyst for the wider regeneration of Herne Bay. ii. The notable reports investigating this opportunity to date have been commissioned by CCC and the Herne Bay Pier Trust. These reports test their vision of a marina at the pier head with a reinstated promenade and roadway along the line of the old pier. These previous reports are; The Herne Bay Marina Market Demand and Viability Study (November 2011) and The Kent Marina Pier (Herne Bay) Outline Business Case (November 2012). iii. The scale, vision and approach of both reports were a little different and it was clear that there were limitations, risks and information gaps attached to the various scenarios outlined. The focus of the Council has now shifted towards testing a more achievable marina development that uses the existing coastal defence maritime infrastructure of Neptune s Arm. iv. An outline design concept has been developed by the CCC s Harbour Development Engineer which encompasses an enclosed basin that sits within Neptune s Arm. v. MDL Marina Consultancy was commissioned to clarify outlined information gaps. These information gaps relate to the market and the investor appetite for CCC s revised outline marina concept. vi. Appendices A & B give CCC s concept design and MDL s initial development of this concept. 1.2 Approach The approach has been to carry out desk top research to provide evidence, where it is available, to support a professional opinion on the market demand and likely future trends in demand. 1

7 Guidance on essential and desirable features to be included within the project is given based on operational experience. Comments are raised on CCC s proposed design solution and on the costs estimated by CCC. A high level financial model has been developed to allow the overall order of magnitude economics to be assessed to determine whether the project is likely to be economically viable and hence attractive to investors and developers. 1.3 Information Gaps A number of information gaps were highlighted in CCC s brief to consultants. The four areas where CCC is seeking specialist marina advice are as set out below. The summary comments are included here and a more detailed presentation given in the main body of the report. Optimal Design Essentials and Desirables Technical Feasibility The outline design proposed by CCC is considered to be technically feasible. More detailed comments are given in the body of the report. If the project progresses then the design would need to be developed. A suggested pontoon layout is given in the report which offers a range of berth sizes which closely match the likely market demand profile. This layout also offers a long pontoon which can be used for flexible space for a range of berth sizes. This is positioned close to the entrance such that larger vessels can easily access this pontoon. 4 Hour Tidal Access Window A 4 hour tidal access window (HW +/-2hrs) is considered the minimum requirement. Anything less than this is likely to be unacceptable to the market unless the berth price is significantly lowered. At 4 hours, Herne Bay can compete with other marinas in the local area. Boat Yard Services A basic yard offering lifting facilities and storage ashore is considered essential, although this need not include workshop and boat repair facilities as these are available in other yards locally. The yard should provide a facility for boat owners to work on their own boats or to bring in mobile contactors. 2

8 Fuel Berth and Bunkering A fuel berth serving diesel is considered essential. Ideally this would also offer petrol. Other Leisure / Tourist Components A food and beverage offering is always high on customer s lists, although not essential, particularly given what s already on offer within the town and close to the marina. The same is true of other leisure and tourist components. Such facilities are considered as desirable and add to the marina s appeal to annual berth holders and visitors, but are not essential. Other Marine Related Facilities The focus should be on leisure berthing. The tidal restriction is likely to deter other commercial operators, although day trip boats and recreational fishing craft may choose to operate from the marina. Other possibilities include RNLI, sea school, charter or brokerage. Traditional or Contemporary Specification The marina should be designed to conform to modern standards and to benefit from the advantages given by modern materials, such that the customer experience is modern and fresh. Onsite Parking Parking provision close to the marina is considered essential. The ideal would be sufficient spaces within the marina complex. If this is not possible then drop off spaces should be offered as a minimum allowing people to park close to the marina entrance to load and unload equipment and provisions. Offsite parking would then need to be offered locally and within a short walk from the marina. If there is no dedicated parking provision and customers experience difficulties in finding a car parking space, then this is likely to impact negatively on the marina. Demand and Herne Bay Market Position Overall it is believed that there would be demand for a marina in this location, although it may take several years before the marina achieves high occupancy. The assumptions on demand are based upon data provided by British Marine, upon observations at other marinas in the region and on data from MDL s own database for boaters living within the target catchment area. 3

9 A high level demographic study for the area also supports the notion that there are sufficient numbers of people living within the catchment area who match the demographic profile of a typical leisure boater, ie. in the right age group, with the right level of disposable income etc. As a visitor destination the marina is expected to be popular, given the appeal of the town, it s amenities and proximity to Canterbury. There are few other options for cruising yachts along the North Kent coast and therefore it is thought that the marina will be popular amongst sailors cruising along this coast and within the Thames estuary. Impact of Forecasted Economic and Marine Leisure Trends In recent years the marina and marine industries have both been enjoying sustained growth although this has slowed in the last 6 months following the EU referendum. Growth across the marine sector is said to be only marginally positive over the past 6 months. However, on balance more marinas are reporting increased turnover & profits as well as growth in workforce, than are reporting a reduction. At this time it is not clear what impact the Brexit vote will have on the industry but signs of instability and reduced customer and business confidence may result in fewer people choosing to buy a boat, or existing boaters choosing to sell their boats. Currency fluctuations are already having an impact, although this may be both an opportunity and a threat. The weaker pound could stimulate more people to remain in the UK for holidays, possibly leading to increased marine leisure activity. The relative strength of the Euro against the pound will make UK brokerage boats cheaper in continental Europe which could lead to brokerage boats being sold abroad and lost from the UK market, thus reducing volume in the market. Another challenge facing the industry is the ageing demographic amongst marine leisure participants with fewer younger new entrants to the market. The industry is responding to this challenge and will need to continue to evolve in order to address this problem. This is seen as an opportunity to create new boating opportunities that will be more appealing to new entrants to the market. Whilst growth in the market may slow down in the coming years, in the longer term it is thought that the market will continue to grow. With limited opportunities to build new marinas it is likely that demand will remain strong leading to relatively high occupancy in marinas. The existing demand in the Herne Bay region is presently catered for in drying creeks and on swinging moorings, or boats dry sailed from slipways. Therefore with limited competition, demand for a modern marina in Herne Bay is likely to be relatively strong. Other marina development plans in the region include possible projects at Whitstable, Margate and Queenborough, although not all (if any) of these will be built. There are 4

10 firm plans to redevelop parts of Dover harbour including creation of a new marina to replace existing berthing within the inner and tidal basins. Creation of additional berthing supply in the region could reduce Herne Bay s share of the market forcing Herne Bay to compete more strongly with either better services and facilities or a more competitive price. Business Case and Investment Appetite A high level capital cost estimate and cash flow forecast for the marina has shown that the marina could be sustainable although, with marginal profitability, it is thought that the marina will generate insufficient return on the level of investment needed to create it. Consequently, it is believed that the project will not be sufficiently attractive to a developer, as a stand alone project. Ideally alternative funding needs to be secured for the creation of the heavy civil infrastructure including quay walls and revetments, new western breakwater, the tidal gate, reinforcement / raising of the Neptune s Arm etc. If it is possible to secure funding for these elements then the basin could be leased to an operator to complete the marina fit out. The marina business is thought to be sufficiently profitable (based upon an initial high level appraisal) to support and provide a return on the c 2m investment needed for pontoons and basic marina equipment. An alternative would be to consider including other development plots within the project to help increase the overall development value to a developer. 5

11 2 Introduction MDL Marina Consultancy has been commissioned by Canterbury City Council (CCC) to carry out a high level study on the prospective marina and boat yard market for a potential development at Herne Bay, Kent. A review of previous studies, undertaken by Gifford and Colliers International in 2011 and 2012 respectively, has been carried out to establish information gaps that require specialist marina advice and market testing to determine whether there would be sufficient demand for a marina, and to allow development of the outline marina design. This report presents the findings of the study, considering annual and visitor berthing as well as the market for marina and boat yard services. The market has been studied with the aim of demonstrating that there could be adequate volume to fill the marina with customers taking annual marina berths, as well as demand for boat yard and associated services. Having demonstrated that there could be adequate volume in the market, the study progresses to identify the likely market segmentation in terms of boater profiles, what services and facilities they would want from the marina, and the relative demand for each berth size. This is based on an analysis of the market segmentation and evaluation of the location in terms of its appeal to different boater profiles. Consideration has been given to the likely implication of forecasted economic and leisure industry trends, and competitive developments along the north Kent coastline on the anticipated market for the Herne Bay marina. Guidance on how CCC could attract potential investors for the proposed scheme has been provided in the interest of developing the opportunity. The study has informed the layout of the marina and the facilities to be provided within the design. The layout and basic design requirements to best match the needs of the market are set out within the report and a suggested marina layout is provided. Further work would be needed beyond the scope of this study to firm up the design and business plan for the marina. The availability of land surrounding the harbour, and the commercial arrangements for use of this land for a harbour development, will likely impact on the design and overall viability of the project. The findings of this report should be taken as indicative only at this stage, although the fundamental points around overall market demand and financial and technical viability can be relied upon. 6

12 3 Location 3.1 Location Appraisal The site lies on the north Kent coastline, between Margate and The Swale (Figure 1). Source: Google Earth Figure 1: Herne Bay Development Location Presently there are very limited marina and berthing facilities on the North Kent coastline and consequently the market in the area is undeveloped. Research shows that there are boat owners living close by who presently keep their boats in other locations and whilst many of them will be driven by the appeal of other cruising locations, some will prefer the convenience of having the boat closer to home should the Herne Bay site be developed. The site is situated on the coastline in the centre of Herne Bay, which is a traditional Victorian seaside town and tourist destination, with activity centred around the Herne Bay Pier. The area lies within the Herne Bay Conservation Area, although the pier itself is not a listed structure (Figure 2). 7

13 Figure 2: Herne Bay Harbour Development Site To maximise the chances of success of the harbour it is important to understand the constraints of the site and to identify the likely sectors of the market that can deal with these constraints. It is then necessary to design in features and services specifically targeted to meet the needs of these sectors. 3.2 Transport Links With the opening of the international high speed rail station at Ebbsfleet roughly an hour away, Herne Bay is relatively well-connected via rail, or road by way of the M2 and A299. Roads along the seafront are small and not particularly well connected to the main through-roads of Herne Bay, although it is unlikely that additional users of the marina would cause disruption to the area. However, the issue of parking has already been raised, and there will likely be high competition for parking spaces during the summer season. This would be particularly problematic for marina users who need to transport luggage or equipment between their boat and vehicle. Road Distances to Herne Bay by road from major UK towns and cities are as follows: 8

14 Within half hour drive: Whitstable 6 miles Canterbury 9 miles Faversham 13 miles Margate 15 miles Ramsgate 16 miles Within 1 hour drive: Sittingbourne 22 miles Ashford 26 miles Dover 30 miles Folkestone 32 miles Maidstone 35 miles Greater than 1 hour drive: London 65 miles Oxford 135 miles Southampton 145 miles Birmingham 190 miles Sea Distance from Herne Bay to south east boating destinations are as follows: Canvey Island 25nm London 53nm Queenborough 18nm Chatham 25nm Swale 10nm Ramsgate 17nm Dover 35nm Calais 45nm Ipswich 35nm Burnham on Crouch 22nm The Blackwater 30nm Brightlingsea 25nm Hamble 148nm Southampton 151nm An easy passage from Herne Bay would be to some of the creeks and boatyards on the Essex side of the Thames estuary on the Blackwater, the Orwell, or the Crouch for example. The Swale, Chatham, or Ramsgate would make easy weekend destinations with sailing times of only a few hours. Other longer passages would be to London or further up the east coast to the River Ore or the River Deben, all of which can be easily reached within a day sail. Having a home berth within a few hours or a day sail of these locations would be a very positive factor for prospective customers when deciding where to keep their boats. 9

15 Rail With the new Ebbsfleet high speed rail station at 1 hour s train journey from Herne Bay, the site can be reached by train from cities as far north as the midlands within 3-4 hours and most local towns within 45 minutes. Train journey times to Herne Bay from four major cities are: London 1 hour 25 minutes Southampton 3 hours 30 minutes Oxford 3 hours Birmingham 3 hours 20 minutes Source: Javelin Trains Website Figure 3: Herne Bay rail connectivity 3.3 Planned Developments Over the next 20 years the population of Kent is forecast to increase by approximately 20%, although this varies by district. Additionally, between 2014 and 2015, migration was the primary factor in population change, resulting in an additional 12,000 residents. In order to meet this increase, Canterbury City Council s Housing Strategy outlines plans to provide 15,600 new housing units by Progress towards this is evidenced by several planned housing developments in Kent, particularly around Ashford, south Canterbury, and Manston. The regeneration of Margate is centred on the Margate Old Town and housing and infrastructure improvements. Boutiques, galleries, and cafes are now prevalent around the seafront, and the ongoing restoration of the oldest surviving amusement park in the UK, Dreamland. Increasing investment is being made into new housing and transport projects. 10

16 3.4 Tourism, Visitors and Attractions Waterfront Development The harbour itself is likely to become a visitor attraction, generating interest for the general public in and around the harbour. It would likely improve usage of the existing seafront at Herne Bay. As mentioned in the Gifford report, the Herne Bay Angling Association (HBAA) has over 1000 members. The HBAA holds annual Beach and Boat fishing festivals, among other events throughout the year, which contribute significantly to tourism around the Herne Bay area. There may be a higher demand for berths for fishing vessels than in adjacent areas in the Medway, for example. Other attractions may include traditional crafts such as boat tours, fishing charters, as well as a quayside fish market for local fishermen to land their catch. Other Visitor Attractions Although the town itself is a tourist destination as well as a population centre, many of the local attractions are over 20 minutes drive away which may be prohibitive for boaters without access to a car making public transport links even more important. Outside Herne Bay, and the adjacent town of Whitstable, the area is sparsely populated; the nearest large city being Canterbury. The Kent area has many nature-based attractions, including the Kent Downs Area of Outstanding Natural Beauty (AONB), Dover-Folkestone and South Foreland Heritage Coasts. Again, these require significant travel times by car and may not be available to all boaters. The Reculver Towers Country Park is a short walk from Herne Bay town centre, and could be an important attraction to the area. Many of the key visitor attractions are based in and around Canterbury, which has good public transport links to Herne Bay and therefore will be easily accessible to visitors. 3.5 Demographics The boroughs of Canterbury, Thanet, and Swale have a combined population of around 433,000 and are considered to be the main target market for Herne Bay. Other Kent suburbs and areas of boroughs to the south and east of Herne Bay would add to the pool of people considered to be the potential customers because, whilst some of these areas are sparsely populated, there are some pockets that are home to a more wealthy demographic. The population pyramid for the local area shows an aging population, with significantly fewer young adults (20-39 years) than the England average (Figure 4). 11

17 Source: Kent City Council Business Intelligence Statistical Bulletin: 2011 Census Population Figure 4: Population distribution by age The leisure boat market typically comprises people with a relatively high disposable income which may include business owners or other high earning professionals. Table 1 shows that the East Kent area has a higher average disposable income per capita than the national average. The latest available data is from United Kingdom 12,712 13,156 13,556 14,043 14,596 15,255 15,642 16,219 16,927 17,056 17,705 17,872 17,965 Kent (overall) 13,561 13,722 14,039 14,525 15,015 15,856 16,022 16,812 17,609 17,772 18,361 18,544 18,518 East Kent 12,898 13,067 13,275 13,771 14,249 15,085 15,278 16,364 17,176 17,461 18,055 18,305 18,121 Source: Gross Disposable Household Income 2014 Bulletin from ONS Table 1: Gross Disposable Household Income (GDHI) per Head The 2014 per head figure for Kent was 18,518, an increase of 0.1% from the previous year. The comparable national (UK) figure was 17,965 (+0.5% since 2013) and the figure for the south east was 20,434 (+0.0%). The percentage changes in GDHI since 2001 are as given in Table 2. East Kent ranked ninth (out of 21) for the period from , and third for the period , among areas within the South East Region. 12

18 Percentage change in GDHI per head for East Kent rank rank 43.0% % 2 Source: Gross Disposable Household Income 2013 Bulletin from ONS Table 2: % Change in GDHI per head for East Kent The East Kent area is presently tracking above the national average for GDHI but below the south east figure, as can be seen in Figure 5. From the demographic analysis the following types of people are likely to be found living within the catchment area for the marina: Professionals Business owners Families & retired Young adults These types of people are typical of marina customers with good levels of disposable income. The marina needs to be designed to provide facilities and services that this demographic would want. Professionals or business owners would typically have a large motor boat, however if there is a history of sailing in the family they may choose a yacht. In addition to an easy and convenient escape from the pressures of business life it may be used as an office extension, for corporate entertainment, or as an additional business, such as chartering. Source: Gross Disposable Household Income 2013 bulletin from ONS Figure 5: Gross Disposable Household Income per Head

19 Young adults typically look for the higher adrenalin boating activities such as fast cruisers, speedboats, sports boats, fast sailing yachts or jet skis. They may look to take part in racing activities, water skiing or regattas. Retired couples and families may have small to medium sized yachts or motor boats and typically look for picnic cruising destinations, fishing and explorations. In this case, the creation of a new market would look at targeting the above groups of people and encouraging the taking up of a new interest, focussing on longer term berthing, with the attraction of a new, quality marina that is close to an area with a high level of the people that fall into the target market. 3.6 SWOT Analysis Strengths Strategic location and good geographical location in relation to other sailing destinations. Recognised water and boating activity in area. Existing quay wall and breakwater reduces overall cost. Good sailing and cruising area. Proximity to population centres and good communication links. Attractive location with no commercial activity to spoil quiet enjoyment. Reasonable transport links to town. Limited environmental designations. Established recreational fishing area. Ability to provide bespoke designs for particular needs. Opportunities Source of new and diverse employment. Create a new development without significant design constraints. Location for events, festivals and competitions related to boating and marine leisure activity. Develop berthing and boating products to stimulate new entrants to the market. Weaknesses Water depth & potential tidal access restrictions. Limited existing landside facilities and supporting marine trade. Potential need to dredge and maintain depths. Major construction works necessary to create marina. Limited established market or support facility in local area. Limited ability to offer marine support services such as a boat yard. Limited car parking. Threats Modest return on investment means it is difficult to attract investment. Further development at established locations such as the Medway and Swale. Possible new developments at Whitstable, Margate and Dover. Ageing demographic amongst leisure boating participants. Economic effect of Brexit. 14

20 3.7 Location Summary The site is already an established seafront tourist destination. Whilst the north Kent coast is considered a secondary cruising area for the wider leisure boat market, the convenience of the marina for the local market and lack of competition could make this a viable location. There is already a series of public events and festivals, largely focused around sea angling and fishing competitions, which draw significant numbers of tourists to the area. Other tourist attractions may be difficult to reach for boaters, although there are good public transport links to nearby Canterbury. Kent is generally sparsely populated, with existing marinas at Ramsgate and Dover offering strong competition around population centres. 15

21 4 Market Demand 4.1 Methodology Whilst the brief does not require a full market study; to answer point 3.1 in the consultant s brief it is felt that a desktop study is needed to look at the size and segmentation of both the local and wider boating market. This is to provide evidence to support the views given on the demand for a marina at Herne Bay. MDL s databases of customers, prospects and visitors were used to conduct this research. In addition, trends and boater profiles were identified using research conducted by MORI, together with knowledge drawn from MDL s 40 years of successful marina operation. In particular, MDL s own experience in the Kent area at Chatham on the River Medway and the present market on the North Kent coast, gained through experience of sailing in the area, was used to guide views on the likely profile and size of the market for Herne Bay. The macro environment was analysed using market data published by British Marine, as well as general economic indicators. Again, MDL s own trading environment was considered. This investigation has provided the basis for the commentary on the demand and the design of a marina for Herne Bay to meet the needs of the target market. 4.2 Summary of and comments on Gifford Demand Appraisal Overall, the findings of the Gifford report in terms of catchment area, strength of demand locally and requirements of the market are considered appropriate. Whilst it is likely to take time to build occupancy, in the longer term it is thought that the marina could achieve high levels of occupancy provided it offers facilities and services to rival and compete with other marinas in the area. Other marine related activity that could be serviced by the marina is expected to include recreational fishing and potentially one or two day trip boats taking tourists out to the wind farms and Thames Estuary forts. Commercial activity from wind farm support vessels is unlikely to materialise due to the tidal access restriction. 4.3 Boater Profiles The occupancy of marinas is made up of five distinct boating types and, depending on the location and style of marina, a particular type will be dominant. For example, sailors who race their boats will favour marinas close to the start line of a yacht club, 16

22 whereas a social boater who enjoys being seen aboard his or her boat would favour a more glamorous or visible marina, perhaps in a city location or in a popular seaside town. A MORI Research Study conducted for MDL identified the following five boating types, but this list is in no way exhaustive: Serious Racers These boaters (primarily sailors) are spread across all age groups. They have a tendency to use moorings rather than marinas, as this allows them quicker access to the racing water. They are more likely than average to go out boating with other club members, and they tend to rely on marinas for weather forecasts more than other boating groups. However, they spend less time on board their boats than average each month. Champagne Social Boaters These boaters are likely to own motor boats of greater than average length. They tend to be under 34, and they are more likely than average to attend marina-organised activities and events. As a general rule, these people spend slightly longer than average aboard their boats each month. As might be expected, they are the group most likely to rely on the marina for provisions. Social Boaters and Family Boaters (two groups) These two groups are very similar in many respects, with the major difference being the presence of children on board the boat among the second group. (Although the focus groups identified different requirements in terms of marina facilities between these two groups, the quantitative survey does not provide any statistical data to back this up.) These people are primarily weekend sailors, who tend to go sailing two or three times a month, while the warmer weather lasts. They usually go on day trips, or spend time pottering around. The MORI research found it hard to find out more about the fifth group - tentatively entitled Fanatics - as one of the main factors determining membership of this group is virtually year-round use of the boat, compared to more seasonal use among others. However, MDL s experience is that this group often prefers the convenience of having the boat close to home making it easy to visit and spend time aboard on a regular basis. 4.4 Local Market Overview The general split between the type of boat that occupies a marina sits fairly evenly between sail boat and power boats but there are regional variances. In order to identify likely boater profiles for Herne Bay, MDL s Chatham Maritime Marina was studied due 17

23 to its relatively close proximity (40 miles / 45 minutes by road) and access to the same coastal sailing waters. In summary: The split between the type of boat that occupies the marina is roughly equal between sail boats and power boats (52.4% and 47.6%respectively). The boat lengths that are most popular in the marina are m (31%) and m (27.8%). The customer types for Chatham are Champagne Social Boaters, Social Boaters and Family Boaters, although at Herne Bay it is considered that the latter will be more prevalent along with a proportion of Fanatics. There could also be a small proportion of Racers if a racing scene could be developed, potentially with Herne Bay Sailing Club offering facilities at the marina for keel boats rather than only dinghies. The majority of berth holders at Chatham live in close proximity of the marina, as shown in the catchment area map in Figure 6. Figure 6: Catchment for Chatham Maritime Marina In the case of Herne Bay, drawing on MDL s experience and research, it is expected that demand would come from the local area with a drive time of around 30 minutes. This results in a catchment area extending as far as Sittingbourne to the West, including the Swale areas of Faversham and surroundings, and Whitstable; the Canterbury area and surrounding villages to the South, and extending as far as Thanet to the east. 18

24 However, it should be noted that further East and South East, demand is likely to be catered for by marinas in Ramsgate and Dover. Boaters who live closer to the Medway area are likely to berth their boat on the Medway or travel to the South Coast. This is evidenced by the catchment for MDL s South Coast marinas such as Mercury Yacht Harbour which includes the Medway area but does not extend as far as East Kent, as shown in Figure 7. As previously mentioned, boaters who live further East or South are likely to berth their boat in Ramsgate or Dover, unless they particularly want to sail in the Thames estuary rather than the Channel. Alternatively they might travel to the South Coast. Figure 7: Catchment for Mercury Yacht Harbour Therefore, the postcode areas considered most likely to provide demand for a marina development in Herne Bay are: ME9, ME10, ME13, CT1, CT2, CT3, CT4, CT5, CT6, CT7 and CT13, referred to as the local area and shown graphically in Figure 8. The typical customer types expected for Herne Bay are Social Boaters, Family Boaters and Fanatics with a smaller proportion of Racers and Champagne Social Boaters. As Social Boaters use their boat regularly (two or three times a month) and enjoy being in a vibrant leisure environment, a marina right on their doorstep and within a developing and popular seaside town would certainly be convenient and attractive to this group. Fanatics or traditional boat owners enjoy year-round use of their boat and 19

25 would prefer to be using their boat rather than spending a long time in their car. Therefore, a local marina would again be attractive to this group. Whilst the fanatics don t generally require much from their marina, other than secure berthing and yard and chandlery services, the Social and Family boaters typically look for other leisure attractions within, or close by, the marina such as retail or food and beverage outlets as well as proximity to leisure or entertainment and tourist attractions. Figure 8: Map showing the prime catchment area for Herne Bay Marina Visitors are generally also driven to a marina by its leisure facilities. Canterbury is close by and there is a good transport infrastructure. The Seafront and Pier at Herne Bay is also developing and during the summer months there are events such as the Air Show and music in the historic band stand. Therefore, with development of these activities it is considered that Herne Bay could become a destination marina for regular visitors. A marina at Herne Bay would also attract yachts on passage from the Thames Estuary and East Coast rivers round to the South Coast. At present there are no marina facilities along the 35 nautical mile stretch of coast between the Swale and Ramsgate. Yachts crossing the Thames Estuary, on passage from the Thames or Medway rivers, or from the Channel in the opposite direction, would be faced with an additional passage time of around 2-3 hours after passing Herne Bay, before reaching a marina in either direction. Therefore, being mid-way between existing marina facilities would make Herne Bay a convenient stopping off point for traffic coming from either the east or the west. Whilst the majority of the marina s income will need to come from annual berthing to maximise viability, some income can be expected from visitor berthing. The marina 20

26 should be designed to offer services and facilities for the target boater types and to attract visiting yachts. 4.5 Volume Statistics Table 3 is based on data from MDL s customer, visitor and prospect databases and analyses the local area by boat type. MDL Annual Customers POWER SAIL UNKNOWN BASE 50.00% 43.18% 6.82% 44 MDL Visitors 25.47% 59.43% 15.09% 106 MDL Prospects 42.22% 57.78% 0.00% 45 MDL Previous Customers 45.76% 54.24% 0.00% 59 Average 40.86% 53.66% 5.48% Table 3: Boat type by local postcode area: CT1, CT2, CT3, CT4, CT5, CT6, CT7, CT13, ME9, ME10, ME13 Analysis of Table 3 shows that the split between power and sail boats in the local area is biased towards sail, although it should be noted that this is from a relatively small sample size. From the base, it also identifies 254 boaters in the area known to MDL. It is also fair to say that due to the distance from this region to MDL s main areas of operation it is likely that MDL only have contact with a small proportion of the local sailing community. Therefore a sample size of 254 known boaters in the region is considered a good indication that there will be many more. Note: the databases have been cleansed to remove any duplication. The data in Table 4 identifies that there could be up to 70,483 households in the South East that own boats suitable for a marina in Herne Bay, although not all living within the expected catchment area. This data is drawn from the British Marine Watersports Participation research which is managed by an external research agency. There is a question that asks interviewees about boat ownership and, since this is a nationally representative survey, the results from this question are weighted to the UK adult population to provide estimates of total boat ownership in the UK, and by region. This analysis is based on a small sample size and figures have been taken over three year averages in order to make the research more statistically robust, however the total number of households with a boat must be taken with caution as this is a statistically derived figure and could be significantly over or under estimated. 21

27 Total to 2015 average SOUTH EAST 95% % Households Sample (Kent & Sussex) confidence All boats 3.1% 111, /- 0.5% Sail boat 0.9% 31, /- 0.2% Yacht 0.4% 12, /- 0.2% Power boat 0.3% 9, /- 0.1% Motor boat 0.3% 10, /- 0.1% Canal boat 0.1% 1, /- 0.1% Canoe/kayak 1.4% 48, /- 0.3% Rowing boat 0.2% 6, /- 0.1% RIBS inflatable/sports boat 0.2% 6, /- 0.1% Windsurfer 0.4% 14, /- 0.2% Personal watercraft 0.0% 1, /- 0.1% Population & sample size 3,555, Total of highlighted cells 70,483 Source: British Marine Table 4: Estimated number of households owning a boat in Kent and Sussex Analysis of Figure 9 and Table 5 shows that the largest percentage of boats in the local area fall into the 8m to 10m length band, closely followed by the 10m to 12m band. This is consistent with MDL s experience at Chatham Maritime Marina and indeed the MDL group. Therefore, the berth sizes likely to be in most demand for Herne Bay are the 8m 10m and 10m - 12m berths. Figure 9: Boat size by local postcode area 22

28 Size Up to 5.9m MDL Annual Customers MDL Visitors MDL Prospects MDL Previous Customers Average 0.00% 1.89% 6.67% 1.69% 2.56% 6-8m 18.18% 15.09% 28.89% 11.86% 18.51% m 43.18% 45.28% 31.11% 33.90% 38.37% m 22.73% 25.47% 15.56% 30.51% 23.57% m 13.64% 4.72% 13.33% 22.03% 13.43% m 0.00% 5.66% 2.22% 0.00% 1.97% 18.1m+ 2.27% 1.89% 2.22% 0.00% 1.60% Table 5: Boat size by local postcode area 4.6 Nationwide Market Overview The UK Marine Industry Trends report (November 2015 June 2016) from British Marine, along with the British Marine Economic Benefits of UK Boating Tourism report and MDL s own experience was used to establish the state of the industry and to understand how the market generally, is likely to develop. The UK Marine Industry Trends research is a bi-annual survey that monitors marine businesses economic performance and was completed by 257 British Marine members. Summary of findings The marine industry has continued to grow over the last 6 months, although the rate of this growth has slowed across all key metrics. This echoes the performance of the wider UK economy, which saw reduced growth prior to the EU referendum. The uncertainty and financial volatility that has followed the EU referendum has clearly had a knock-on effect on marine industry business optimism, with marine businesses reporting a negative outlook for the coming 6 months. The outlook for the marine industry also differs significantly across marine sectors; exporters and tourism-focused businesses are generally more positive about their future business prospects, since these are companies whose markets will accrue a net benefit from currency depreciation following the vote to leave the EU. Whilst boat exports will not help the case for a marina in Herne Bay the weaker pound is driving more domestic tourism which arguably could result in increased leisure boating activity in UK amongst existing boat owners, choosing to stay at home rather than holidaying abroad. 23

29 The weaker pound could also result in brokerage boats being sold abroad which ultimately will lead to a reduction in volume of the UK leisure boat market which may take time to re-build. The marina industry is also facing a problem with an aging customer base. The industry is not seeing as many new entrants to the market (people buying boats) as there are people choosing to stop boating and sell their boat. Instead, new entrants to the market are tending to consider fractional ownership or chartering as a means to start boating. The industry is working to address this problem by creating ways to make it easier for people to participate in leisure boating and water sports and promoting the activity to increase numbers of participants. Within the next years there is likely to be a change in marina customer profile and type of boat. There may be more larger boats owned by groups of people or commercial organisations, with a greater proportion of smaller, privately owned boats. This could impact on longer term demand for marina berths as well as the ideal berth size mix. Across the industry marina customers may move towards a greater proportion of commercial operators as the boat owner and berth holder. Marina users may increasingly be customers of these organisations, being more focused on enjoying use of the boat and the marina facilities than on boat ownership. Commercial operators will want a base that is fully accessible at all states of tide and are considered unlikely to choose Herne Bay as a location. Therefore, for a marina in Herne Bay it is likely that the future demand for marina berths will reduce and the expectation is that smaller berth sizes will be in more demand. That said, there will still be a proportion of larger boats in the marina and overall it is expected that there will be adequate volume in the market in the future to sustain occupancy of a 300 berth marina in Herne Bay. 24

30 5 Competition 5.1 Competitor Locations It is generally accepted within the marina industry that some customers will typically be prepared to drive for up to two hours to go boating. This correlates well with the catchment areas for MDL s Solent and other south east marinas, where the catchment areas include London and parts of Kent, or Essex in the case of the East Coast marinas. Herne Bay lies approximately two hours drive from the Solent (eg Portsmouth or Chichester Harbour) and around two and a half hours from the Hamble and Southampton marinas. Therefore, some of the potential customers living nearby may prefer a South or East coast marina, where there is a more developed leisure market, better cruising grounds, or a more active racing scene. These customers are unlikely to be the target market for Herne Bay. For others, the driver will be the convenience of having the boat close to home and therefore these are considered to be the target market for Herne Bay. It has been identified that there are almost no other marinas or other berthing options within half an hour s drive of Herne Bay. Faversham is the closest for leisure boating facilities although only offering drying berths, while Ramsgate is the closest full serviced marina at around half an hour s drive away. The zone between half an hour and one hour s drive of Herne Bay, is within a similar driving time of other competitor locations. It is marinas within this zone that are considered to be the direct competition for Herne Bay. Other marinas north of the Thames and on the South coast are not considered to be in direct competition because of the journey time involved. The locations that have been specifically identified as potential competitors are as follows: Medway Chatham Marina Gillingham Marine Hoo Marina Swale Queenborough Harbour Conyer Creek Marina Swale Marina Young Boats (Faversham) North Kent and Channel Coast Whitstable Harbour 25

31 North Kent and Channel Coast (cont.) Ramsgate Yacht Marina Dover Marina (Granville Dock, Tidal Harbour, Wellington Dock) The locations of competitor sites are shown on Figure 10, and the berth numbers by location are shown on Figure 11. Figure 10: Competitor Locations Figure 11: Competitor Locations by Size 26

32 5.2 Competitor Service Offering The product and service offering for each competitor, taken from the Practical Boat Owner magazine s 2016 berth price guide (published in March 2016), is shown in Table 6 together with their average pricing. Information for sites marked with a * was taken from their websites. From Table 6 it can be seen that most competitors offer water and electricity, and toilets and showers which is considered to be a basic service provision. Some offer laundry, WIFI and fuel, as well as gas cylinder sales and basic chandlery, all of which are desirable services. Some of the competitors have boat yards attached with lift out capacity varying from 8 tonnes to 50 tonnes. Chatham Maritime, Ramsgate (Outer Harbour) and Dover (Outer Harbour) all offer full tide access and berths where the boats can remain afloat throughout the tidal cycle. Additionally Ramsgate and Dover Inner Harbours also offer berths where the boats remain afloat throughout the tidal cycle, however access to and from the berths by sea is limited by the tide. 27

33 Location Marina Medway Harbour Dues Inc. in berth Number of berths Max berth depth at MLWS (m) Approach depth at MLWS (m) *Tidal access window for 1.5m draught vessel Average annual price /m (Ex Water/ Electricity Toilets/ Shower Swale Laundry/ Wifi Diesel/ Petrol Gas/ Chandlery Lift-out max. tonnes North Kent & Channel Chatham Maritime Marina N hr 270 YY YY YY YY Y< 16.5 Gillingham Marina N hr 280 YY YY YY YY YY 65 Hoo Marina/Port Werburgh Y HW +/- 3hr Queenborough Harbour (*) Y Various 72 SS Swale Marina N Conyer Marina N Young Boats (Faversham) N Whitstable Harbour (fishing & commercial) <HW +/- 4hrs <HW +/- 4hrs <HW +/- 4hrs 202 YY YY YN N N 168 YY YY 141 YY YY 145 YY YN N _ 127 YN N N NY N O N O N O N N N N NN 15 NN 10 YN YN 30 <N <N 8 N N YY 8 NN YY NN n/a Ramsgate (Outer Harbour) Y hr 302 YY YY YO YY <Y 40 Ramsgate (Inner Harbour) Y Dover (Granville Dock) Y Dover (Wellington Dock) Y HW +/- 2hr HW +/- 4hr HW +/- 1.5hr 275 YY YY YO YY <Y YY YY YO Y< << YY YY YO Y< << 50 Dover (Tidal Harbour) Y hr 306 YY YY YO Y< << 50 Legend Services Y = Yes N = No S = Some berths < = within a mile Table 6: Comparison of Competitor Offering Wifi Y = at berth O = Onsite N = No 5.3 Competitor Occupancy Competitor occupancy has been estimated from aerial photography and recent enquiries made to these marinas. Looking at aerial photography of the competitor sites they mostly appear to be at a high level of occupancy. The time of year at which the photo was taken has been taken into account, and if this was outside of the general boating season, leading to seemingly vacant berths, the number of vessels stored ashore was also assessed. 28