Houseboat Rental Business Plan

The U.S. vacation houseboat market includes vacationers who are both local and from afar, including other countries. Renters are interested in rental periods of up to a week and use the houseboat to travel within inland lakes for activities both on the boat and in the surrounding area.

The market is primarily segmented by age and family status, as these different groups have different preferences when looking at vacation houseboats. These groups are broken into younger couples, older couples, and families. Single individuals are generally not interested in renting houseboats. The most economical houseboat rentals sleep 14 to 18 or more individuals and are rented by 2, 3, or 4 families at a time (or up to 9 pairs of couples). Generally, these families organize themselves into groups and plan vacations together, although some services assist with matching groups to share rentals.

Research and Markets writes that “vacation rentals represent a more than $24 billion opportunity in the US – that’s more than one fifth of all hotel room revenue and 8% of the total US travel market. And vacation rental consumers are a market to covet. They’re well-off, well-educated, and they travel – a lot. Nine in 10 take at least four leisure trips a year.”

The market discussed is based on vacationers to Northern California. However, vacationers who do not travel to Northern California or consider houseboats an option can be converted through exposure to Houses On The Lake’s marketing and collective marketing for the industry. The estimated growth rates given show this expected growth in Northern California vacationers over the next few years. Due to an aging population, the market for older couples is expected to grow faster than other segments.

Market Segmentation

The key market segments for houseboat rentals are described more fully below:

Young Couples: Aged 21 to 39, young couples without children look for romantic getaways as well as high-energy activities (ski boats, hiking, diving, etc.). While some may be wealthy enough to rent a luxurious houseboat with all the extras, many have to stretch to rent a basic houseboat. It is more difficult for these young couples to put together a group large enough to afford a large houseboat, but they may be able to use smaller houseboats with fewer amenities.

Older Couples: Aged 40 and up, although some within this age bracket will still be very active and self-identify with young couples, older couples without children look for romance and relaxation. They seek quieter activities such as fishing, light hiking, etc. Some cannot use a boat that requires a great deal of physical exertion to operate.

Families: Couples or individuals with children. They require a mix of relaxation for parents and high-energy activities for children. They may also require creature comforts for the children, such as entertainment centers, which couples can do without on a vacation. Sometimes a few large families band together to rent a large houseboat. Other families are less inclined to do this and more interested in being alone with their nuclear unit.

Target Market Segment Strategy

Houses On The Lake will focus specifically on families with children and young couples at the lower end of the market. With each boat sleeping up to 6, a couple or family will be very comfortable on these boats. By avoiding the market for older couples, there is more leeway as to the type of boat that can be rented and marketing can be more focused. Also, by offering only houseboats on the smaller side (compared to those that sleep 14 to 18) the business can better stand out among the options for houseboat rentals on Lake Shasta. Offering lower price rentals without luxurious accommodations means that costs can be limited as well.

Service Business Analysis

The vacation houseboat rental industry is comprised of hundreds of independent businesses in the United States, as well as owners of individual boats who rent out their boat for weeks without meeting the state requirements for commercial vehicles. Legal vacation houseboat businesses include those which own their own boats and those which create networks of independent owners and rent out those boats when they are not reserved for their owner’s use. These boats are checked to meet the state’s safety requirements and carry proper insurance to cover their use.

Research and Markets writes in January, 2009 that “the majority of bookings are done the old-fashioned way, at a time when nearly $100 billion in leisure travel will be booked online in 2008. Many property managers have yet to leverage the emerging business models, technologies and services that are spurring change.” That is to say that Web services and bookings are still not prevalent in the industry. Most rentals are made over the phone, even if the customer first learns about the business on the Internet.

Competitors in the Lake Shasta region include:

• Shasta Marina Resort: Offering ski boats, and three 14 or 16 sleeper houseboats, they offer dock hands and full services. Marketing for their business focuses on a mix of older groups, twenty-somethings, and children.
• Antlers Resort and Marina: Offers 8 houseboats, cabin rentals, and other watercraft. The business is forty years old and is the largest of the small resorts on Lake Shasta.
• Holiday Harbor: Also offers 7 houseboats, toy rentals, camping & RVs. Offers much the same information on its website as the others, with little differentiation.

Competition and Buying Patterns

The vacation houseboat industry is an asset-intensive business for some players who must purchase expensive houseboats and set up marinas to serve them. However, small players can enter the market with just one boat or by managing the rentals for existing owners. With reduced barriers to entry, an opportunity exists for boat rentals at the low end of the market.

When choosing a vacation houseboat, vacationers look at the following:

• Location: Most vacationers will choose the geographic area they intend to visit first and then look at the houseboat rental companies available there. They will generally not be swayed to a different geographic area based on the company.
• Availability and promotion of appropriate activities: Families and couples are all looking for rental companies which make activities easy to find and take part in, either by providing them directly or providing resources and help to access those activities.
• Boat amenities: For customers at the high end of the market, luxurious accommodations and creature comforts on the boats are extremely important. For those new to the market, “roughing it” somewhat is more important. It is the latter group which Houses On The Lake will focus on.
• Price: For customers at the lower end of the market, price is more important than amenities. For most groups, houseboat rentals can be much less expensive than hotel accommodations for the same sized group. Like cruise tickets, houseboat rentals can offer some luxury at prices which most vacationing Americans find reasonable, assuming they can assemble a group of enough passengers for the boat.