BUSINESS
05/31/2008 05:12 am ET | Updated May 25, 2011

Megayacht Business Shows Signs Of Weakness

The boating business -- like many businesses these days -- is splitting in two. The lower end is suffering from the weak economy, while the Richistan market is sailing along without a care.

That's the conventional wisdom, anyway. If you look more closely, there are growing signs of a slowdown at the top of the yacht market. It's not sinking, but it is taking on a little water.

In an article in Megayacht News, David Reed interviewed a panel of yacht captains and brokers about the yacht slowdown. Here's what he found:

Trouble trading up. The yacht business depends on boat owners continually trading up to bigger boats (traditionally known as "four-footitis" but now more like "50-footitis"). Since boat buyers are having trouble selling their smaller boats (under $5 million), they're not trading up as often to buy bigger ones.

As one captain said: "We're trying to sell a 94-footer. The guys who would buy it need to sell their 80s and 70s. I've had several stand on my back deck and said 'I'd buy it in a minute if I could sell mine.' "

In other words, the weakness in the bottom of the boat market is creating a domino effect to the top -- a classic example of trickle-up economics.

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