BWML leads marina meltdown

THE Canal & River Trust (CaRT) flagship Sawley Marina on the Trent at Long Eaton is leading the meltdown of inland marina berth occupancy, writes Allan Richards.

An independent investigation carried out in January and February this year has found the marina, which is operated by CaRT's wholly owned subsidiary BWML, only has 400 of its 620 berths occupied. That's more than one in three berths empty!

Red Hill Marina

The investigation was carried out by planning officers in connection with the re-submission of a planning application for a 553 leisure berth marina development at the existing Red Hill Marina at the bottom of the Soar. It was undertaken when it became apparent that out-of-date British Waterways information was being used to justify need for the marina.

Officers surveyed 15 marinas within a 40 mile radius of Red Hill and found average occupancy 77.8% rather than the 98% claimed. Between them the surveyed marinas had 3,355 berths but only 2,610 were occupied. The report produced suggests that there may be even more than 745 empty berths within a 40 miles radius because two marinas surveyed did not reply and smaller marinas did not form part of the survey.

The investigation also documented some marinas that have planning permission but are not yet open or, in two cases, not currently being developed.

Just 10 provisional bookings

A 150 berth marina at market Bosworth on the Ashby Canal due to open in 2014 says it has just 10 provisional berth bookings, with only 38 having signed up to its website's newsletter. Construction of a 220 berth marina at North Kilworth (Leicestershire) on the Grand Union has not started although planning permission was granted it 2012.

The giant 550 berth Onley/Barby development on the North Oxford Canal was granted planning permission last year. However, anecdotal information suggests that investors have pulled out as they do not see the marina being filled due to lack of demand.

Empty berths will increase dramatically

Obviously, if these developments proceed then empty berths will increase dramatically.

Pillings Lock Marina (12 miles from Red Hill), which faces a blockade by Canal & River Trust unless a new Network Access Agreement (NAA) is signed, was found to have 243 of its 315 berths in use. That's 77.1%, which indicates that its occupancy rate is average for the area.

Unfortunately for Pillings, but perhaps understandably, the report does not state which of the marinas surveyed are subject to NAA.

What can be stated quite categorically is that only one of BWML's 20 marinas nationwide is subject to NAA and it is not Sawley!

Inaccurate licence claim

The investigation also shoots holes through the claim that the number of boats on CaRT's waterways is increasing by 2.5% per year. It found the opposite to be true with boat numbers decreasing over the last three years.

The 2012/13 figure given shows 33,227, some 4.4% down on the previous year and well below the ‘over 35,000' still being quoted by CaRT.

What the report does not mention, however, is that an increasing proportion of the boats still remaining on CaRT's waterways chose not to have a home mooring. Three variations of numbers quoted by CaRT in the last six months are:

1. 60-70 per month
2. 67 in one month
3. 94 in the last two months of 2013

A crude estimate would be that last year some 600 decided that a home mooring in a marina or elsewhere was something they could do without.

How can marinas cope with this declining berth occupancy?

New Marinas Unit

Back in 2006, British Waterways New Marinas Unit forecast a massive growth in the need for marina berths. By 2015 it suggested that an extra 11,750 berths were need. It expressed this as 47 marinas each with a capacity of 250 berths.

Worked examples, indicated to potential developers that they could expect nominal pre-tax rates of return (IRR) for newly constructed marinas of between 15% and 18%. Developers worked on the assumption that demand would outstrip supply right up to 2015, but nobody stopped to consider what would happen if the reverse became true and supply outstripped demand.

As a result of British Waterways predictions, new marinas such as Pillings signed NAA agreements whereby 9% of their assumed gross mooring income would pass to the navigation authority.

No marina boom

It was in September 2010, that narrowboatworld first alerted the public to the fact that the ‘marina boom' was going terribly wrong. We noted that over the previous two years berth occupancy of BWML's marinas had fallen from 90% to 81%.

Whilst this was worse than the industry as a whole, private developers were also feeling the pain with both profits and the value of their assets falling. Put simply, it was becoming less expensive to buy a marina than develop one from scratch!

Expansion by acquisition

However, British Waterways had a plan to cash in on the marina industry's problems. In January 2011, its Board approved a plan presented by Finance Director, Philip Ridal (also a director of BWML) to invest an initial £4m (with more to follow) to allow its subsidiary to ‘expand by acquisition'.

The idea was to buy ailing marinas at less than the build cost and apply for planning permission to convert berths for residential use where demand was still supposedly high.

There is no documentary evidence to confirm that Pillings Marina was specifically targeted as part of the ‘expansion by acquisition plan'. However, it is known that British Waterways abandoned court action for non payment of NAA fees in 2011 and it is difficult to think what other reason they might have had for doing this.

Investment halved

Paul Lillie, sole director of the three companies involved in Pillings, has suggested that the investment in his marina was just under £4m. Today, it has been estimated that it would only fetch £2m when sold.

BWML went on to buy just two ailing marinas as ‘part of its expansion by acquisition' plans, but the whole concept now seems to have foundered due to difficulties in obtaining planning permission and unwillingness of existing berth holders to pay more for little increase in benefit.

Conflicting interests

One of the difficulties that CaRT has with marinas, as one marina owner points out, is that it is at the same time a navigation authority, a competitor and for some a landlord.

One of the bizarre outcomes of these conflicting interests is that the advice given to the developers at Red Hill regarding the need for more berths in the area simply did not match the reality of the situation.

Another peculiar twist is that CaRT supported the application. Was this because it gets its full NAA fees irrespective of berth occupancy and has the option of buying it if it fails? Or was it that as a navigation authority it feels that it cannot object on the grounds of ‘need'?

Supported and opposed!

At the same time as supporting the application, it has opposed the application via BWML due to the impact the new marina might have on its own at Sawley!

A classic case of conflict of interests.

CaRT's Board of Trustees are now taking an interest in BWML. In November last year, Vice Chair Lyne Berry asked for more information to be able to assess its financial, operational and reputational impact of its subsidiary.

Not before time!