When renting an electric boat to putter around the harbor at Newport Beach, Josh Sitea has one recommendation.
“Duffy is synonymous with this experience,” Sitea told the Business Journal. “It’s like making a Xerox.”
Sitea is of course biased since he became the chief executive last November of Duffy Boats, which has 160 employees. He’s been laying the groundwork to grow the Newport Beach-based company by improving customer marketing, expanding operations and opening new revenue streams.
“I thought there was a lot of potential to take this company to the next level,” Sitea said. “This company has been around forever. It has a great cash flowing business, but there’s so many areas to expand and grow into and so many prospects to move this company forward.”
Duffy boats which have a top speed around 6 mph, are a ubiquitous part of the harbor scene in Newport Beach, playing as an important draw for its tourism.
They can also be found at harbors throughout Southern California, from San Diego to Dana Point to Marina del Rey as multiple operators have bought fleets to build their own rental businesses.
For more on Orange County tourism, see the Business Journal’s special report, which starts on page 15 and the Leader Board on page 57 where several executives reveal how they entertain visitors.
Duffy Boats feels like a startup although it’s 54 years old, Sitea said. While he declined to provide an annual revenue estimate, he gave a hint of his big audacious goal.
“My goal is to help grow Duffy Boats to $50 million in revenue within the next five years.”
Full Speed Ahead for Texas
Duffy Boats dates to 1966 when owner Marshall “Duffy” Duffield created the first boat by attaching a golf cart motor to an old beat-up motorboat. He then opened his first electric boat shop in 1970—a year later, Disney ordered 25 boats for a park attraction.
From 1970 to 2000, Duffy delivered over 15,000 boats. The vessels can range from 15.6 feet to 22 feet long with price tags starting around $65,000.
“I never thought Duffy Boats would become this popular,” Duffield said. “I was just trying to get a boat across Newport Harbor on battery power, with no idea I was about to create a whole new category of boats and revolutionize an industry.”
Nowadays, the company monthly hand builds about 12 to 15 new electric boats at a 57,000-square-foot factory in Adelanto. Duffy also runs rental operations in Newport Beach’s Balboa Fun Zone and provides cleaning and maintenance services.
Sitea plans to spread Duffy’s fame even further nationally. The CEO wants to build a nationwide rental network that is all managed by Duffy Boats. A deal for a new operation is in the works right now, according to Sitea.
Sitea said the local land doesn’t allow for a new location, so the company is searching to expand outside the city and Orange County. He said that Newport Beach is a bit saturated in the rental boat market.
“The rental business is a very profitable business for us, and we would like to duplicate that in different markets throughout the country,” Sitea said.
On the busier weekends, Duffy rents out 100 boats a day. Each rental center counts 40 boats in its fleet.
According to the company’s website, customers can rent an electric boat for 2-4 hours, ranging from $299-$549.
Sitea acknowledged that it would take time to find the right markets because of the difficulty of locating the right real estate, such as a slip that could fit 15 boats in the water.
Another difficulty is the need for restricted waterways since the boats are not built for open water. Future harbors would need to be next to complimentary, entertaining tenants.
“There are markets in California that we can do a better job of reaching and then there are markets out of state that we can hopefully get our footprint in the door,” Sitea said.
He currently has eyes on Florida, Washington and parts of Texas to start growing a national and eventual international footprint.
Sitea is also aiming to make the company more proactive in customer relationship management (CRM) for both renters and owners.
He noted Duffy Boats probably has a database of about 30,000 previous rental customers the company could be marketing to.
“The strength of the brand has been such that we’ve been able to survive and do well, just with people coming to us,” he said. “But I think there’s a whole other level to achieve when you start doing outbound outreach.”
Any future rental locations will be solely Duffy operated and could potentially be joint ventures.
“We want to maintain the integrity of the experience too,” he said. “We’re not going to outsource that.”
Faster Duffy in the Works
A good amount of the company’s revenue goes back into its rental fleet to make sure it is the most maintained group of electric boats in the harbor.
“We take a lot of pride for what we put in the water,” Sitea said.
Sitea sees an opportunity to start updating the rental fleet and launch new boat models.
The company in May introduced its first new model in 17 years, called the Duffy 20 CS.
It spans 20 feet and can fit 11 adults at a time lasting four hours at a top speed of 6 mph.
“We’re also working on some other boats that might go a little bit faster for different waterways as well,” Sitea said.
Including the newest Duffy, there are six different boat models currently available for purchase.
He noted that the past series of boats were satisfactory for the first 40 years. However, with new technology, Duffy boats could finally evolve.
“There are lithium batteries now,” Sitea said. “With lithium technology and changes in other areas, we’re now able to look at building boats that go longer, faster, and provide a different experience.”
As for its rental program, one new idea Sitea discussed was a Duffy limo program that employs licensed captains to drive clients around in their rented boat rather than steering it about the harbor themselves.
Locals often use the electric boats to bar hop among the variety of restaurants that line Newport Beach harbor.
Founder Duffield, who is still heavily involved in production, explained the popularity of the boats that go only about 6 mph.
“A big part of Newport Beach’s allure is the culture of relaxation by the water,” Duffield said.
“Duffy Boats give people a much more relaxed boating experience than speed boats. A slow cruise through the harbor is exactly what people need when they want to relax and enjoy the Newport Beach weather.”
A Boat Proudly Made in America
Marshall “Duffy” Duffield built the very first Duffy boat in 1966 by taking a motor from a secondhand golf cart and attaching it to the hull of a beat-up motorboat.
“The fact that there are boats still in the water from the ’70s and ’80s is a testament to how well these products are built by hand in America, by American labor,” new Chief Executive Josh Sitea told the Business Journal.
Duffy Boats’ manufacturing facility in Adelanto, 90 miles north of Newport Beach, currently employs approximately 70 people who build each boat by hand. Between 12 to 15 boats are built per month totaling up to 180 boats a year, according to Sitea.
Duffy acquired and moved into the Adelanto facility in 1998.
“There aren’t too many boat builders left in California. They will be exporting this to China, this to Mexico, and then they’re importing the stuff and assembling it,” Sitea noted. “We’re not assembling in America; we’re building in America.”
He also admitted that there is a cost to maintaining operations in California.
“We’re proud to have that cost because it represents our product. Whatever our plans are for growth, we are very focused on maintaining the same level of care about quality and made in the USA. It’s very important to us that we maintain that even if we grow outside of our backyard.”
