While golf has historically been the least expensive sport when measured on a per hour basis, the Pandemic has created a surge in rates. I am starting to ponder whether the industry rates are reaching a ceiling on what golfers are willing to pay? With demand pricing in vogue and finding a tee time difficult in most metropolitan markets, the quick answer is no. However, for the first time, I read on November 27, 2023 an article in the daily publication First Call, titled, “Golf's surge still going in Coachella Valley, even if at a slower pace which cited, “We’ve built our budget for this year and we are planning our business plan for next year on the expectations that things are going to continue to grow,” said Rodny, the director of sales and marketing at the Indian Wells Golf Resort.” However, he added, “For many in the golf industry in the Coachella Valley, there are some signs that the surge, while not reversing, might be at least slowing down. “What I am noticing, particularly on the group side of the business, golf tournaments, smaller outings, is that there is some pushback on rates that is starting to happen that we did not see last year.” While the surge may have slowed in the desert, Rodny knows that the cycle for the game might end. But he also doesn’t know when that will be. “The wave has to crash eventually,” Rodny said.” In Colorado, I have noticed a dramatic increase in green fee rates. In 2022, you could have played 18 holes at the City and County of Denver’s City Park on a weekday for $22. This year the rate was $54. The Heritage Group purchased three courses in Colorado last year (Colorado National, the Golf Club at Bear Dance and Plum Cree) and raised prices by 25%. The increase in prices is best seen by the price of the Cyber Pass offered at the Troon managed Ridge at Castle Pines.
Year |
Rounds |
Price |
Cost Per Round |
2017 |
4 |
$215 |
$53.75 |
2018 |
5 |
300 |
60.00 |
2019 |
5 |
325 |
65.00 |
2020 |
5 |
350 |
70.00 |
2021 |
5 |
375 |
75.00 |
2022 |
5 |
400 |
80.00 |
2023 |
5 |
445 |
89.00 |
The associated 18-hole weekend green fee in this period has gone from $129 to $179 which is way overpriced considering the layout and bunkers that are unplayable – basically dirt with pebbles.
From a consumer’s viewpoint, it is difficult to pay a lot more for the same goods or services.
From a golf course owner’s perspective, perhaps now is the time to begin monitoring demand closely.
One technique would be to offer 100% of your tee times for 2024 now secured by a credit card and an advanced booking non-refundable deposit. Combined with eliminating dilutionary season passes, introducing player’s cards offering small discounts off the rack rate, and fully disclosing that no-shows will be charged the full rate is not canceled 24 hours in advance, these policies would ensure that the owner continues to benefit from the increased demand for golf without gouging the frequent golfer.
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Jeff Hoag
JJ,
It is not hard to make a case for higher rates when looking back at three things.
First, the lack of fee growth prior to the pandemic because of over supply of golf courses and bad mathematics where operators were searching for market share instead of operating profits, therefore keeping prices artificially low.
Second, the impact of inflation on all costs of managing and maintaining a golf facility. Payroll costs to find and hire management staff have increased substantially. The dearth of applicants for the agronomy side (Superintendents and their assistants) and the golf shop(Golf Pros, managers and their staff) have gone up dramatically. As an owner we continue to strive to pay our staff comparably to their peers. When we add in benefits our payroll cost have jumped 36% since 2020.
Third, deferred maintenance was very evident prior to the pandemic. With the high cost of equipment for replacement and capx projects to replace cart paths an irrigation systems require higher prices.
It is not unreasonable to see rates increase to support the continued operation of a golf facility. It is interesting to see all of the excitement about the growth of the game and the amount of people participating in non-course golf activities. Finding the “right” price to maintain the operation of a golf course and creating higher operating profits for future cpax will be a tightrope walk.