Over 75% of public golf courses offer a season pass. Ninety-five percent of those “annual” memberships are vastly underpriced.
What is the rationale for this irrational decision?
Golf courses often sell an annual pass in the offseason for the upcoming year to create cash reserves. The justification proffered is that having a stable base of golfers creates customer loyalty. Further, the facility, it is presumed, will benefit from the incremental spending of these golfers for merchandise and food and beverage.
However, someone always loses with the sale of a season passes – either the golfer who purchases it and doesn’t sufficiently lower their cost per round or the course when the golfer plays an excess of rounds beyond the calculated “breakpoint”: the average number of round estimated that a season pass holder will play.
We have found that season pass holders who play far more rounds than the calculated breakpoint become territorial demanding preferred access, are rude to daily fee players and as a result, often become resented by course’s management and staff.
Recently, we observed 114 season pass holders pay an average of $5.92 per round. The operational cost to produce the round of golf was $14.25. Go figure!
At another course with a posted green fee of $65 and carts $20 extra, we were informed that the average revenue per round for season passes was $26.93. Beyond the ability to play an unlimited number of rounds, season pass holders were given exclusive access to the golf course after 4 p.m., four free rounds for guests, discounts on merchandise, and advance booking privileges. These “bonus perks,” when introduced in 2019, resulted in a surge of annual passes being sold: 215, as shown below.
The net impact of this program resulted in the golf course realizing revenue per round purchases of 39.9%. The benchmark for a golf course is that they should realize a revenue per round of 60% of the prime time rack rate. The result is that the golf course “forfeited” $497,483 in potential revenue.
What the pandemic has clearly demonstrated is that those golf courses that offer season passes have underachieved in comparison to their brethren, who eschew such programs.
If one is to offer season passes, there is a simple formula to determine the ‘break point’ illustrated for the “median” golf course below:
|Unlimited Pass – Walking: Nationally|
|Proper Annual Fee||$2,705|
Note that a Golf Playable Day (GPD) as defined by Weather Trends Internation is where the maximum temperature is above 45 degrees Fahrenheit and below 95 degrees Fahrenheit, precipitation is less than 0.25 inches of rainfall, and wind speed is less than 19 miles per hour.
While one may debate that definition, applying it consistently for clients across the US has provided consistency and guidance in properly suggesting annual membership rates. Most golf courses north of I-70 use a breakpoint of 40 rounds.
Far preferable to season passes is the establishment of a loyalty program. One golf course that I believe has it right is the Alamo City Golf Trail. They have established a three-tier loyalty program:
|1||$64.95||Best for golfers that play once per month|
|2||$359.95||Best for golfers that play once per week.|
|3||$2,800||Best for golfers that play as much as possible…|
Tier 1 provides for the following benefits:
- $21 Off Regular Rates at Brackenridge Park, $6 at Twilight
- $8 Off Regular Rates at Cedar Creek, including Twilight
- $6 Off Regular Rates at Northern Hills, Olmos Basin, Riverside, and Willow Springs, including Twilight
- $4 Off Regular Rates at Mission Del Lago, $6 at Twilight
- $3 Off Regular Rates at San Pedro Par 3
- $3 Off range balls at San Pedro, Cedar Creek, Mission Del Lago, and Northern Hills
- 6 Free Green Fee Promo codes sent during select months each year and a FREE Birthday Green Fee during the month of your birthday. Promotional/Birthday rounds can be used Mon-Fri. Not available for use on weekends or holidays. Mandatory $16 + Tax Cart Fee applies to both riders and walkers.
- One-Hour early Twilight Times
- $5 Discount on Simulator Fees at San Pedro
- Loyalty Points for each paid green fee, Range Balls, and simulator usage. Points redeemable for free green fees.
- An additional discount on the weekend for Seniors and Active Duty or Retired Military personnel
Tier 3 provides for unlimited golf. For an additional $1,200, an individual can also purchase unlimited carts.
The benefit of a tiered program is that the customer either paying every time they visit the golf course and those that have unlimited playing privileges have paid an appropriate fee.
If golf course owners now creating their budgets for 2022, would examine their annual pass programs, on this 2021 Labor Day maybe they would have to labor less.