I Don’t Understand – Can You Help Me?

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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
Transferable No
Holes 18
Playable Days 260
Playing Frequency 30%
Rounds Played 78
Rate Rack  $51.00
Frequency Discount 32%
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:

Tier Fee Designed for
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.

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3 comments

  1.    Reply

    You’re too kind! Rounds up, Revenue up, PROFIT UP!

    A few minor tweaks coming for ’22 to push rate.

  2.    Reply

    Great analysis of a very controversial issue. This applies to public operations primarily. Curious to understand how private member courses would or could approach this. Most private clubs charge everyone an equal annual fee and within the membership there are those who play 100+ rounds per year vs those who may only be able to play a minimum number of rounds. Have you run across this in your travels, is it an issue at private clubs or do most just accept it and if it is an issue what are some of the proposals for change?
    I can certainly understand why a course that is a public play operation would want to do away with season passes or at least create some variant that allows the operator to control per round revenues.
    What do golf course operators think and how many of them are prepared to act?

    1.    Reply

      The dynamics and pricing models for a private club are vastly different than for a daily fee or municipal golf course. The value of a membership at a private club can not be calculated based on a cost per round because of the intangibles of the social status gained from membership.