We have been closely monitoring in the Denver metroplex the availability of getting a prime time weekend. Getting up at midnight on Friday night to find a tee time is taking its toll. Reserving a weekend foursome before 1 p.m. at the Weiskopf/Morris Ridge at Castle Pines – No chance. The municipal City and County of Denver City Park? I don’t even try anymore. Thus, I often play as a single getting paired with other golfers willing to pay a significant premium to secure a tee time more than seven days in advance.
However, in Canada, a different story is emerging. 33% of the golf courses reported rounds were down in July compared to the same month in 2020? In the US, June 2021 rounds were up only .04% over 2020.
Is the market for golf starting to soften?
At the Golf, Inc. Spring Conference, Jon Last of Sports and Leisure Research Group and David Lorentz, Chief Research Officer of the National Golf Foundation, expressed concern that the surge experienced in 2020 where rounds were up 13.9% over 2019 would not be sustainable.
If one looks beyond golf, there are troubling signs that the economy has not returned fully:
- At Golf Galaxy at Park Meadows Mall, they have 72 display racks for new golf irons. Only 14 displays have clubs available for purchase on August 4, 2021.
- Titleist shoes, ordered in June, are back-ordered until October 31.
- A Callaway 9 iron, ordered in June, is scheduled for shipment in November. The stock has fallen from $37.73 to $33.20, we believe, due to a constraint on revenue from manufacturing challenges.
- One can not purchase a small sample of Sherwin Williams paint due to massive inventory shortages. You are required to buy at least 1 gallon rather than a mere pint.
- Simply Lemonade is nearly impossible to find at local grocery stores. It sells out with hours of being restocked. So much for the evening summer Vodka Lemonade. ☹
Further, as reported by the New York Times, “With more companies delaying their return to the office, working from home will remain a reality for many of us for the foreseeable future. And at least some remote work is likely to become a regular part of our lives, even after the pandemic is behind us.”
All of these factors ironically bode well for golf. Thus, for the foreseeable future, the bloom does not appear to be fading from the rose, as highlighted by these examples:
- Steve Skinner, Chief Executive Officer of Kemper Sports, and Tom Bennison, Chief Development Officer of Club Corp at the Spring 2021 Golf Inc. Conference, expressed that their firms saw record bookings for 2021. Skinner’s and Bennison’s perspectives were validated as 2021 rounds through July 31 are up 22.8% over 2020.
- Golf courses are reporting record revenues. Meadow Park Golf Course grossed over $450,000 in July alone – a record by a wide margin. Under the guidance of Chris Goodman at Metro Parks – Tacoma, this historic $1.4 million operation is likely to exceed $3 million in revenues primarily sparked by range revenues have increased from $100,000 to over $900,000 with the introduction of Top Tracer.
- A southern California municipal golf course exceeded planned revenue by over $140,000 as the year-to-date rounds exceeded the target by 24%, with REVPAR up 7.9% by eliminating all discounts.
- Mike Cutler, Senior Vice President, Indigo Golf Partners reports that he has not seen any software in golf, the REVPAR on many courses is up over 10% and the banquet business is ramping up with vengeance. He does caution the job market for qualified operational employees will be a challenge until the government turns off the spigot.
While these numbers are impressive, the best example of how proactive leadership can produce a windfall is seen under the sage leadership of Ms. Sue Wells, Acting Director of Oakland County Parks, and Mr. Thomas Hughes, Chief Park Operations and Maintenance – South District. Here are their numbers:
|Combined Course Information through July 31|
|Senior, Military, Adaptive Veterans Starts||
They are up to $748,790 in revenue over 2019 as the revenue per round has increased from $27.14 to $30.20 – an 11.27% increase. How did they do it, and what are the lessons for you?
- They benchmarked their rates against the competitive set and raised rates to equal the value they were providing, irrespective of what other golf courses may have been charging.
- Conducted a customer survey in which respondents highly rated course conditions and customer service reflecting the golfers felt the courses were underpriced.
- Introduced online reservations. Over twenty percent of tee times are now booked online, saving labor expenses.
- Eliminated Spring Rates under bear/squirrel theory. Golfers will pay more for golf in the Spring for the same experience than in the fall.
- Raised the rates for leagues by curtailing reduced fees provided for green fees and carts.
- Delayed the implementation of fall rates until October 15 rather than reducing rates after Labor Day concurrent with greens verification.
- Eliminated discount programs previously available in regional magazines and via punch passcards.
- Simplified the rate structure, now offering 32 rates throughout the golf season, down from over 100.
- Restricted the use of Volunteers (cart attendants) play to limited times.
- They also strongly considered raising the age for seniors from 62 to 65. They delayed implementation of that marvelous idea until they completed a comprehensive study of that change. All Oakland County Parks rates, i.e,. swimming pools, parks, etc. used 62 as the age threshold for discounts.
Do all those changes go smoothly? Tom Hughes stated, “Overall, the non-discounted rates have had very little pushback. The new rates are mostly in line with the comparable facilities of each course.”
However, as to be expected, the Seniors were upset. Tom reported, “Seniors….that was a user group that was very upset and were very vocal. Many phone calls, emails, and face-to-face conversations took place to address the comments and concerns with the senior group. Staff really took a beating the first six weeks of the new rates, especially since the spring rates were eliminated too, which made the increase look even higher when compared to other courses that were offering reduced spring rates. During that transition time, all the commissioners and administrative team were consistent in maintaining the rate increase, which provided support to staff and showed we were all on the same page as an organization. Although it was difficult, staff did manage it wonderfully.”
From these changes, it appears that Oakland County may eliminate the $1.4 million cash flow deficit they incurred in 2020. It is amazing the impact well-informed policies can have on the bottom line.
At some point, the golf market is likely to soften, as is being seen in Canada. There is a lesson now for all golf course operators when demand vastly exceeds supply. It is a perfect time to raise rates and streamline your policies for a more effective operation. When the market softens, it is always easier to offer appropriate discounts during slack times rather than try to raise your rates than to cover operational expenses.
While some customer pushback is likely, as the Golf Professional at Glen Oaks stated, “When I was getting grief for the higher rates from a customer, I merely told him would he be so kind as to step aside. The customer behind him is willing to pay the higher rate.”
Profits are earned by the bold and courageous. Are you of that mindset?
 New York Times, “Coronavirus Briefing” August 4, 2021.