The creation of a strategic plan requires work. To ease and accelerate the development of a winning formula for a golf course, there is a seven that is followed producing a winning financial result. This process moves along the “critical path” from strategy to tactics to operational execution.
While the golf course’s location and the impact of weather are uncontrollable factors, fortunately, there are also many controllable elements for a strategic plan, such as:
* identifying the best architectural and agronomy practices.
* using the most appropriate operational procedures for every step in the assembly line of the golf experience.
* measuring customer satisfaction and loyalty.
* benchmarking the financial results.
* leveraging technology to ensure efficient operation.
Here is an overview of each of these steps:
1. Geographic Local Market Analysis
This analysis includes the six vital measurements that accurately forecast the potential of your facility. They are the MOSAIC profile; the age, income, and ethnicity of your customers; the number of golfers per 18 holes; and the slope rating within your competitive market. Only exclusive remote private clubs and resorts escape precise classification based on these factors.
This step answers what:
• The course’s financial potential is.
• Annual revenue should be.
• The appropriate green fee is.
These are vital data points you need to know if you are going to manage a golf course profitably.
The key questions to be answered are: Are the MOSAIC profile, age, income, ethnicity, and population density sufficient to sustain the golf courses? Do the demographics indicate that there is enough demand to meet the available supply? How many golfers per 18-holes are there within the competitive local market? Where does your course rank as to its financial potential amongst the 14,613 golf courses in the United States?
The axiom that “if rounds are up, it’s because of good management, and if rounds are down, it’s because of bad weather” is a standard joke, but golf is an outdoor sport. Experts estimate that over 90% of rounds played are when the temperature is between 55 and 90 degrees. Monitoring the number of playable golf days in a year compared to a 10-year trend allows an analyst the opportunity to filter the financial information to differentiate between the impact of weather and the effect of management on a course’s performance. Conduct a weather playable-days study to determine if you are over or under-performing the weather. Access to Weather Trends International’s 11-month weather forecast service is available for a slight incremental fee, and it will be 88% accurate for temperature and 83% accurate for precipitation.
The key questions to be answered are: What impact has weather played on rounds vs. management policies? Are there sufficient playable days to generate a return on the proposed investment? Has weather forecasting been fully leveraged? Are season passes appropriately priced based on the number of playable days and how frequently the golfer plays and the discount desired? Is seasonal staffing being correctly deployed?
These first two tasks quantify the uncontrollable factors that impact a golf course’s financial performance and clearly define the course’s investment potential. The results from this analysis determine the strategic vision for the facility and the viability of the course.
Assembling this data represents a competitive market review. (Chapter 3)
3. Architecture and Agronomy
A golf course is a living organism. It only appears as designed by the architect on the day it opens. Primary constraints to keeping it looking as intended include annual renovation expenses and the equipment required to maintain a course. Comparing the available equipment to industry standards and identifying deferred capital benchmarks provide valuable information.
The key questions to be answered are: What is the proposed style of the golf course? Are the design, agronomic and turf practices, and equipment levels compatible with the vision for the facility? (Chapters 4 and 5)
The entrance to the clubhouse, staffing, organizational structure, merchandising, food and beverage, accounting and budgeting procedures, information systems, advertising, marketing, and public relations need to be evaluated and compared to the industry’s best management practices. (Chapters 6 and 7)
The key questions to be answered are: Will the value provided equal or exceed the associated fees? Are the proper operating procedures going to be consistently deployed through each step of the “assembly line of golf”? What additional programs can be added to bolster revenues? Are the marketing strategies adequately aligned between the customers’ preferences and the experience offered? Are the staffing levels appropriate to provide the desired level of customer service?
5. Customers: Learning Their Preferences
Enlightening insights can be obtained by utilizing a golf course’s database, purchasing an email list of local golfers, and employing electronic survey tools. Why aren’t the golfers in your area playing more? What are the motivating price points in your region? What is your course’s brand image? You’ll never know the answers if you don’t ask the questions. Fifteen percent of the customers generate 60% of the revenues; 25% generate 85%, and many daily fee golf courses have at least 50 customers who spend over $4,000 annually.
While only half the golfers who played a course one year will return the next, identifying your core customers provides the foundation for your marketing program. (Chapters 8)
The key questions to be answered are: Who are your core customers, and how much do they spend? What is the annual retention rate among your golfers? What are the barriers to increased play? What is the golfer’s perceived value of your course, and what is the primary reason to select one course over another? How loyal are customers? What are the critical loyalty drivers that create satisfaction, and what is the financial referral impact of promoters vs. detractors?
6. Key Metrics, Yield Management, Financial Modeling and Course Valuation
The valuable research data of the National Golf Foundation, Golf Datatech, Club Benchmarking, and Sagacity is contrasted to a facility’s performance to determine opportunities for improvement. Statistics show how course utilization, revPAT, revPAR, EBIT, technology ROI, cost per round, staffing levels, capital budgets, and deferred expenditures compare to those of local and regional courses. (Chapter 9)
The key questions to be answered are: Have accurate financial models been developed that support proactive decision-making? What debt service can the golf courses cover? Is there a gap between the potential fees charged and the clientele’s disposable income base?
7. Technology—The Foundation
A business analyzed on the aggregation of data is dependent upon having an integrated technology solution, properly installed, and fully utilized by the staff. Ascertaining if the tee sheet integrates into the POS system, the size of the email database, the efficacy of the website, whether proactive email marketing is occurring appropriately, and the extent of the adoption of social media are accurate predictors as to the successful implementation of technology.
Unfortunately, in the history of man, there may never have been more money invested, with such a small return, as there has been in the acquisition of golf management systems. (Chapter 10)
Fortunately, the seven-step formula outlined in this book creates a tapestry of sound principles and common-sense solutions for the golf course operator.
Author: JJ Keegan, Envisioning Strategist and Reality Mentor. Click here
© 2020, JJKeegan+