Golf Revenue Equation points to Duration and Demand

Digging around in the recycle bin behind the office last night, we found an interesting article: "Revenue Management on the Links," Cornell Hotel and Restaurant Administration Quarterly, Feb. 2000, pg. 120-127.

Author Sheryl Kimes isolates two variables that dominate in golf course revenue management issues: 1.) the uncertainty of play duration and 2.) price management based on player demand characteristics.

Play duration

Play duration is affected by arrival and pace. No-shows or late-arrivals are generally the biggest losses in terms of arrival. Ways to combat that? Require guaranteed reservations with credit card approval and charge a fixed fee for no-show/no-call golfers. Reconfirming reservations the day before also works psychologically to prevent flippant no-shows. Automated email is an ideal solution for this.

Pace of play requires a little more creativity. One option is to redefine play as an event with a time limit for a round of golf rather than the open-ended approach. This runs against common practice. During busy times, carts could be required with a reduced rental fee. Some courses even post golfer playing times, hoping that peer pressure will encourage pace improvements.

The main goal of removing uncertainty of play duration is so that tee-time intervals can be shortened. On a busy day, going from a 10 minute interval between groups to an 8 minute interval adds substantially to the revenue bottom line.

Demand characteristics

To determine price, Kimes warns against "charging price premiums" due to the negative fallout from customer perceived unfairness. Instead, set a "full" price during times of high demand and offer discounts off that full price during slack or unfavorable times. The discount approach is viewed more favorably by customers than a surcharge arrangement.

Using intangible rate fences can shift demand from busy times to slow times, reward reliable customers, and leave the highest-margin business for the busiest and most desirable times. (No, these fences aren't made of wire and wood.) A rate fence segments customers based on their habits. Typical golf industry fences: group membership, lead time in reservation booking, guarantee by the customer for the reservation, and time of day/week/season.

Although fencing is common practice for airlines, hotels, and rental cars, Kimes warns against customer perceptions when applying revenue management techniques like fencing to golf. As a well known function of business, customers will go out of their way to punish a business they think is unfairly gouging on prices.

One thing is certain: to move a golf course into the managed-revenue realm, the course needs to implement sound data gathering practices, automated communications, and customer-profiling technology. More revenue is possible for the courses willing and ready to implement these things. When you're ready, consider Cypress Golf Solutions.

Pump Up the F & B Revenue

From Golf Business magazine's June 2007 issue: six ways to pump up your food & beverage business:

1. Dine and Nine—the classic dinner and a half-round of golf. Make it a family affair, with kids under 12 playing free.

2. Wine and Nine—This one brings in the ladies with a golf lesson and half-round followed by wine and appetizers.

3. Have leagues pay after the round—It's more work, but cashing foursomes out on the backside of play creates an instant sense of community. Sells drinks and promotes post-round mingling.

4. Wireless access—You can set it up for around $200 with a wireless router and your existing Internet service.

5. Practice lunches—Offer a complimentary bucket of range balls with lunch purchase. Your course just became the most popular café in town.

6. Targeted communication—Restaurants used to fax lunch specials. why not use email to do the same thing? Build a database. Find out what your golfers want to see on the menu.

This last point is where Cypress Golf Solutions comes in. Find out about our powerful relationship marketing approach.

Thoughts on the Future of Golf from the NGF

Looking over the National Golf Foundation's "A Strategic Perspective on the Future of Golf," a few things jump out. (It's well-worth the read, by the way.)

Chiefly, that the U.S. population is expected to grow 19% in the 20 years from 2005 to 2025, from 296 million to 350 million. However, that growth will be mostly in groups that have not been traditional golfers. Therefore, the primary targets for participation rate increases are females (currently at a 6% participation rate), Hispanics (5.4%), and African Americans (7%).

Growing those participation rates, according to the study, will depend upon three factors:

1. Latent demand increases will occur from high-interest populations that want to play more, former golfers who pick it up again, and those who start (research shows 4% are "very interested" in learning).

2. Exposure to golf is at an all-time high, going from 130 hours to 1,553 hours of televised coverage since 1980. Tiger Woods and Michelle Wie, of course, are great golfers, but they also promote interaction by the target growth segments.

3. There are more player-development programs than ever, also, including Play Golf America, The First Tee, Link Up 2 Golf, Junior Links.com and the Executive Women's Golf Association.

The study states that significant improvements in participation rates are necessary to get industry growth up around 2%, a level beyond the 1.3% that would happen if growth went unmanaged. The unmanaged growth accounts for a decrease in overall population participation rates against an increase in rounds played by the core—white, male, retired baby-boomers.

The new Lorena Ochoa from a think tank? Ten-year investment strategies?