(Marketing your course) Trends affecting business

In 1997, I worked for a client who had a vision of creating a unique golf course ­– all par-3 replica holes from famous courses throughout the world. As with many visionaries, he wanted to secure additional private funding for the project. I was asked to help write a prospectus for that purpose. While writing this portion of the investment offering, I focused on the need for player development facilities and the need to increase the number of players for the continued health of the game. This marketing angle seemed perfect for my client’s offering. I knew course supply was weighing on golf demand, but I didn’t know exactly how much.

At this time, golf equipment sales were booming, a golf course was opening every day, and being in the golf course industry was cool. However, once I had some basic research in place – annual rounds played and course supply growth in the United States from 1990 to date – the trends didn’t look so wonderful from a golf course owner’s view.

The health of the industry was showing signs of deterioration. Golf rounds played in the United States weren’t keeping pace with the number of courses being built. Additionally, the industry was gaining 3 million golfers a year while losing 3 million a year. Some management companies and developers were opening, selling out and flipping their golf course amenities into a market without regard for oversupply.

I wondered who was right – the buyers or sellers? Even my client, and I by association, was to blame partially for not being able to recognize these warning signs of oversupply.

Projecting trends ... again
The research I conducted then should have been a learning experience for me. I was surprised by the accumulated data indicating that annual U.S. golf rounds declined significantly on a per course basis, even though I realized competition was heating up for rounds in almost all markets.

But at the time, no industry source was evaluating the decline or attempting to explain it to golf course owners. As a marketing consultant, I vowed not to make the same mistake twice. Now I attempt to project trends based on industry facts. You should too.
 
Baby Boomers and Gen-Xers
If I had a crystal ball, I would want to examine the playing habits and trends for Baby Boomers and what the group contributed to total annual rounds played in the United States, as well as my expectations for the group in my market.

I would also want to know the profile of Generation X and their propensity for golf. Who are the golfers of today, and who will they be in 2010 and 2015? What’s their demographic makeup? As a percentage of the growth of the population, is golf keeping pace?

So, I called Stuart Lindsay at Edgehill Consulting to see what he and Pellucid Corp. had researched about Baby Boomers. (Note to owners and operators: Knowing the questions to ask is only one-third of your marketing solution for your facilities. Getting the answers and interpreting the data is the solution to marketing planning for success.)

Lindsay says, “The good news is we recently have completed our look at the fourth year of Baby Boomers turning 55. Their participation is strong, and their play frequency is increasing like it has with past generations at that age. This should provide a tailwind of between 1.5-percent and 2-percent rounds growth annually. This might not seem like a big increase, but that’s between 7.5 and 10 million rounds a year.

“The bad news is that by 2010, more than 50 percent of the golf in the United States will be played by people older than 55,” Lindsay says. “That’s an increase from an estimated 42.7 percent in 2005 and an estimated 35 percent in 1985. This represents a significant shift. During the next five years, the skew toward older play will change as much as it did in the past 20 years. This was predicted by the National Golf Foundation but is accelerating faster than predicted because of Generation X.

“The potentially ugly news is many golf course operators have lowered the age for senior rates to capture play from that age group,” Lindsay adds. “At a golf course generating 30,000 rounds at $30 and a 20-percent senior discount, the change outlined above will reduce revenues (and most bottom lines) by $14,940. And most operators won’t know it happened until after the fact. To be proactive, all operators need to look closely at the age and percentage discounts used for senior play.

“Now here’s the rest on the Generation X part of the equation,” he continues. “The good news is Generation X is a smaller group than Baby Boomers, and that’s the only thing good about it. The bad news is they’re not participating as much in golf as a percentage of the population as the Baby Boomers did at the same age. The ugly news is their annual play frequency at age 40 is falling, not increasing as it did for the generations before them.

“As your clients look at marketing in 2006 and beyond, they’ll need to remember an estimated 75 percent of all the golf in the United States is being played by people older than 43.”

Well, considering Lindsay’s data about Baby Boomers and Gen-Xers and all the initiatives targeting player development during the past five years, I’m betting the industry’s demand and supply balance is in a corrective stage. The snapshots of relative data might appear to be declining or stagnant, but that’s because the industry is slowing, hopefully reversing, its downward trends. Time and research will tell.

My bet is the industry is turning for the better. Let’s hope the light at the end of the tunnel isn’t another train. I’d prefer to do the extra work and know for sure.

So, to you owners and operators: Research your market. Know what trends are affecting your businesses positively and negatively. Learn how to better project local market trends for the future. It could mean the difference between your course being plowed under for additional housing and being the best golf value at your price point in your chosen market. That’s success. GCN

Jack Brennan founded Paladin Golf Marketing in Plant City, Fla., to assist golf course owners and managers with successful marketing. He can be reached at
Jackbrennan@tampabay.rr.com.