Golf in the Land of the Rising Sun

Since the opening of the country’s first course in 1903, Japan has seen a rapid growth of popularity in golf, which has fueled the creation of more than 2,350 golf courses and led to nearly 9 million active golfers. At one point in time, demand for the sport was so high in Japan that it was difficult to book tee times at many of the courses. According to recent studies conducted by KMPG International, Japan has the second largest market in terms of demand and the third largest market in terms of supply.

Some of KMPG’s other findings included the following:

Membership: Japanese courses have a very high membership base with nearly 1,500 members on average at 18-hole facilities.

Playability: Most courses in Japan are open year-round and 18-hole golf courses record about 40,000 rounds per year on average.

Employment: An 18-hole golf course employs a staff of 63 on average, with 36 percent being full-time employees and the rest being employee either part-time or working at outsourced facilities. Caddies represent the highest share of staff (38 percent) while about one-fifth work in golf maintenance and another 20 percent at other service facilities (restaurant, pro-shop, etc). The remaining 20 percent work mainly in administration (management and sales) or at a front desk or reception area.

Pricing: The total cost for playing 18 holes of golf, including green fee, cart fees, caddy fees and taxes is $70 for member and $110 for visitors on a weekday, and $75 for members and $160 for visitors on weekends.

Economy: Financially troubled golf courses were bought mainly by two key investment groups: Accordia Golf (sponsored by Goldman Sachs Group) and Pacific Golf Management (sponsored by Lone Star Group). Each own and operate some 120 courses throughout Japan.

Revenue: The average revenues at 18-hole (and equivalent) golf courses in Japan were about $5.1 million in 2008. Direct revenues from playing, such as green fees and candy fees, comprised more than 60 percent of the total revenues, and an additional 11 percent was generated by memberships, including annual dues and initiation or transfer fees. Spending at additional service facilities including restaurants and pro-shops generated 20 percent of the total income.

Profitability: The average gross operating profit (GOP) achieved at 18-hole facilities was around .6 million, equating to an operating profitability rate of 10 to 12 percent compared to total revenues.