By Bruce Campbell | November 2003
During the period from 1986 to 1990 demand for rounds of golf exceeded the supply of golf rounds. Over the period of 1991 to 2000 this trend reversed itself and growth in golf supply outpaced growth in golfers. The only exception to this trend was in 1997 when the “Tiger Woods” effect rekindled a brief surge in golfer growth.
While the numbers of rounds are down over 5% nationally, the range in performance, from desperate to thriving, is enormous even within regions. Many courses in North Texas are experiencing a decline, which varies from 4% to over 20%. These declines can be attributed to many factors including:
- Overall weakness in the economy, which is creating a squeeze on consumer discretionary income.
- Continued course development creating excess supply versus available demand.
Winners and Losers
This trend reversal, which began in the early 90’s, was virtually ignored by the developer community who turned out to be one of the major contributors to the problem. Lost in their desire to help fill the runaway demand for new home construction they failed to consider the potential impact their building a record number of golf courses would have on the golf industry. In their rush to meet the demand for more developed lots for new home construction they created an imbalance in the supply and demand for rounds of golf.
The losers turn out to be the golf course operators who now find the demand for rounds of golf falling under the number of rounds that are available. In a nutshell, there are more available tee times than there are golfers to go around. Gone are the days of a full tee sheet. In fact, walking-on a course is easier now, even on a weekend, than it has been in the last 20 years.
The winners are the daily fee golfers who now wield the power of their dollars targeted to their pursuit of golf. To compete in today’s market golf course operators are going to have to cater to the daily fee golfer like never before.
Outlook
The golf industry is not mortally wounded only bruised. We will rebound from this portion of the cycle but the recovery will take several years to be completed.
To survive, operators are going to need to focus on reaching out to the daily fee golfer like never before. As in any supply and demand imbalance, revenue and therefore profits will suffer. We will need to be creative in increasing our other revenue lines like food and beverage, merchandise, lessons, tournaments, etc.
The ownership of courses with less nimble operators will change hands, sometimes more than once. The growth of golf frequent player programs will occur. We all need to understand the theory and practical application of dealing with a “perishable commodity”.