CHAPTER SEVEN Golf-Based Resorts: Managing the Operation Copyright © 2012 John Wiley & Sons, Inc. Photograph Courtesy of SuperStock

Learning Objectives Identify the changing trends in and demographic profiles of the golf market. Identify the critical variables in determining a golf- based resort's profit potential. Identify potential solutions to financial problems faced by golf-based resorts. Copyright © 2012 John Wiley & Sons, Inc.

Market Trends International golf market: 57 million people Just under half are in the U.S., about a quarter in Japan Slightly more than 10 percent are in Canada with just under 10 percent in Europe Avid golfers account for less than one quarter of all golfers but account for 63 percent of all golf-related spending. Copyright © 2012 John Wiley & Sons, Inc.

Market Trends U.S. golfers spend over $26 billion a year on golf travel, three quarters of which goes to the accommodation, transportation, and food and beverage sectors. Florida, South Carolina, North Carolina, California and Arizona are the most popular travel destinations for golfers. Number of core golfers has been declining Major challenge is to turn occasional golfers into core golfers. Copyright © 2012 John Wiley & Sons, Inc.

Changing Trends (cont.) Industry Trends (cont.) Water management is the major environmental issue facing the industry Many courses are utilizing water conservative technology Changing Demographics There are seven segments of golfers: core, seniors, women, juniors, highly skilled players, private club members, and high spending golfing households Copyright © 2012 John Wiley & Sons, Inc.

Identify the critical variables in determining a golf- based resort’s profit potential. Operations The Sun Belt covers the southern states and part of the coastal region These courses are likely to be open year-round The Frost Belt consists of northern states and the mountainous parts of southern states These courses usually shut down for a while during winter Copyright © 2012 John Wiley & Sons, Inc.

Profit Potential (cont.) Revenues Most revenue comes from annual fees and green fees The second most important source of revenue is from golf cart rentals Expenses The greatest expense is the cost of merchandise sold, followed by the cost of food and beverages Payroll is usually the largest expense category Copyright © 2012 John Wiley & Sons, Inc.

Identify potential solutions to financial problems faced by golf-based resorts. Tournaments and Events Business Golf Customer Appreciation Events Sales/Product Launches Employee Outings Fund-Raising events Copyright © 2012 John Wiley & Sons, Inc.

Solutions to Financial Problems (cont.) Hole in One Contest Companies organize the activity for the resort and provide the prizes While many think it is virtually impossible to achieve a hole in one, in any given year in the U.S., there are over 40,000 holes in one Copyright © 2012 John Wiley & Sons, Inc.

Solutions to Financial Problems (cont.) Women-Friendly Women friendly courses can: Vary tee locations to allow the option of playing a harder or easier course Feature holes in the 5,600 to 5,700 yard range Provide holes where players do not have to carry the ball over a lot of obstacles Where greens can be easily reached Where forward tees are closer to the hole and allow for a better angle at the green Copyright © 2012 John Wiley & Sons, Inc.

Solutions to Financial Problems (cont.) Banquets Can be an excellent way to bring in additional revenue Golf tournaments are a good market to advertise to Pre-game lunches, box lunches, post game dinners, or cocktail parties have proven successful Social events are the most financially profitable segments, including weddings, bar mitzvahs and anniversaries Copyright © 2012 John Wiley & Sons, Inc.

Solutions to Financial Problems (cont.) Pro Shops Margin Enhancers include discounts, rebates, fitting fees, advertising co-ops, freight programs, or free product accounts Accessories The key to increasing sales is in the presentation of items Keep displays neat, use color effectively, develop a theme, cross merchandise, and avoid one level displays Copyright © 2012 John Wiley & Sons, Inc.

Solutions to Financial Problems (cont.) Inventory Control Controlling inventory can cut down costs “Open-to-buy” refers to the amount of retail dollars set aside for the purchase of merchandise in the future Old sales figures are used to project future sales Merchandise group departments are created Copyright © 2012 John Wiley & Sons, Inc.

Solutions to Financial Problems (cont.) Inventory Control (cont.) To maintain control of the system the two important pieces used to determine beginning inventory levels are projected sales volume and the turnover rate desired by the shop Credit Cards Accepting credit cards makes the purchase easier for the customer Retailers pay a fee to credit card companies when they accept credit cards Copyright © 2012 John Wiley & Sons, Inc.