Survival Of The Fittest (1 Of 7 In A Series) – Golf Courses Strive To Deliver The “Experience”

The 2011 golf season is upon us. The last few years of escalating expenses and price wars have put a number of golf courses in a near bleak fiscal position. 2011 is predicted to be the year that the golf course industry is due to start recovering, but it will also be a “make or break” season for some courses. Anticipating that fact, courses are almost unilaterally developing evolving strategies that will adjust the manner in which they will conduct business.

It’s a fact of life that the sale price of your house is most likely lower today than when you purchased it; your 401K balance is lower today than it was four years ago; and you paid less to play golf in 2010 than 2008. Some of this is bad and some good. However, what is likely common to all these situations is that in 2011 they have bottomed out. It is believed that this will be particularly apparent with golf pricing as greens fees will go no lower.

The marketplace is changing…but the rules haven’t changed. Survival of the fittest is still nature’s most uncompromising rule. The past years of massive golf discounting and “deals” has left many course owners in a precarious financial position. It is understood that few can survive if they cut prices any more. Golf operators must find another way to attract golfers – providing a “value experience” is most likely the avenue of choice starting this year. 2011 will be a time to choose your golf course based upon value, just not price.

Recently, a number of golf course experts assembled to discuss the state, and future, of golf in Minnesota. This was a meaningful roundtable as Minnesota is recognized as generating much of the pulse of our country’s golf wellbeing. The group included:

• Steve Fessler, PGA – Riverwood Golf Club, Head Golf Professional
• Chris Sauer, PGA – Cedar Creek Golf Course, GM/Head Golf Professional
• Lori Money, PGA – StoryTeller MN
• Mike Hinton, PGA – Columbia Golf Club & Director MN Chapter of 1st Tee
• Input from others associated with public and private courses

The discussion, held at Medina Country Club, touched on a myriad of topics that will affect the success and enjoyment of the game of golf in Minnesota for the upcoming season including: Weather; The Economy; Competition (both competition among golf courses and competition from other recreation/entertainment for the golfers time); Customer Service; Pricing Trends; Alternatives to price cutting (loyalty programs/value-added services); Course conditions & playability; Marketing Tactics; Ways to Grow the Game and more. The outcome of the round table was condensed and is presented below as an overview for golfers and golf operators to evaluate. At the end of the process it was apparent that a single article provided insufficient space to reflect all the input and issues that are at hand for our great sport of golf. Additional articles are anticipated.

Over the past fifty years golf has steadily increased in popularity and today’s most well-known athlete worldwide is reported to be Tiger Woods. The international Olympic Committee designated golf as an Olympic sport for the 2016 Summer Games, and golf has begun to gain a foothold in many countries throughout the world. Over the early years of the past decade golf course construction outpaced growth of the golf market. Golf brings in 1.5 to 3 million new players each year, and each year, golf loses about the same number. Growth is basically flat. There have to be consequences. At the same time golf has suffered from the recent economic decline, along with several factors that have made the economic success of the golf industry a challenging struggle for many golf course owners, country clubs, and municipalities. Competing will be the full-time job for golf operators in this decade.

In a highly competitive environment, the golf industry is faced with the dilemma of how to compete while maintaining the integrity of their business and their course’s reputation. Most assuredly, how they price tee times and services have a huge impact on our bottom line. Let’s take a look at how value and price enter into this equation.

Slashing prices to keep pace with competitors can negatively impact a specific course and the entire industry. Discounts for greens fees cover a full page of the daily papers like a black-and-white mosaic ~ these are magic to the golfer’s eyes, but a nightmare to the course owners in that market. Thousands of golf course operators find themselves in a situation of decreasing prices and increasing operating costs, and many feel like they’re stuck in a downward spiral of price cutting. When deciding on rates each season, they consider seriously the consequences of lowering greens fees. Price cutting impacts business, leads to decreased availability of amenities and ultimately quality and could also contribute to a shrinking golf economy in the market. This dire situation could leave many golfers without their favorite course.

Is Price Cutting the Future of Golf? – Decidedly Not!
Why are course operators slashing prices? Some feel that they have no other choice; it is a matter of survival. They believe that by lowering the greens fees, they’ll increase the number of rounds on their course and, therefore, stay afloat. While this might make theoretical economic sense, there’s a fallacy in the reasoning. It appears that the frequency of price cutting has bottomed out with the golfer now is in a position to choose their tee time at a club based on the quality of the “Experience” while enjoying a fair price.

What can informed golf customers look for from golf operators in 2011 rather than price wars with competitors?
• Upgraded course conditions
• Incentives to play more frequently rather than cutting price
• Emphasis on amenities
• Enhanced customer service.
• An overall attention to quality

Quality has a price. If there is value in the eyes of the guest, then there is inherent quality. Simply because the price is low (or cheap), generally is not an indicator of value.

Golfer demographics are changing. The “Baby Boomer” generation is retiring. The hot ‘demo’ today is the 29-49 age group. This segment doesn’t have time to plan…doesn’t have time or the finances to travel to faraway golf destinations, preferring to play at courses and destinations within a three-hour drive. This age group has tended to marry later and had children later in life resulting in time requirements for child rearing. Time is the new currency of today. All this contributes to declining rounds.

In the face of declining rounds, regardless of reason, the focus at courses nationwide has been on cost containment and cost cutting – with limited impact, since so many expenses at golf clubs are relatively fixed. Reducing the level of customer service is not the answer. In fact, the level of service and value for money spent are primary factors for 2011 in golfers choosing where to play. Those clubs focusing energy and resources on increasing revenues through value-added amenities for customers have the best chance of success. The “value proposition” for any product is the relationship of many factors as they relate to price. In the case of a golf course, customers will likely mandate an “Experience” to include Location, Setting, Amenities, Attitude, and Quality. Match up the price to these and you have the “VALUE”!

The “Experience”
Courses differ in many ways and in part much of this, beyond location and setting, is recognized as Amenities. Amenities can include a great variety of items such as player activities (leagues, youth, men, woman, family programs etc.), loyalty programs, before and after bag drop services, state-of-the-art power carts with GPS, 10-minute tee time intervals rather than 7 minutes, complete practice facility with full swing driving range, chipping and sand play areas, large manicure practice putting green, full service proshop, professionally designed layout with dramatic topography, continuous cart paths, well-shaped sand bunkers, a friendly and knowledgeable starter, rangers to keep the play flowing, beverage carts and halfway grill with beverage and food options, locker rooms with shower and towel service, outside decks with golf vistas, restaurant and bar, etc.

Additionally, the attention to Attitude in delivering customer service is paramount these days when customers of any business have options in where they place their hard earned dollars. As the economics of golf course operations tighten, more and more golf clubs are recognizing that the human resources part of the business requires more attention. More staff training, staff recognition and better communication will be a priority for golf operators to ensure enhanced customer enjoyment of the “Experience”.

The “Experience” is the sum of the location, setting and amenities combined with a well trained professional staff in a relaxed, friendly, warm and effective customer-oriented service atmosphere. There is an awful lot to present to the golfer beyond 18 holes in order to guarantee the “Experience” that will bring golfers back again and again.

Fortunately, there are alternatives to price cutting for courses to attract customers and stay focused on the quality experience for their guests.

Golfers will measure the value of a golf experience by the ENTIRE experience, from the marketing offer to the bag drop through 18-holes and on to the 19th hole.

Competing Means Communicating
For courses to compete they must communicate. Courses will attempt to tell the world what differentiates their course from the competition. The most effective manner to communicate with current customers, and potential customers, used to be simply advertisements and newsletters. Today the communication options are evolving with the inclusion of an almost endless selection of marketing tactics beyond brochures, print ads and electronic media such as: Interactive Websites; Social Media (Facebook, Twitter, Blogs);
e-Newsletters; Text Marketing; Smart Phone Applications; YouTube, etc. What the best avenue to communicate with the golf marketplace has yet to be determined.

Courses Will Provide Value In 2011
In conclusion, providing value, and even better, added-value, for a fair price is a far better position for any business than to simply cut fees to stay afloat. When price becomes the driving force, everyone loses! It is a far stronger and a superbly defensible position to be the provider of quality, customer friendly service and hospitality along with a well-conditioned course to earn the golfers business than just a cheap price. In 2011 many of the successful golf course operators will be striving to find that perfect balance of the highest level of the “Experience” i.e. location, setting, amenities, quality, hospitality and service while offering guests the best possible rates – not necessarily the cheapest. These courses will deliver the best “Experience” and become the “Fittest” in the golf industry.