Golf-Based Resorts:Managing the Operation

Copyright © 2012 John Wiley & Sons, Inc.Photograph Courtesy of SuperStock

Learning ObjectivesIdentify 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 TrendsInternational golf market: 57 million peopleJust under half are in the U.S., about a

quarter in JapanSlightly more than 10 percent are in Canada

with just under 10 percent in EuropeAvid 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 TrendsU.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 industryMany courses are utilizing water conservative

technology

Changing DemographicsThere 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.

OperationsThe Sun Belt covers the southern states and

part of the coastal regionThese courses are likely to be open year-

roundThe Frost Belt consists of northern states

and the mountainous parts of southern statesThese courses usually shut down for a while

during winterCopyright © 2012 John Wiley & Sons, Inc.

Profit Potential (cont.)RevenuesMost revenue comes from annual fees and

green feesThe second most important source of

revenue is from golf cart rentalsExpensesThe 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 EventsBusiness Golf

Customer Appreciation EventsSales/Product LaunchesEmployee OutingsFund-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 courseFeature holes in the 5,600 to 5,700 yard

rangeProvide holes where players do not have to

carry the ball over a lot of obstaclesWhere greens can be easily reachedWhere forward tees are closer to the hole and

allow for a better angle at the greenCopyright © 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 ShopsMargin Enhancers include discounts,

rebates, fitting fees, advertising co-ops, freight programs, or free product accounts

AccessoriesThe key to increasing sales is in the

presentation of itemsKeep 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 CardsAccepting credit cards makes the purchase

easier for the customerRetailers pay a fee to credit card companies

when they accept credit cards

Copyright © 2012 John Wiley & Sons, Inc.