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Thursday, February 10, 2011

Gordian Not: To survive, golf courses need to cut ties to old ways of doing business

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     Golf course operators are in a box, trapped by a series of cataclysmic events that came at them so fast that they had little time to react rationally.  Most were unprepared to deal with a deep recession that shone the light on a staggering
The most savvy golf courses innovated; the others cut prices.

over supply of golf courses.  As disposable income and rounds played shrank, and members began leaving their private golf clubs, golf course operators did the easiest but most self-defeating thing they could do:  Public golf courses cut their green fee prices to the bone and the private ones dropped their initiation fees, or eliminated them altogether.  The most savvy ones set about distinguishing their services and solidifying their identities, but these clubs are far and few between.

        During a day of workshops at the National Golf Industry Show in Orlando on Tuesday, I heard many golf course operators share their frustration and even some anger at the bind they find themselves in.  Online tee time providers like GolfNow.com were singled out for having forced green fee prices way down.  But these tee time consolidators are invited by the golf club to help fill in their tee sheets, and they can be uninvited at any time.  The golf course operators mistakenly thought they could control third-party pricing, and they are upset now to find out they can’t unless they turn their backs on the incremental revenue stream.

        Private clubs are putting themselves in a similar bind.  In an effort to backfill for lost members, some of these clubs have eliminated initiation fees altogether in order to generate much needed cash flow from dues.  But a new member with no “skin in the game” is not tied to the long-term viability of the club.  If they are not getting their moneys worth from rounds played, nothing keeps them from fleeing the club after a few months.  In many cases, members-only clubs are also shifting the definition of “private” by permitting outside play through providers like GolfNow.com and BoxGroove.com.  That may solve some short-term revenue problems but will likely erode the notion of exclusivity, the reason why many joined their club in the first place.

        For the most part, the series of 90-minute “education sessions” on Tuesday at the Golf Industry Show provided a bit of tough love for the many

The elimination of initiation fees does not inspire longevity of membership; members with no skin in the game can depart without penalty.

golf club operators in attendance.  If there was one overall message, it was that golf club operators will need to innovate their ways through adversity, not price their way through.  Golf clubs both private and public need to work much harder to distinguish themselves from their competitors; to establish their own separate identities (beyond low price); to spend as much energy on current member retention as on member acquisition; and to focus much more on developing family friendly environments, even if that means investing to develop or enhance non-golf activities.

        Many clubs will see innovation as an expensive proposition.  But those that don’t innovate to meet the new market will pay the ultimate price.

Read 3506 times Last modified on Friday, 27 September 2013 11:29
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Larry Gavrich

This blog was conceived and is published by me, Larry Gavrich, a former corporate communications executive who founded HomeOnTheCourse, LLC, in 2005.  Our firm advises baby boomers and others seeking a lifestyle in which golf is a major component.  My wife Connie and I own a home in Connecticut (not on a golf course) and a condo at Pawleys Plantation in Pawleys Island, SC, on a Jack Nicklaus layout.  We began our search for our home on the course more than 15 years ago, and the challenges of the search inspired me to research golf communities and write objective reviews of them.

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