The Pellucid Perspective - September 2013 - (Page 8)

GOLF COURSE PRICING Pricing and Yield Management Can you discount your way to prosperity? By Stuart Lindsay A s we work our way though 2013 looking at golf course results across the US, we are reminded that the demand for golf (rounds played) is relatively “weather elastic.” The solid increase in rounds in 2012 was accompanied by favorable weather, and the widespread unfavorable weather in 2013 is being accompanied by a similar decline in rounds demand this year. On the other hand, the data we review suggests that golf rounds demand is relatively “price inelastic.” In fact, the high demand in 2012 did not result in higher prices; but the much lower rounds demand in 2013 has produced higher pricing on both a revenue per round played and an even wider increase based on weather adjusted revenue per available round. If golf rounds demand is price inelastic, what does this say about discounting? Most of you will concede that our current wave of discounting really began with 9/11/2001. That time period was also marked by the burst of the dot.com bubble and a few other things; but the chart below petty clearly illustrates what has happened to golf rounds demand over more than a decade of rampant discounting. The above should raise a red flag for everybody in the golf industry. Either discounting does not work or we don’t do a very good job of it – take your pick. We would argue that it’s probably a lot of both. I went back and looked at some dead tree media advertising for a bunch of local courses from 2002. The newspaper ads touted large discounts from rack rates. Those same courses currently have tee times available on-line from multiple sources below what was the 2002 discounted price. Also, there is very little consistency. We looked at one course on a major 3rd Party website that said the 3rd Party rate was a 9% savings, but the price was identical to what was on the course’s website. This is a seemingly minor infraction, but is a great example of both the course’s failure to look at what is being posted www.PellucidCorp.com by their 3rd Party “partner” and the 3rd Party misusing unfettered access to the golf course’s pricing. We tried to book a tee time on another 3rd Party site, but were told the time was not available and were presented with additional discounted options at competitive facilities. We also find countless examples of tee times available at rates that do not even exist. All of these represent what we would call false and misleading information. Again, this is an example of the golf courses not checking what is being done by their 3rd Party “partner” and the 3rd Party “partner” being very creative in advertising rates with inflated “savings”. In the end, we are doing a great job of telling golfers that our available rounds are not worth the list price we work so hard to establish. One 3rd Party site lists golf courses in the order of magnitude of discount – the first course says “savings up to 71%”, the second course lists “savings up to 60%” and so on. You have to scroll down almost a full page to find courses that are trying to move inventory at their posted rates. Every golf facility should be trying to make an educated assessment of their relative market position and price their fees accordingly, but they increasingly allow 3rd Party service providers to move inventory at prices that are not being checked and compromise the integrity of their posted rates. I asked one owner why he was listed on two 3rd Party sites with different discounted prices for the same tee time – he said his marketing guy handled those things, but his course has now “disappeared” from one of the sites. Another issue is how much of a course’s tee sheet can be viewed by the golfer. When we clicked on one well known area course, we could see that only 3 of 18 available tee times between 8AM and 11AM on a Thursday had been sold. What message is that sending to the golfer? One of our more successful operators has both limited the times that can be viewed on the 3rd Party site he uses and the number of tee times that can be viewed on his own website. This course also adopted a “simplified” pricing structure and has increased both rounds and revenue in the 3 years since we helped him better manage his pricing and online reservation approach. In the final analysis, we can collectively do a much better job when it comes to pricing and inventory management. For those of you who believe that the primary motivation of your 3rd Party “partners” is helping you maintain rate integrity and not the sale of their “barter” inventory, there is a bridge in Brooklyn for sale. For those of you who do not pay attention to the rates and amount of inventory visible both on the 3rd Party sites you use and your own website, you have 2nd Amendment rights, but you need to realize your firearm is aimed at your foot. As it is, our current practices are only creating an open season on ourselves. n The Pellucid PersPecTive 7

Table of Contents for the Digital Edition of The Pellucid Perspective - September 2013

The Pellucid Perspective - September 2013
Contents
Golf industry supply contraction: Not if but how long?
Water “Whoas”
Pricing and Yield Management Can you discount your way to prosperity?
The Dude and Jeff Spicoli Go Golfing
PGA Junior League Golf takes a step forward in 2013
August golf weather impact: Continuing positive; better late than never
Phoenix courses not desert-ed
Sequoia Golf acquires 3 former Heritage courses in Atlanta market, leases California course
Watershed moments for U.S. golf

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