The Pellucid Perspective - July 2017 - 15

but is still much higher than the US average. A better available
metric for supply dilution/absorption in the post-2000 period
is comparing supply growth to the changes in rounds demand
tracking (rather than population growth, which tends to always
increase, just at different rates). Orlando has been one of the few
US markets which has seen annualized rounds growth since 2000
so we're actually showing them in a supply absorption mode for
the '00-'13 period). Combining the 1990-2000 decade (-7%)
and the 2000-2013 period absorption (+14%), the average facility
in the Orlando CBSA should be in better revenue shape than in
1990 (chosen semi-arbitrarily by Pellucid as a period of economic
health for the majority of US golf facilities). Since we've done
work in this market and know a number of operators, they're saying that other market forces are in play to depress financials but
that it still feels like there's too much supply in the market vs.
rounds demand and golfers (which just points out that analyses
are helpful but not flawless, especially in this industry where reliable, consistent information is hard to come by or produce from
the raw material we have available).
The average facility has throughput of just over 33K rds/yr,
very near the national average before factoring in climate and
daylight influences. The more accurate measure is the market's
44% Utilization Rate, which significantly lags the Top 25 US
Golf Markets average (56%). This means that, after neutralizing
the weather impact of a 12-month season, the market's average
golf "factory" runs at a lower throughput than its Top 25 US Golf
Markets peer group. On the revenue productivity side, the market generates roughly $1.1M per public regulation-length EHE

which is slightly below the Top 25 Markets average (which is
a little surprising given the heavy bias to Public-Premium but
one has to remember that the Price segments are driven by peak
season vs. year-round Greens Fee rates). After factoring that for
weather influence, the market's Greens Fee Revenue per Available Round (RevpAR = Greens Fee Revenue/Available (Capacity) Rounds) registers at $14, lagging by a larger margin the Top
25 Markets' average of $19. As a final measure for the Top 25,
the Golf Fee Profit-per-Available Round estimate (designed for
markets like San Diego) is $0 (not a typo) vs. the national average
of $9. In other words, after weather adjustment and factoring out
cost-of-living and maintenance cost differentials, it appears that
all they're managing to do is tread water.
In summary, we don't see the normal culprits of unprofitability
in the Orlando market of supply overhang and an insufficient
golfer base. We do see evidence of an imbalance of supply in
the wrong direction (i.e. too much Public-Premium, that is another legacy of the build-a-course-a-day era) but it appears the
market is correcting for that through discounting or the balance
of rounds in-season vs. off-season. Not captured in the analysis,
but we know from market knowledge, is the fact that Orlando is
one of the leading markets in penetration of 3rd party tee time
programs and, not coincidentally, the home of GolfNow. There
have been a number of transactions over the past several years in
the market and that may be the continuing next chapter in the
story of Orlando as it plays out. In the meantime, the way the
numbers lay out here, only the smart will survive in Orlando (and
having a little Disney "magic" can't hurt).
n

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