The Pellucid Perspective - April 2011 - (Page 14)

MARKET FOCUS he Phoenix market is a study in contrasts and contradictions which also requires some interpretation of our standard market performance measures. The Phoenix CBSA ranks 16th of the Top 25 golf markets in the US by size (# of golfers). What has to be considered however for the Phoenix market is that it serves a large and very profitable golf tourist base which is not included in the local demographics. That said, based on the resident population it appears underserved with just over 316K golfers supplied by 223 18-hole equivalent (EHE) facilities producing a ratio of just over 1,400 golfers per EHE (20% below the national average). The supply mix is markedly skewed vs. the national distribution across Pellucid’s five access/value/usage segments with a much higher concentration in “value-added golf ” (Private and Public-Premium) at 57% of supply vs. the national average of 49% for this segment. This is biased by the data collection method in which facilities are classified by their highest weekend greens fee to establish their facility type designator and we know that a number of Phoenix facilities are Public-Premium in season and yet Public-Value (or some, Public-Price) in the off season. In addition, these figures reflect rate card pricing and anyone who has worked in this market recently knows that rampant discounting has significantly undermined the rate card prices, both in and out of season (so the economic health of the market is also likely less rosy than this syndicated analysis portrays). The change in supply since 2000 has far exceeded the change in demand resulting in a cumulative dilution for existing facilities of 28% which is nearly 3x the national average of 10%. This means that, compared to 2000, the average existing operator has suffered an estimated 28% revenue decline due to supply dilution through some combination of rounds loss and/or rate erosion. The average facility has throughput of roughly 43,000 rds/yr, well above the national average. The more accurate comparison is that Phoenix’s 57% utilization exceeds the national average by 4 points meaning, even after factoring out season length, facilities in Phoenix are more efficient in generating rounds than the national average. On Greens Fee RevpAR (Greens Fee Revenue/Available (Capacity) Rounds), Phoenix beats the national average with a $27 rate driven by a combination of its higher utilization rate coupled with an above average effective greens fee rate (compared to the national average but remembering that this is calculated off rate card rates, in season). In summary, Phoenix has some solid fundamentals but is heavily reliant on the significant tourist trade and, within that population, local operators have to fight intelligently (we were going to say aggressively but that always leads folks to discounting) for “share-of-tourist” play/ Phoenix, AZ Core Business Statistical Area (CBSA) T Private PublicPremium PublicValue PublicPrice Learning & Practice Future Facility dollars. The over-supply isn’t helping and also isn’t going away in the near future. Short of a significant increase in tourist business (possible) or by the local golfer base (less likely), this will be a market where hopefully the smart will survive during and after a “return to normalcy” in pricing power and discipline among operators. It will be interesting to see which ones remain standing when the dust settles in Phoenix. n Golfer Base – Est. # of Golfers (Ks) – # of 18 Hole Equivalent Facilities – Golfers per 18-Hole Equiv. Supply Mix – Private – Pub-Prem – Pub-Val – Pub-Price – Learn & Prac Supply/Demand Balance – ‘00-’09 Cume Mkt Supply Dilution (-)/Absorption (+) Level* – Avg Ann Rds Velocity (18-hole Equiv.) Rounds & GF Revenue Health – % Utilization Rate – Avg. Ann. Rev. per Public Regulation EHE ($Ks) – Revenue per Available Round (RevpAR) Phoenix, AZ CBSA Tot US Index vs. US 316.4 26,600 223 15,929 1,419 1,774 33% 24% 28% 12% 4% –28% 29% 20% 33% 13% 4% –10% 80 114 120 85 92 100 272 136 42,917 31,512 57% 53% $1,990 $1,137 $27 $16 108 175 169 * Period % Chng in Rds vs. Period % Chng in Supply Above average level vs. US (Index 105+) Average level vs. US (Index 95-104) Below average level vs. US (Index <95) 14 The Pellucid PersPecTive APril 2011

Table of Contents for the Digital Edition of The Pellucid Perspective - April 2011

The Pellucid Perspective
Cover Your Asset
NGCOA Ponders Becoming Southwest Airlines?
Is E-Mail Dead?
Foreclosures Opening New Avenues for Managers
Mar 2011 YtD Weather Impact, Feb 2011 YtD Utilization
An App a Day Takes Your Money Away
Comings & Goings
Golf Deals to Forget
Phoenix, AZ Core Business Statistical Area (CBSA)
Can’t Sell Your Home? Call Tullymore Resort

The Pellucid Perspective - April 2011