The Pellucid Perspective - July 2011 - (Page 15)

MARKET FOCUS Minneapolis, MN Core Business Statistical Area (CBSA) he Minneapolis market has seen better days based on the Supply Dilution measure but, on current key metrics of the consumer base, Utilization and Revenue per Available Round, it’s not all doom and gloom for the “survivors.” The Minneapolis CBSA ranks 6th of the Top 25 golf markets in the US by number of golfers. The moderate golfer base of roughly 447K is served by 184 18-hole equivalent (EHE) facilities (compare with San Francisco in last issue’s Market Focus with only 83 EHEs), producing a ratio of just over 2,400 golfers per EHE, slightly higher than the national average. The supply mix skew vs. the national distribution across Pellucid’s five access/value/usage segments shows underdevelopment in Private at 20% of total supply (this is somewhat mitigated by the higher incidence of Public-Premium which often serves a similar golfer base). Within Public Regulation, it appears there’s a slight skew to the Premium vs. the Price components but with a healthy supply of the mid-tier Public Value relative to the US average. The change in supply since 2000 is higher than the change in rounds demand, resulting in a cumulative dilution for existing facilities of 23% which is on par with the national oversupply situation of 23% since the turn of the century. This means that, compared to 2000, the average existing operator has suffered an estimated 23% revenue decline due to supply dilution through some combination of rounds loss and/or rate erosion. The average facility has throughput of roughly 32,000 rds/yr, consistent with the national average. The more accurate comparison is that the Minneapolis market’s 64% utilization outpaces the national average by 11 points meaning, after factoring out the shorter season length and harsher climate, facilities in Minneapolis are more efficient in generating rounds than the “average” golf facility nationally. On Greens Fee Revenue per Available Round (RevpAR = Greens Fee Revenue/Available (Capacity) Rounds), Minneapolis handily beats the national average with a $20 rate driven primarily by the higher than average Utilization Rate coupled with relatively affordable golf on the Avg. Achieved Greens Fee Rate. In summary, the Minneapolis CBSA has many favorable factors including a healthy golf consumer base, an abundance of public golf, strong utilization and relatively affordable golf (Note, just because they have a higher incidence of Public Premium doesn’t mean expensive golf. Remember that the price tiers are based on the range in the local market so a $50 course in T Private PublicPremium PublicValue PublicPrice Learning & Practice Future Facility Golfer Base – Est. # of Golfers (Ks) – # of 18 Hole Equivalent Facilities – Golfers per 18-Hole Equiv. Supply Mix – Private – Pub-Prem – Pub-Val – Pub-Price – Learn & Prac Minneapolis, MN CBSA Tot US Index vs. US 446.8 26,600 184 15,929 2,435 1,774 20% 23% 40% 10% 8% 29% 20% 33% 13% 4% 137 69 115 121 77 200 80 156 108 100 120 99 125 Supply/Demand Balance 11% 14% – ’00-’09 Cume Supply Growth/Decline –13% –8% – ’00-’09 Cume Rds Demand Growth/ Decline –23% –22% – ’00-’09 Cume Mkt Supply Dilution (-)/Absorption (+) Level* – Avg Ann Rds Velocity (18-hole Equiv.) 31,516 31,512 Rounds & GF Revenue Health – % Utilization Rate – Avg. Ann. Rev. per Public Regulation EHE ($Ks) – Revenue per Available Round (RevpAR) * Period % Chng in Rds vs. Period % Chng in Supply 64% $974 $20 53% $983 $16 Above average level vs. US (Index 105+) Average level vs. US (Index 95-104) Below average level vs. US (Index <95) neapolis can be Public-Premium while here in Chicago you’ve got to get to $65 to crack Public-Premium). Unfortunately, Minneapolis is paying the same price that the average US market is (See Market Focus on page 14) The Pellucid PersPecTive 15 http://WWW.PELLUCIDCORP.COM

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

The Pellucid Perspective - July 2011
The PGA of America hits the restart button on player development
Permanent tee times, Chicago style
Positive P.R. leads to course record revenue month
Exploring the alternative golf universe
Jun 2011 YtD weather impact, May 2011 YtD utilization
Life at the top of the market
Minneapolis, MN Core Business Statistical Area (CBSA)
Comings & goings
Musings from the rough

The Pellucid Perspective - July 2011