The Pellucid Perspective - October 2011 - (Page 14)

MARKET FOCUS Cincinnati, OH Core Business Statistical Area (CBSA) ll I compete against here are money-losing muni’s and bank-owned daily fees.” This was a recent lament by a veteran Cincinnati market operator. This is also the market where one of the daily fee operators has successfully petitioned the state courts to make municipal golf courses pay back real estate taxes because their courses are being run by professional management companies. Amidst that backdrop, let’s take a look at the fundamentals of the Cincinnati market. The Cincinnati CBSA ranks 23rd of the Top 25 golf markets in the US by number of golfers. The moderate golfer base of roughly 229K (about the same size of last month’s featured market of Seattle) is served by 115 18-hole equivalent (EHE) facilities (significantly higher than Seattle), producing a ratio of just under 2,000 golfers per EHE which is slightly above the national average. The supply mix skew vs. the national distribution across Pellucid’s five access/value/usage segments shows a relatively balanced picture, with the exception of Public-Value being slightly underrepresented and Learning & Practice having a healthy presence at 6% of holes, higher than the national average. The balance of Value-added golf supply (Private & Public Premium) vs. Value golf (Public Value and Price) is right on the national average of 51%/49% (we’re off by a point here in Cinci but hey, who’s counting?), which suggests that even if they’re slightly oversupplied, they’ve generally got the pricing mix right. Prior to 2000 the market participated fully in the 1990s “irrational exuberance” movement by expanding supply at an annual clip in excess of 2%. Since 2000 though, the change in supply has been comparable to the US level of <0.5% annually. This results in a cumulative dilution rate for existing facilities of 9%, which is significantly healthier than the national oversupply situation of 22% since the turn of the century. This means that, compared to 2000, the average existing operator in Cincinnati has “only” suffered an estimated 9% revenue decline due to supply dilution through some combination of rounds loss and/or rate erosion. The average facility has throughput of roughly 29,000 rds/yr, slightly below the national average before factoring in climate and daylight influences. The more accurate measure is Cincinnati’s 55% utilization, which is slightly above the national average by 2 points. This means that facilities in Cincinnati are slightly more efficient in generating rounds than the “average” golf facility nationally after weather is factored out. On the revenue produc- “A 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 Cincinnati, OH Tot US Index vs. US 229.4 26,600 115 15,929 1,995 1,774 31% 21% 29% 13% 6% 29% 20% 33% 13% 4% 112 107 105 88 100 150 27 67 42 92 103 77 81 Supply/Demand Balance 4% 14% – ’00-’09 Cume Supply Growth/Decline –5% –8% – ’00-’09 Cume Rds Demand Growth/ Decline –9% –22% – ’00-’09 Cume Mkt Supply Dilution (-)/Absorption (+) Level* – Avg Ann Rds Velocity (18-hole Equiv.) 29,000 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 55% $758 $13 53% $983 $16 Above average level vs. US (Index 105+) Average level vs. US (Index 95-104) Below average level vs. US (Index <95) tivity side, Cincinnati generates roughly $800K per public, regulation length EHE, which is 23% lower than the national average (affordable golf, golfers love it but operators not so much). After factoring that for weather influence, Cincinnati’s Greens Fee OcTOber 2011 14 The Pellucid PersPecTive

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

The Pellucid Perspective - October 2011
Table of Contents
When will pricing power return to golf?
Municipal golf’s identity crisis
Let’s make a deal
‘Winter rounds test drive’ promotion wins Labor Day battle
September weather impact: Too little too late?
‘Brown’ not making Half Moon Bay golfers blue
Cincinnati, OH Core Business Statistical Area (CBSA)
Comings & goings
The “Most Powerful” — really?

The Pellucid Perspective - October 2011