The Pellucid Perspective - November 2011 - (Page 13)

MARKET FOCUS San Diego, CA Core Business Statistical Area (CBSA) s singer/songwriter Albert Hammond pointed out in the lyrics to his 1972 hit song, It Never Rains in Southern California, it would seem that the benevolent weather in this geography would make life easy, but it’s not the case. The same is true for the golf market in San Diego, generally recognized to have the most benevolent Golf Playable Hours climate in the US, but where success is easier thought than done. Home of the most expensively build muni course in the country and multiple golf equipment manufacturers, let’s take a look at the health of the home market for Editor-in-Chief Jim Dunlap and Art Director Richard Steadham. The San Diego CBSA ranks 19th of the Top 25 golf markets in the US by number of golfers. The moderate golfer base of roughly 274K is served by 93 18-hole equivalent (EHE) facilities, producing a ratio of just under 3,000 golfers per EHE, which is well above the national average. The supply mix skew vs. the national distribution across Pellucid’s five access/value/usage segments shows a higher concentration of Private (note all the red stars on the map, most north of the city) as well as a liberal base of Learning & Practice facilities comprising 18% of the supply. The balance of Value-added golf supply (Private & Public Premium) vs. Value golf (Public Value, Price and Learning & Practice) is 52%/48%, very close to the national average of 51%/49% (so the abundance of Private is being offset by a lower presence of Public-Premium as well as the healthy contribution of Learning & Practice). Within PublicRegulation golf, the distribution between Premium/Value/Price is 36%/36%/28% which is unusually biased toward the extremes of high and low-priced golf compared to the national distribution of 27%/53%/20%. 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, the change in supply has moderated, but at 1% annual growth, it still exceeds the US level of <0.5% annually. Also unusually, San Diego is one of the few markets showing rounds demand growth cumulatively since 2000, but that favorable factor is being eclipsed by the supply “overhang,” creating 9% dilution during the period. While this is significantly healthier than the national oversupply situation of 22% since the turn of the century, it means that, compared to 2000, the average existing operator in San Diego has “only” suffered an estimated 9% revenue decline due to supply dilution www.PellucidcorP.com 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 San Diego, CA Tot US Index vs. US 274.3 26,600 93 15,929 2,965 1,774 35% 17% 17% 13% 18% 29% 20% 33% 13% 4% 167 121 85 52 100 450 89 N/A 44 153 111 196 138 Supply/Demand Balance 12% 14% – ’00-’09 Cume Supply Growth/Decline 3% –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.) 48,300 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 59% $1,923 $22 53% $983 $16 Above average level vs. US (Index 105+) Average level vs. US (Index 95-104) Below average level vs. US (Index <95) through some combination of rounds loss and/or rate erosion. The average facility has throughput of roughly 48,000 rds/yr, well above the national average before factoring in climate and daylight influences. The more accurate measure is San Diego’s The Pellucid PersPecTive 13 http://WWW.PELLUCIDCORP.COM

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

The Pellucid Perspective
“Know your customers”: PGA sending members into battle unarmed
They’re stealing your money
Does industry health need health?
Golf seeking keys to tap growing Hispanic market
October weather impact: No favors from Mother Nature
San Diego, CA Core Business Statistical Area (CBSA)
Comings & goings
Williams’ slur boomerangs in Tiger’s favor

The Pellucid Perspective - November 2011