The Pellucid Perspective - January 2013 - (Page 2)

STATE OF THE INDUSTRY A Pellucid Preview of the 2012 State of the Industry By Jim Koppenhaver W ell, another year is now “in the books” for the unpredictable and often enigmatic golf industry, so it’s time to look back at what happened and our educated opinion of why, for the 2012 season. Stuart Lindsay and I are in the midst of compiling both the quantitative and qualitative findings for the year gone by, in preparation for the upcoming State of the Industry presentation in Orlando, Florida, but I couldn’t resist offering a preview of what we’re seeing as the hot topics. Rather than my usual top-down, quantitative first, qualitative second approach, I’m going to take a different route and wander through the results in a stream-of-consciousness style. Everyone wants to talk about the increase in rounds first, so let’s get that out of the way. It looks like we’re going to see a year-over-year increase in rounds of roughly 6-7% (depending on whether you’re a Golf Datatech or PerformanceTrak supporter), which is a very healthy gain and the first year since 2006 that the industry has posted a gain in demand. As many industry observers have pointed out, the 2012 gain will take us back to the 2008 level of demand, which they position as “regaining 4 years of loss in a single year.” Not exactly my interpretation, but let’s just go with that while we bask in the glory of a much-needed positive year on rounds. The public sector was the primary driver/beneficiary of the rounds bonanza in 2012, while Private saw a gain, but at half the rate of Publics. Since we can’t take rounds to the bank, let’s talk about how much of that rounds increase resulted in “coin” for the average operator. According to PerformanceTrak, it’s likely going to translate into a similar gain in Golf Fee revenue (good news because that means rate held its own vs. 2011) while at the Total Revenue level it appears that operators will only get about half the rounds gain back in real dollars. A little confusing because that would mean that non-golf revenue, which accounts for roughly 1/3 of the total at the average facility, must have really gotten whacked!). The net is that the rounds translated into a decent amount of dollar gain, driven by the primary revenue generator for facilities, golf itself. That’s good news. Next, everyone wants to talk about the weather, with most pundits saying, “Yeah, it was good but that isn’t what 2012 is all about.” I always chuckle when I see those comments because, last time I checked, Pellucid was the only entity in the industry that could quantify weather impact at a local, market and national level and none of those commentators subscribe to our services. Be that as it may, I’m sorry to say that the facts don’t support their reasoned opinion. Through November, Golf Playable Hours at the national level (weighted by rounds 2 The Pellucid Perspective contribution at the 45 regions level) were up 8%, suggesting that yes, mathematically, all of it was due to weather. To further punctuate my response to them, not only did we have a favorable weather year, we had a record year at the national level since Pellucid started weather impact tracking in golf in 2005. So, great weather, thank you very much, but let’s right now start planning for 2013 against the 5-yr average, which means we’ll give some of that back this year. The next most prevalent question I get is, “What’s going on with supply, is it getting better?” The answer is “Yes, and no.” From the latest smoke signals coming from Jupiter FL, it appears that openings in 2012 will be closer to 25 than 50 which would be a record low (that’s good). On the other hand, closings look like they’ll be closer to 100 than 150 (that’s bad, we need more on an annual basis). So, while we wait for the NGF to come up with the final stocks and plows, my crystal ball is saying we’re going to make yet another tiny dent (but a dent nonetheless) in the roughly 1,000 course supply overhang at the national level. I’m still waiting for the big catalyst that I had prematurely predicted back in the mid-2000s that would trigger a few years of 250+ courses being taken out of inventory. I’m also afraid that one of the unintended consequences of this past year’s weather benevolence is that it will further stretch out the supply contraction as the more marginal owner/operators got a shot of courage that “Hey, I can make this work.” One area that few are paying attention to, but they should be, is what’s happening to our participant base. The 2011 consumer survey results (remember these are taken in arrears, we’re fielding the 2012 survey as we speak) showed that we lost nearly 2M participants vs. 2010. That’s most probably the intersection of the economy, demographics and golf ’s refusal as a sport and, in some cases, as an industry to adapt to the changing consumer lifestyle and preferences. As the November election showed, the demographic composition of America is becoming more diverse and attitudinally more attuned to immediate gratification, neither of which play into golf ’s wheelhouse as a sport or a lifestyle. My latest Outside the Ropes (OTR) issue goes into this topic in more detail and outlines what I would do toward stabilizing the golfer base in the next 2-3 years vs. some of the “moonshots” we’ve been taking, chasing opportunistic groups that are sizeable but unlikely prospects (in my humble but educated opinion). Given that we’re seeing an increase in rounds in 2012 against what’s likely to be the same or a smaller golfer base (when 2012 consumer survey results are tallied), it suggests to me that the Baby Boomers who are the prime constituency of our Core Golfers are once again carrying January 2013

Table of Contents for the Digital Edition of The Pellucid Perspective - January 2013

The Pellucid Perspective - January 2013
A Pellucid Preview of the 2012 State of the Industry
Boom times for golf course brokers
Show time: Happy days are here again?
Sharp Park wins
Private owner launches another attack on municipal course tax exemptions
December golf weather impact: 2012 a year for the record books!
Goofy had company in Orlando course developers
Dallas negotiating for construction of new championship course
“Customer co-production” worth looking into for golf

The Pellucid Perspective - January 2013