The Pellucid Perspective - January 2014 - (Page 2)

GOLF INDUSTRY PERFORMANCE 2013: Farewell vs. good riddance - Industry bends but doesn't break By Jim Koppenhaver W ith 2013 now in the rearview mirror and as I continue were only off a couple percentage points so what we're going compiling the tale of the tape for the upcoming State to end up with in 2013 is a -6% in GPH and likely a -5% in of the Industry, the story that's emerging is our indus- rounds, meaning a slight gain in the key measure of Utilization. try took a pretty good hit but didn't get knocked down (or out). While all of our Sharper Edge Marketing clients actually beat That means we'll emerge from our corner in 2014 slightly weak- the weather in Utilization in 2012, to expect that performance ened but still very fight-capable. at the industry level is unrealistic, so I chalk up basically flat Going through the results from the top down, let's start with utilization in a year of -6% GPH as another indicator of "abFacility Total Revenue. According to PerformanceTrak's No- sorbing a blow." vember Year-to-Date (YtD) figures (see the By-the-Numbers Saving the most encouraging indicator for last, when we section in this issue if you're interested in the underlying detail), look at Golf Fee Revenue-per-Available-Round (RevpAR), the Total Facility Revenue is essentially flat which, on the surface, combination of a 3% decline in GF RevpAR against the backdoesn't appear to be headline-worthy news but you'll see be- drop of a 6% decline in GPH means that our "factories" were low that it was in the face of some pretty strong headwinds. 2.5% more efficient in driving rounds-related revenue in the By department, that's comprised of a 3% decline in Golf Fee face of the weather downturn. For those playing along at home, Revenue being offset by 2-3% gains each in Merchandising this translates to a GF RevpAR for 2013 of $16.50 vs. the 2012 and F&B. (Someone still has to educate me on value of $16.07. That's solid progress and one how the math works when the department that The story that's of the primary reasons that Pellucid pioneered contributes 60%+ of revenue declines more than and continues to track weather-adjusted peremerging is our formance vs. just watching the raw rounds and the remaining departments but you don't get a net decline. There must be another department revenue figures produced by the various industry industry took like memberships or season passes, etc.). So, in associations. The irony of the situation is that a pretty good the face of a 3% decline in Golf Fee Revenue, in 2012, the industry was applauded for gains in the industry figured out how to offset that with rounds and revenue while we showed that those hit [in 2013] gains in ancillary departments; not bad. results simply mirrored the weather "dividend." but didn't get Looking at the Golf Fee Revenue departFast forward to 2013 where people are despairment, the November YtD 3% decline vs. 2012 knocked down ing at the results and yet we actually turned in was comprised of a 7% decline in Rounds which better relative performance. So the final data(or out). means, by deduction, that Rate (per round point showing that we were able to take a punch played) must have been up 4%. This is a very in 2013 was the improvement in GF RevpAR at interesting development that suggests pricing the industry level. power in some fashion and at a relatively meaningful level reIn summary, if you were an operator "living on borrowed turned to the average golf operator in 2013. For reference, in time" at the outset of 2013, the stabilization of the overall per2012 vs. 2011, Golf Fee Revenue was up 6.6% on a Rounds formance probably didn't help you that much. However, for increase of 6.4%, suggesting that Rate was essentially flat, which the owner/operators who were struggling but weren't critically in turn suggested that rate stabilization was occurring after over-extended at the beginning of the year, the results at the nearly a decade of pricing pressure. The 2013 results on Rate industry level would suggest that there continue to be signs of seem to support that trend. So, our 2nd encouraging datapoint stabilization and perhaps slow recovery in pricing power (Rate at the industry level is the indicator of some form of pricing gains), Utilization (ability to constrain Rounds declines to not power which mitigated the poor rounds results. exceed weather downturns) and Golf Fees RevpAR in the face Turning our attention now to Utilization, or the Rounds of continuing challenging macro conditions. As always, indiperformance relative to what Mother Nature provided us, we vidual results will vary and we continue to be an "industry of see that all of the Rounds softness was due to less favorable golf courses" vs. a "golf course industry," so don't aspire to be weather. For the Pellucid faithful who regularly read and sub- the industry; you can do even better with intelligent marketscribe to our information services, we outlined in the 2012 ing based on facts vs. intuition. Overall however for those of State of the Industry that the Golf Playable Hours (GPH) us who also watch the industry as a whole for signs of health, performance in '12 was near-record and would not be repeated while stopping short of bidding 2013 a "fond farewell," when in 2013. We also forecast that 2013 would "give back" the en- viewed through the correct lens, it doesn't merit a "good ridn tire increase we saw in '12 (6%) and then some. It turns out we dance" dismissal either. 2 The Pellucid Perspective January 2014

Table of Contents for the Digital Edition of The Pellucid Perspective - January 2014

2013: Farewell vs. good riddance – Industry bends but doesn't break
GolfNow's PMP sales pitch: Join or be stolen from
College Golf Pass aims to close golf's participation "doughnut hole"
Gender-based golf promotions carry risk
Orlando – Golf Central USA
December golf weather impact: Significant down month closes year of downs
Development restraint buoys Miami golf market
GreatLife expands business model into 3rd state
The PGA Show – just like a box of chocolates

The Pellucid Perspective - January 2014