The Pellucid Perspective - February 2014 - (Page 16)

MARKET FOCUS Developers' past excesses plague DC area courses Washington DC/Northern VA Core Business Statistical Area (CBSA) C ontinuing our sequential series of profiling the healthiest Top 25 US Golf Markets as quantified and ranked by Pellucid using a 10-measure composite scoring system (things like population size/growth, golfer base, rounds generation, supply/demand balance, utilization and RevpAR), this month we highlight the 10th healthiest golf market in country, Washington DC/Northern Virginia/Baltimore (Wash/NoVA). Anyone who has ever lived in this market knows that it's dominated by Washington politics, the "power country clubs" as well as the ongoing rivalry between the Virginia and Maryland counties as to which are the "richer" suburbs of our nation's capital. The real question is, "Is it currently a healthy place to own and run a golf facility?" By rounds demand (our selection criteria for market inclusion in the Top 25 list), Wash/NoVA has a healthy number 9 ranking of US markets with facility-reported annual demand of just over 5.6M rounds. (That facility-reported tally counts both local and tourist play). Looking at the golf consumer base, we see that Wash/NoVA is home to an abundant local golfer base of roughly 457K golfers. (This is only local, resident population; I wonder if it counts all those ineffective people in Congress?). That golfer base is served by an abundant 153 18-hole equivalent (EHE) facilities, producing an above average ratio of nearly 3K golfers per EHE (again, this metric is based off locals only). The supply mix vs. the national distribution across Pellucid's five access/value/usage segments shows a strong bias to the Private segment at 39% of holes vs. 27% of holes nationally. The balance of Value-added golf supply (Private & Public Premium) vs. Value golf (Public Value, Price and Learning & Practice) is 59%/41%, which is significantly skewed to the Value-added segment vs. the national average (50%/50%). Within Public-Regulation golf, the distribution between Premium/Value/Price is 36%/39%/25%, which represents only a slight bias to Premium, compared to the national distribution of 34%/42%/24% (surprising based on the number of "country club-for-a-day" facilities they built since 2000 radiating out an hour's drive or so from the affluent suburbs in both Virginia and Maryland). During the "go-go" years of supply development (19902000), Washington DC/NoVA fully participated in the "build a course a day" craze, outpacing the national rate of supply expansion, adding holes at a Compound Annual Growth Rate (CAGR) of over 4% (compared to the 2%+ national expansion rate). This was somewhat offset by healthy Population growth (~+1.5%) but you can easily see the differential created by these two figures during the 1990s. This translated to the market en- 16 The Pellucid PersPecTive Private PublicPremium PublicValue Golfer Base - Est. # of Golfers (Ks) - # of 18 Hole Equivalent Facilities - Golfers per 18-Hole Equiv. PublicPrice Learning & Practice Washington DC/No VA CBSA Tot US Index vs. US 456.5 24,400 153 14,675 2,993 1,663 Supply Mix - Private - Pub-Prem - Pub-Val - Pub-Price - Learn & Prac 180 39% 20% 22% 14% 5% 27% 23% 28% 16% 6% 144 87 79 88 83 12% -2% 8% -15% 157 14 -14% -23% 62 33.9 26.7 127 54% $1,558 44% $836 123 186 $17 $14 121 Supply/Demand Balance - '00-'11 Cume Supply Growth/Decline - '00-'11 Cume Rds Demand Growth/ Decline - '00-'11 Cume Mkt Supply Dilution (-)/Absorption (+) Level* - Avg Ann Rds Velocity (ks per 18-hole Equiv.) Rounds & GF Revenue Health - % Utilization Rate - Avg. Ann. Rev. per Public Regulation EHE ($Ks) - Revenue per Available Round (RevpAR) Future Facility * Period % Chng in Rds vs. Period % Chng in Supply + Inverse index, lower is better Above average level vs. US (Index >105) Average level vs. US (Index 95-104) Below average level vs. US (Index <95) February 2014

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

The 2014 solution to Barter is… NGCOANow?
PGA Merchandise Show from 35,000 feet
Philosophy, sociology and epistemology lessons for Hackgolf
The way Keiser rolls
Scottsdale National owner to low-spending members: 'Go, Daddy!'
January golf weather impact: Downward trajectory from '13 continues
Developers' past excess plague DC area courses
ClubLink adds TPC course to Florida portfolio
USGA responsibility not to grow the game. Really?

The Pellucid Perspective - February 2014