The Pellucid Perspective - June 2014 - (Page 6)

GOLF COURSE BENCHMARKING How is your golf course really doing? Technology exists to benchmark course performance By Stuart Lindsay H ouse calls are relatively rare for me these days; but I love to do them. One of our semi-regular clients asked us to do a "full data" analysis that we hadn't done in a few years - we had done a customer survey in 2012 and gotten them some recent weather data, but the GM wanted to get a deeper dive look at his performance during the weather related shipwreck of 2013 and the slow start to 2014. What he really wanted to know was how he was doing compared to the rest of the Chicago market. It turns out that this course was doing really well. * They beat the weather on both rounds and revenue * They retained well over 90% of their most valuable customers (those that generate their first 60% of revenue) * They collected email addresses for 73% of their new customers and have email addresses for over 85% of their returning golfers * They are tying over 80% of their revenues to individual golfers * They beat the trends indicated by Golf Datatech and PerformanceTrak (they report to both as we encourage all our clients to do) We get a lot of calls asking about comparative golf course performance data. Commonly called benchmarking, it is used to measure relative results in similar operations ranging from soft drink distribution to hotels to dentists' offices and most businesses in between. The "benchmarking" we provided to our client course above is pretty complex and uses information derived from over 500 proprietary Pellucid/Edgehill Consulting queries that organize data from one of the better POS platforms that ties customers to transactions. However, even the better POS platforms could use a lot better comparative reporting of rounds and revenue, which is why we have developed our own application to get monthly and day of week numbers. One of the most recognizable and successful benchmarking systems is STR Global (Smith Travel) in the hotel industry. Their STAR Report is highly regarded for its ability to help hotels zero in on three key measures of performance - Occupancy, Average Daily Rate (ADR) and Revenue per Available Room (RevPAR). STR is also able to "slice and dice" operating results by geography, price segment, brand and a host of other customized criteria. However, the heart of their benchmarking success is the information derived from these three relatively simple key data points. We would contend that the measurement of golf course operating results is very similar to those of hotel operations. Both 6 The Pellucid PersPecTive are forms of hospitality services within the larger segment of commercial real estate. Let's take a look at these key STAR Report components in a golf operations context. Occupancy (Course Utilization) - For hotels, this is a rather simple calculation. The starting point is how many rooms are available - a 100 room hotel has 36,500 room nights available (100 X 365). If the hotel sells 21,535 rooms over the year, their occupancy rate is 59%. For STR, a reporting hotel needs to initially provide their number of rooms and then simply report their number of rooms sold on an ongoing basis. For golf courses, most operators set up their tee sheets and can get a rounds capacity number from their electronic tee sheet program. At that point, most tee sheet and/or POS systems can give you a "rounds sold" number and an operator can get an occupancy percentage (commonly called course utilization). The only problem is that the number of available rounds is not always static from year to year or month to month. This is not only due to changes in available daylight during the year, but some courses adjust tee sheet "spacings" from year to year. Of course, the elephant in the room is weather variation from year to year. This makes benchmarking for a golf course much more difficult, but more on that later. Average Daily Rate (ADR or Revenue per Round) - Again, this is pretty simple. The reporting hotel provides a room revenue number (in most cases excluding F&B, but sometimes may include resort charges, valet parking, etc.) and this number is divided by the number of rooms sold above. For golf courses, this is also simple - take your greens fee, cart and membership revenue and divide it by the number of rounds played and you have your ADR. Most hotels use this statistic to determine how much relative promotional pricing they do measured against their "list price" or "rack rate." Revenue per Available Room (RevPAR) - This is the "holy grail" of overall performance that measures whether pricing (and/or marketing) decisions resulted in more revenue per available room night. For STR, this computation is again simple, using a combination of Occupancy and ADR. For golf course benchmarking to become as simple as the successful STR process for Hotels, we have to clear the hurdle of determining "Available Rounds." We also have to establish the proper baseline information - this would have to be rounds and revenue by month for a full baseline year (2013). We would also want to have the "rack rate" for the highest greens fee with cart for initial price segmentation. STR benchmarking clients June 2014

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

TOC
Is the golf industry "healthy"? Three versions of truth
Former ClubLinks co-gounder launching 12-hole golf
How is your golf course really doing?
Winning team produces a turnaround success story
Club to golfers: Promise to have fun
May '14 golf weather impact: Positive streak extends to 3 months
Chicago courses 'toddling' along in tough times
Declining Golf Galaxy sales contribute to poor Dick's Sporting Goods stock performance
Tracking golf's progress … via GPS?

The Pellucid Perspective - June 2014