The Pellucid Perspective - May 2015 - (Page 14)

MARKET FOCUS Profits not Rocky Mountain high, but better than most Denver CO Core Business Statistical Area (CBSA) I n this monthly section we profile one of the Top 25 US Golf Markets (based on a Pellucid composite score of the golfer base, the supply level and rounds demand). Within that Top 25 universe, we then rank them based on relative health using a Pellucid weighted scoring system on 8 variables ranging from Population Growth to Estimated Profitability-per-Available Round. In this issue, we'll profile the 9th healthiest market, the Denver CO Metro Core Business Statistical Area (CBSA). We're going to consciously avoid making any "mile-high" or "home of legal weed" references and instead put the market in the context of the health and wellness disposition of this city among the major US metros. That's a dual-edged sword for golf in that, on the one hand, golf isn't perceived as the most strenuous or aerobic of activities but, on the other hand, it's something that takes place in the great outdoors and Denver folks love their outdoor activities. (In part due to the scenic backdrop and a very hospitable climate; we know there are some of our warm-weather friends who might take exception to that but it's definitely not Chicago-esque). As you'll see in this profile, they do love their golf in Denver and who doesn't like changes in elevation of which there are plenty. Couple elevated tees with thin air and you've got the average golfer's dream except for those sidehill, uphill and downhill lies that also come with undulating terrain. By rounds demand (one of our 3 selection criteria for initial inclusion in the Top 25 list), Denver ranks 25th among US markets with facility-reported annual demand of just under 3M rounds. (That facility-reported tally counts both local and tourist play). Looking at the golf consumer base, we see that Denver is home to a relatively healthy local golfer base of roughly 277K golfers (18th ranking, remember this is only local, resident population, doesn't count the tourism crowd). That golfer base is served by a relatively sparse supply amount of 91 18-hole equivalents (EHE), producing an average ratio of roughly 3.1K local resident golfers per EHE, well above the national average. The supply mix vs. the national distribution across Pellucid's five access/value/usage segments skews to Public-Value at 36% of total holes compared to the national average of 28%. The Private vs. Public access balance is 31%/69%, slightly more tilted to Private than the national average of 27%/73%. The balance of Value-added golf supply (Private & Public-Premium) vs. Value golf (Public-Value, Price and Learning & Practice) is 45%/55% which is slightly more skewed to the Value classification vs. the 50%/50% national distribution. Within Public-Regulation golf, the distribution between Premium/Value/Price is 23%/60%/17% vs. the national picture of 34%/42%/24% which means that, within Regulation supply, we've got a significant gathering in the 14 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 Tot US Index vs. US 277.1 22,900 91 14,672 3,062 1,561 196 Denver, CO CBSA Supply Mix - Private - Pub-Prem - Pub-Val - Pub-Price - Learn & Prac 31% 14% 36% 10% 8% 27% 23% 28% 16% 6% 115 60 130 66 138 13% -15% 9% -12% 143 128 -28% -21% 134 29.0 33.8 86 56% 56% $1,371.1 $1,155 $27 $19 100 119 142 Supply/Demand Balance - '00-'13 Cume Supply Growth/Decline - '00-'13 Cume Rds Demand Growth/ Decline - '00-'13 Cume Mkt Supply Dilution (-)/Absorption (+) Level* - Avg Ann Rds Velocity (Ks per 18-hole vs. ks) Rounds & GF Revenue Health - % Utilization Rate - Avg. Ann. Rev. per Public Regulation EHE ($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) middle at the expense of both Premium and Price. Remember that, in this particular analysis, Pellucid allows the definitions of Premium/Value/Price to "float" across each of the markets driven May 2015

Table of Contents for the Digital Edition of The Pellucid Perspective - May 2015

Third party tee time space battles heat up
NGCOA draws flak on owners’ message board
GPS Industries, Club Car forge rare GPS success story
“Paces” of play a healthy alternative for golf?
Flying Tee aims to top Topgolf with debut facility
April golf weather impact: Put another month in the “plus” column
Denver: Profits not Rocky Mountain high, but better than most
ClubCorp reports outstanding first quarter results
The Players, on and off the course

The Pellucid Perspective - May 2015