The Pellucid Perspective - January 2016 - (Page 13)

Market focus Bull-ish on supply, Bear-ish on demand Chicago IL Metro 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 17th healthiest market, the Chicago IL Metro Core Business Statistical Area (CBSA). Given that Chicago is Pellucid's "home market," we're not a disinterested 3rd party in analyzing and assessing the strengths and opportunities for one of the largest golf markets in the northern US. Coming off several Voice of the Local Golfer surveys here in the Fall, golfers repeatedly indicated that there's a wide variety of very proximate facilities and they're inclined to "play around." This is good for the overall market but more challenging for the owner/operators as they compete for loyalty and what we call "share of play." We're also seeing an abatement of the rampant discounting of recent years past and it appears that the tide of 3rd Party Marketing has crested here and consumers are now looking equally to facility websites as well as 3rd party sites to book tee times, which is also likely helping us come down from the discounting heroin. So, on the operator's side, on to the question of whether this is a good, neutral or challenging market in which to make your living in golf. By rounds demand (one of our 3 selection criteria for initial inclusion in the Top 25 list), the Chicago CBSA ranks 2nd among US markets with facility-reported annual demand of just over 9M rounds. (That facility-reported tally counts both local and tourist play). Looking at the golf consumer base, we see that Chicago is home to a healthy local golfer base of roughly 1.1M golfers (ranking 3rd in the US, remember this is only local, resident population, doesn't count the tourist crowd). That golfer base is served by a reasonable supply amount of 341 18-hole equivalents, producing a healthy ratio of roughly 3.3K local resident golfers per EHE, over double the national average. The supply mix vs. the national distribution across Pellucid's five access/value/usage segments skews slightly to Private at 30% of total holes compared to the national average of 27%. The Private vs. Public access balance is 30%/70%, not differing materially from 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 52%/48%, which again is not materially different vs. the 50%/50% national distribution. Within Public-Regulation golf, the distribution between Premium/Value/Price is 35%/45%/20% vs. the nation- Private PublicPremium PublicValue Golfer Base - Est. # of Golfers (Ks) - # of 18 Hole Equivalent Facilities - Golfers per 18-Hole Equiv. PublicPrice Learning & Practice Chicago IL CBSA Future Facility Tot US Index vs. US 1,142.0 22,900 341 14,672 3,349 1,561 215 Supply Mix - Private - Pub-Prem - Pub-Val - Pub-Price - Learn & Prac 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) (EHE) Rounds & GF Revenue Health - % Utilization Rate - Avg. Ann. Rev. per Public Regulation EHE ($Ks) - Revenue per Available Round (RevpAR) 30% 22% 28% 13% 6% 27% 23% 28% 16% 6% 113 97 102 80 100 5% -21% 9% -12% 57 178 -26% -21% 125 24.5 26.7 92 48% 56% $1,079 $1,155 $21 $19 86 93 111 * Inverse index, lower is better ** Period % Chng in Rds vs. Period % Chng in Supply Above average level vs. US (Index >105) Average level vs. US (Index 95-104) Below average level vs. US (Index <95) al picture of 34%/42%/24%, which shows that the Public-access regulation supply skews slightly toward the higher-priced end vs. the US benchmark (80% is Premium/Value vs. 76% nationally). Remember that in this particular analysis Pellucid allows the definitions of Premium/Value/Price to "float" across each of the markets driven by the local market price spectrum so the absolute price of golf isn't necessarily revealed by a balanced distribution (i.e. Value golf could still be expensive in the absolute). The Pellucid PersPecTive 13

Table of Contents for the Digital Edition of The Pellucid Perspective - January 2016

2015 industry tale of the tape: What will the numbers tell us?
Uneven lies in search of a level playing field
Courses denied tax deduction for conservation easements
One-year anniversary of revolutionary course management technology product
December golf weather impact: Near-record for much of Northern US!
Chicago: Bull-ish on supply, Bear-ish on demand
Braving the third party tee time wilderness

The Pellucid Perspective - January 2016