The Pellucid Perspective - February 2016 - (Page 13)

Market focus Tough love, brother, in Philly market Philadelphia, PA 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 18th healthiest market, the Philadelphia PA Metro Core Business Statistical Area (CBSA). While it may be hard to believe, the Art Museum steps and the Rocky statue is one of the top tourist attractions for the City of Brotherly Love, which is home to 5.6M residents and hosts roughly 40M visitors a year. For those residents within the moderate-length season, Philly is home to an ample supply of golf although some of the best golf in this market consists of private clubs of which there is an abundance. Let's take a look at the metrics for Philadelphia and see whether local golf operators are "contenders" or "champs." By rounds demand (one of our 3 selection criteria for initial inclusion in the Top 25 list), the Philadelphia CBSA ranks 10th among US markets with facility-reported annual demand of just under 10M rounds. (That facility-reported tally counts both local and tourist play). Looking at the golf consumer base, we see that Philly is home to a healthy local golfer base of roughly 0.5M golfers (ranking 6th 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 194 18hole equivalents (EHE), producing a healthy ratio of roughly 2.5K 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 heavily to Private at 47% of total holes compared to the national average of 27% (wow). The Private vs. Public access balance is 47%/53%, which is considerably skewed to Private vs. 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 61%/39%, which is also materially skewed to Value-added vs. the 50%/50% national distribution. Within Public-Regulation golf, the distribution between Premium/Value/Price is 28%/55%/17% vs. the national picture of 34%/42%/24% which shows that the Public-access regulation supply tends to cluster in the middle range vs. the US benchmark (55% vs. 42% 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 Private PublicPremium PublicValue PublicPrice Learning & Practice Philadelphia, PA CBSA Golfer Base - Est. # of Golfers (Ks) - # of 18 Hole Equivalent Facilities - Golfers per 18-Hole Equiv. 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) Future Facility Tot US Index vs. US 486.1 22,900 194 14,672 2,512 1,561 161 47% 14% 27% 9% 4% 27% 23% 28% 16% 6% 174 60 96 53 65 8% -12% 9% -12% 86 100 -20% -21% 94 26.4 26.7 99 46% 56% $1,144 $1,155 $20 $19 82 99 105 * 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) 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). During the "go-go" years of supply development (19902000), Philadelphia was at the vanguard of the "build a course a day" craze, increasing supply at an annual rate of ~4% (compared to the (unreasonable) US average of >2%, they beat that The Pellucid PersPecTive 13

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

PerformanceTrak rides off into the sunset: What’s next?
Millenials are only part of the story; don’t forget the rest
Scoundrels or saviors depends on one’s point of view
January golf weather impact: All good things come to an end
Tough love, brother, in Philly market
Slow life in the fast lane

The Pellucid Perspective - February 2016