The Pellucid Perspective - June 2018 - 13

During the "go-go" years of supply development (19902000), Cleveland showed admirable restraint against the "build
a course a day" craze increasing supply at an annual rate of ~1%
(compared to the (unreasonable) US average of >2%). In tandem to this, annual population growth was minimal (0% vs.
the national average of ~1%). Using our pre-2000 calculation
for supply dilution/absorption (supply change vs. population
change) we estimate that the market was at ~11% dilution at
the turn of the century vs. the 1990 benchmark (vs. the US average of 11% "overhang"). Since 2000, the annual rate of supply growth has throttled back significantly (<0.5%) while the
population growth rate has basically
remained flat. A better available metric however for supply dilution/absorption in the post-2000 period (because
we have semi-accurate facility-reported rounds figures at state and market
level) is comparing supply growth to
the changes in rounds demand. Since
2000, the market has experienced a
marginal decline in the annual rounds
demand rate (~1% right on the national
average of -1% annually) which yields
increased supply dilution of ~13% during the '00-'13 period. Combining the
'90-'00 decade dilution rate and the
'00-'13 period results, the average facility in the market is ~24% worse off
than they were at the '90 benchmark (or
similar to the national supply dilution
of 27% for that same '90-'13 period).
So, relative to the national picture and
other markets we've studied in the Top
25, Cleveland isn't as bad off in supply
dilution as most due to a combination
of lower historical supply growth and
roughly similar rounds demand results
to the national average.
The average facility has throughput of 26K rds/yr, slightly below the
national average before factoring in
climate and daylight influences (but
not bad given its latitude and climate
zone). The more accurate measure
is the market's 49% Utilization Rate
which meaningfully trails the Top 25
US Golf Markets' average (56%). This
means that, after factoring in a significantly shorter-than-average season, the market's average golf "factory"
runs at lower throughput vs. its Top 25
US Golf Markets peer group. On the
annual Golf Fees Revenue productivity side, the market generates roughly
$0.8M per public regulation-length
EHE which significantly trails the Top
www.PellucidCorp.com

25 Markets average (this suggests that affordable golf is prevalent in Cleveland). As we move down the waterfall of health
metrics, the combination of the lower Utilization and Revenue
per EHE combines to produce a lower RevpAR result than the
Top 25 Markets benchmark. As a final measure for the Top 25,
the Golf Fee Profit-per-Available Round estimate (designed
to equalize the equation when comparing high cost-of-living
markets to more reasonable ones) is $6 which is well below the
national average of $9 so the market doesn't get any significant
gains in the cost to produce a round of golf (which surprises
slightly in that they only have to operate a fraction of the full

The Pellucid PersPecTive

13


https://www.kempersports.com http://www.PellucidcorP.com

Table of Contents for the Digital Edition of The Pellucid Perspective - June 2018

TOC
Course closures – some perspective from Pellucid
CapEx: The looming monster under the bed for munis
Courses turning unused land into cash cow
May golf weather impact: We Finally Catch a Break
Cleveland market challenged, but not like Cavs
It is, after all, all about the money
The Pellucid Perspective - June 2018 - TOC
The Pellucid Perspective - June 2018 - Course closures – some perspective from Pellucid
The Pellucid Perspective - June 2018 - 3
The Pellucid Perspective - June 2018 - 4
The Pellucid Perspective - June 2018 - CapEx: The looming monster under the bed for munis
The Pellucid Perspective - June 2018 - 6
The Pellucid Perspective - June 2018 - Courses turning unused land into cash cow
The Pellucid Perspective - June 2018 - 8
The Pellucid Perspective - June 2018 - May golf weather impact: We Finally Catch a Break
The Pellucid Perspective - June 2018 - 10
The Pellucid Perspective - June 2018 - 11
The Pellucid Perspective - June 2018 - Cleveland market challenged, but not like Cavs
The Pellucid Perspective - June 2018 - 13
The Pellucid Perspective - June 2018 - 14
The Pellucid Perspective - June 2018 - It is, after all, all about the money
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