The Pellucid Perspective - August 2023 - 4

PRICING
OBSERVATIONS
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4 The Pellucid PersPecTive
9
August 2023
to the Pellucid Publications Membership, ha, ha). I've also been
suggesting in multiple messages to our subscribers over the past
2 years to follow suit of the larger, more sophisticated pricing
and mature industries that have learned over time to always
be one step ahead of inflationary forces vs. playing catch-up a
year in arrears ( " we'll take a modest hike this year and close the
gap next year " , trust me, you lose the initial year of pricing and
you get caught losing the last year when inflation subsides and
consumers put their foot down). As part of that dialogue with
our clients, we also have visibility into key metrics around pricing
strategies being deployed and their general results through
attracting new golfers is in the 25 - 40 Age Group. It is also the
Age that many kids exposed to golf through Junior Programs
return after their detours into high school, college and team
" club " sports. Providing more access to affordable instruction
will only serve to help with faster skill development - we know
that people respond to improvement and will stay involved
when they get better.
It is also clear, however, is that we will have to adjust our
methods for getting these new golfers equipped for staying engaged.
This will entail rethinking " rental programs " and probably
getting familiar with some of these new fintech options
that the Millenials are already embracing.
n
the monthly facts our Golf Market Research Center subscribers
provide. From the three facts they provide through the GMRC
portal monthly for their facility (Rounds, Golf Revenue and
Peak WE GF Rate for the month), we can observe a couple
of key facts around pricing levels, which direction they're going
(and how fast) and how much of the increases are being absorbed
by the golfer vs. where they're pushing back by shifting
playing patterns (or signing up in higher numbers for " fixed fee
golf " like season passes, permanent tee times (popular among
munis here in Chicago), leveraging resident rates etc.).
I recently observed in the GMRC June monthly results
across a number of courses (just taking
one month here for an example, it's not
representative of the entire portfolio and
the entire season) that we're getting a
range of rate increases for the season vs.
'22 (most are falling in the +2 to +6%
range) and a range of results which reflect
how more aggressive pricing is
getting higher pushback and golfer
rate-seeking shifts as well as how some
number of our subscribers are hitting
the sweet spot between taking higher
rates and making the majority of them
" stick " based on looking at their change
in rounds played and a measure we call
% Achieved of WE GF Rate. For those
into detail, the inverse of this number
is the % Discount Rate or the difference
between what your GRev would've
been if every round went out at the peak
WE GF Rate vs. what you actually took
in. This is where Stuart dutifully offers
up the fact that, if you use the industry
standard rate card differentials (i.e.
weekends vs. weekdays and AM vs. PM
rate card norms), you start with a discount
rate of ~18% or your % Achieved
of WE GF Rate is 82% right out of the
gate. We've seen over the years that, at
a high-level summary, this number for
most " pricing normal " golf courses runs
between 60-70%.
In the current economic cycle, we've
watched with interest and advised clients
who inquire regarding what we
think current best-practices are for establishing
rate cards annually and balancing
the mix of play between " fixed
fees " golfers and daily rates. Dynamic
pricing has also now entered the fray
and adds another dimension to it but
that's a completely different topic for a
different day... Back to the task of figuring
out what pricing jumps we're seeing
pursued in the '23 season and using
https://kempersports.com/
The Pellucid Perspective - August 2023

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