Thursday, February 23, 2012

Why are some golf courses committing business suicide?

A few days ago I ranted a bit about the insanity of golf and my fears for its future.  Think of this as part two of that post, because now I am going rave about golf course dinosaurs and why their lack of business model innovation is going to put many of them into bankruptcy.

Last year in British Columbia at least half a dozen golf courses either rolled up their fairways for good or went into receivership.

It was a year plague by bad weather and short-sighted managers who stood their ground on green fee pricing resulting the in the playgrounds around their clubhouse staying empty.

Why can't they see that the old ways of doing business aren't working and will never work again.   it's time to wake up to the new world of daily discounts.

In November 2008, Groupon pioneered its unique geo-targeted daily deal service and things have never been the same.  Just 3 years later the company went public with a market value of whopping $12.7 billion!

Since then hundreds of deal sites have been launched trying to copy Groupon's formula, including those focusing on discount tee times/packages like GroupGolfer.

I haven't used GroupGolfer yet as it is still US only, but I'm very familiar with Groupon and I think it's great for both consumer and vendor.  Consumers get a good deal and vendors get a great opportunity to up-sell the customer and increase the chances of repeat business down the road. I could probably be the poster child for them.. 

Last summer I bought $60 worth of bedding plants for less than half price with Groupon.  But when I left the store, I discovered I had spent three times that much because I liked what I saw and kept buying.  I've been back many times since.  It was win-win for both me and the seller and I believe the same can happen with golfers and golf courses.

I wish a daily deal green fee program would come to BC because I would sign up immediately.  Last year one company tried, but they couldn't get the golf courses to discount their green fees for a group buy.  In fact, when they tried to market the program to a bunch of golf bloggers and golf courses through an email campaign, one golf course representative replied with this:

"I am not interested in signing up for your service.  The last thing I am looking to do is tell thousands of golfers that I value my services at half of what I try to sell it for on a day to day basis.  Unless you are a start up business wiling to pay a severe premium to get people to your location, I believe sites like yours, Groupon, etc. are the worst thing a business owner could do."

What I find really sad is that I know for a fact that his golf club is in receivership. Why he would rather have empty fairways than fill them with golfers who will likely use their savings to pay for range tokens, golf balls, gloves and tees, beers from the cart gal or dinner and drinks after the round, I'll never understand.

And this attitude isn't reserved for North America.  With a reduction in 46,000 registered golfers in 2011 (the first time that's ever happened), over 30% of Europe's operators and club managers actually increased prices in 2011 rather than offering youth and family programs or promotional packages.

According the Andrea Sartori, head of KPMG’s Golf Advisory Practice, “More than half of golf clubs have not invested in enhanced marketing – and many have not yet capitalized on the opportunities provided by online marketing and social media.”

Thankfully not all golf courses are living in the dark ages.  Ka'anapali Golf on Maui figured out how to fill 2 hours of unused time at the end of the day and introduced a great Club Fit program to locals and tourists.  For just $50/month you can walk and play 6 holes of golf after 4 pm.  Brilliant!

And yesterday I heard about one club that offered "gimmes" to players - free golf for the last 1.5 hours in the day during the summer.  It was a huge success.  They could never sell green fees at that time of the day, so why not bring in golfers for free and enjoy the extra revenue that comes from post-round hospitality sales.

Golf has benefited from amazing innovations in equipment, apparel and course design over the past few years.  It time for golf course owners to get with the program and adopt innovative marketing programs and business models to resurrect their dying businesses.

Golfgal


14 comments:

Gerry Wendel said...

Wow! Yes, it sounds like they need to pay attention to new marketing techniques otherwise they'll just have a pretty lawn that requires a lot of upkeep!

Anonymous said...

While I agree the golf industry is in a tough place (I am in it and see it everyday, both as a player and an employee), I completely agree with the club owner you contacted in his statement that companies like groupon are killing and de-valueing (made up word, thanks) golf. Yes I agree green fees could come down, but THAT is how it should be done, not discount after discount.. Think about it from the owners side of it, maybe a course or two gives into groupon type organisations and then they are pushing other courses out of business because more golfers think "hey, lets go play the cheaper course", then all the sudden golf will spiral out worse as golf courses start competing themselves out of business not even meeting operating costs with a full golf course...

Golfgal said...

Thanks so much Gerry and "Anonymous" :) for your comments.

I do appreciate both points of view and it's a wonderful thing that we can agree to disagree.

I'd be curious to know what your club is doing to weather this crisis and any ideas you could share that would help all the struggling clubs.

Thanks!
Gayle

margarit brigham said...

Great article Gayle...

Golfgal said...

Thanks Margarit!

DaveAndrews said...

A tee time is a perishable commodity. If it isn't sold, it is dead to the course owner and has no value. It's like an unfilled seat on a plane. That is why creative ways to fill the tee times must be used.

Golfgal said...

Well said Dave! Thanks - short, sweet and bang on!

Ryan Hauser said...

Maybe courses could start offering free carts with round purchases. I personally like walking a lot of the time, but most people would probably love a free cart! This would probably help speed up the game too...which seems to be another of the major issues. Just an idea... :)

Golfgal said...

I like that idea Ryan. Anything that gives people the sense that they are getting a good deal AND speeds up play.

Fabulous! :)

Thanks!
Gayle

Golfgal said...

I like that idea Ryan. Anything that gives people the sense that they are getting a good deal AND speeds up play.

Fabulous! :)

Thanks!
Gayle

Golfgal said...

I like that idea Ryan. Anything that gives people the sense that they are getting a good deal AND speeds up play.

Fabulous! :)

Thanks!
Gayle

Abercrombie said...

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golfelbow said...

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Arthur Smith said...

What can you expect? A lot of clubs just want to look "sophisticated" that they become exclusive to those willing to pay an arm and a leg just to be a member. I just hope the mill pond golf courses don't follow their example.