Every year about this time, there are numerous stories about the golf industry and how many courses have closed, how many golfers there are and whether dues and fees have increased, decreased or remained constant.
Most of these articles are based on national averages, often compiled by the National Golf Foundation, Golf Datatech, Pellucid or other reliable sources that compile this type of data. Such data does not a market analysis make, even if and when it is reliable.
First, there is the issue of market segmentation. Golf courses come in lots of “flavors”. Generally, they fall into four (4) categories as follows:
Within each of these categories there are numerous sub-segments and then there are the geographical considerations that impact all market analyses. For sure, there are some markets that are regional or even national in scope (major resorts and destination clubs, to name a few) but typically most courses and clubs compete in an environment that is typically very “local”.
Some clubs draw only from the community in which they’re located and others from a limited distance. Conversely, there are destination courses which can draw from a much wider area in some circumstances. Just like “all politics are local”, all golf markets are unique and need to be defined.
There are four recognized levels of market analysis for golf course properties. The range from very “generalized” to very detailed with analysis of future land use, detailed capture analysis and risk/value analysis. With any market analysis, there are 7 fundamental questions that should be asked an answered:
- What market segment?
- What are the characteristics of the market segment?
- What is demand in the market segment?
- What is the competition in this market segment?
- What are market conditions (supply/demand)?
- How much market share can the subject capture?
- What are the financial implications to the property?
Given these fundamental questions, defining the market is a critical part of any market analysis and often contradicts the often published national averages that people read about. Simply put, “all politics are local”.
A proper market analysis can help golf courses and clubs make informed decisions on selling the club, making capital improvements and how much opportunity there may be for growth in market share. Combined with objective facilities and financial analysis decisions can be made that are sensitive to market forces and enhance the prospects of success for any club. In most current market environments, clubs are considering capital improvements and a market/feasibility analysis can not only determine if and which improvements make sense, but also help to identify those items that will yield immediate and positive financial benefits, as opposed to cost centers in order to appropriately phase improvements in the most beneficial order.
Such an analysis can help any club understand their market and provide the foundation for determination of decisions on whether or not to consider re-purposing the club’s real estate, positioning differently in the marketplace or whether to cease operations and sell the club. Every club should know its market and since markets evolve and change, it’s a good idea to review this regularly. Knowledge is Power!