Chapter 7 Golf-Based Resorts: Managing the Operation

Chapter 7Chapter 7Golf-Based Resorts:Golf-Based Resorts:

Managing the OperationManaging the Operation

Identify the changing trends in and Identify the changing trends in and demographic profiles of the golf market.demographic profiles of the golf market.

Industry Trends:Industry Trends:

Golf industry leaders are concerned that Golf industry leaders are concerned that the number of future golfers will declinethe number of future golfers will decline

Issues most likely to impact business:Issues most likely to impact business:– Number of roundsNumber of rounds– Player retentionPlayer retention

Changing Trends (cont.)Changing Trends (cont.)

Industry Trends (cont.)Industry Trends (cont.)

Water management is the major environmental Water management is the major environmental issue facing the industryissue facing the industry– Many courses are utilizing water conservative Many courses are utilizing water conservative

technologytechnology

Changing DemographicsChanging Demographics

There are seven segments of golfers: core, There are seven segments of golfers: core, seniors, women, juniors, highly skilled players, seniors, women, juniors, highly skilled players, private club members, and high spending private club members, and high spending golfing householdsgolfing households


Changing Demographics (cont.)Changing Demographics (cont.)

In 2002, 11 million golfers took an In 2002, 11 million golfers took an overnight trip that included golfovernight trip that included golf

There are more than three times more There are more than three times more male golfers than there are female male golfers than there are female golfersgolfers


Changing Demographics (cont.)Changing Demographics (cont.)The profile of the average golfer is:The profile of the average golfer is:– MaleMale– Around the age of 50Around the age of 50– College graduateCollege graduate– Household income between $100,000 and $149,999Household income between $100,000 and $149,999– Plays about 60 rounds per year and has been Plays about 60 rounds per year and has been

playing for roughly 22 yearsplaying for roughly 22 years– Average score of 88.4Average score of 88.4

Male golfers spend slightly more than female Male golfers spend slightly more than female golfers on golfinggolfers on golfing

Identify the critical variables in Identify the critical variables in determining a golf-based resort’s profit determining a golf-based resort’s profit

potential.potential.

OperationsOperations

The Sun Belt covers the southern states and The Sun Belt covers the southern states and part of the coastal regionpart of the coastal region– These courses are likely to be open year-roundThese courses are likely to be open year-round

The Frost Belt consists of northern states and The Frost Belt consists of northern states and the mountainous parts of southern statesthe mountainous parts of southern states– These courses usually shut down for a while during These courses usually shut down for a while during

winterwinter

Profit Potential (cont.)Profit Potential (cont.)

Income StatementIncome Statement

In 1999 U.S. golf resorts reported an In 1999 U.S. golf resorts reported an average operating median of:average operating median of:– 28.9% for Frost Belt resorts 28.9% for Frost Belt resorts – 25.3% for Sun Belt resorts25.3% for Sun Belt resorts


RevenuesRevenuesMost revenue comes from annual fees and Most revenue comes from annual fees and green feesgreen feesThe second most important source of revenue The second most important source of revenue is from golf cart rentalsis from golf cart rentals

ExpensesExpensesThe greatest expense is the cost of The greatest expense is the cost of merchandise sold, followed by the cost of food merchandise sold, followed by the cost of food and beveragesand beveragesPayroll is usually the largest expense categoryPayroll is usually the largest expense category


StaffingStaffing

Sun Belt resorts staff their facilities with 29 Sun Belt resorts staff their facilities with 29 part-time and 34 full-time staffpart-time and 34 full-time staff

Frost Belt resorts staff their facilities with Frost Belt resorts staff their facilities with 60 part-time and 43 full-time staff60 part-time and 43 full-time staff

Identify potential solutions to financial Identify potential solutions to financial problems faced by golf-based resorts.problems faced by golf-based resorts.

Tournaments and EventsTournaments and Events

Business GolfBusiness Golf– Customer Appreciation EventsCustomer Appreciation Events– Sales/Product LaunchesSales/Product Launches– Employee OutingsEmployee Outings– Fund-Raising eventsFund-Raising events

Solutions to Financial Problems Solutions to Financial Problems (cont.)(cont.)

Hole in One Contest Hole in One Contest – Companies organize the activity for the Companies organize the activity for the

resort and provide the prizesresort and provide the prizes– While many think it is virtually impossible to While many think it is virtually impossible to

achieve a hole in one, in any given year in achieve a hole in one, in any given year in the U.S., there are over 40,000 holes in onethe U.S., there are over 40,000 holes in one


Women-FriendlyWomen-Friendly

Women friendly courses can:Women friendly courses can:– Vary tee locations to allow the option of playing a Vary tee locations to allow the option of playing a

harder or easier courseharder or easier course– Feature holes in the 5,600 to 5,700 yard rangeFeature holes in the 5,600 to 5,700 yard range– Provide holes where players do not have to carry Provide holes where players do not have to carry

the ball over a lot of obstaclesthe ball over a lot of obstacles– Where greens can be easily reachedWhere greens can be easily reached– Where forward tees are closer to the hole and allow Where forward tees are closer to the hole and allow

for a better angle at the greenfor a better angle at the green


BanquetsBanquets– Can be an excellent way to bring in additional Can be an excellent way to bring in additional

revenuerevenue– Golf tournaments are a good market to advertise toGolf tournaments are a good market to advertise to– Pre-game lunches, box lunches, post game dinners, Pre-game lunches, box lunches, post game dinners,

or cocktail parties have proven successfulor cocktail parties have proven successful– Social events are the most financially profitable Social events are the most financially profitable

segments, including weddings, bar mitzvahs and segments, including weddings, bar mitzvahs and anniversariesanniversaries


Pro ShopsPro Shops

Margin Enhancers include discounts, rebates, Margin Enhancers include discounts, rebates, fitting fees, advertising co-ops, freight fitting fees, advertising co-ops, freight programs, or free product accountsprograms, or free product accounts

AccessoriesAccessories– The key to increasing sales is in the presentation of The key to increasing sales is in the presentation of

itemsitems– Keep displays neat, use color effectively, develop a Keep displays neat, use color effectively, develop a

theme, cross merchandise, and avoid one level theme, cross merchandise, and avoid one level displaysdisplays


Inventory ControlInventory Control– Controlling inventory can cut down costsControlling inventory can cut down costs– ““Open-to-buy” refers to the amount of retail Open-to-buy” refers to the amount of retail

dollars set aside for the purchase of dollars set aside for the purchase of merchandise in the futuremerchandise in the future

– Old sales figures are used to project future Old sales figures are used to project future salessales

– Merchandise group departments are created Merchandise group departments are created


Inventory Control (cont.)Inventory Control (cont.)– To maintain control of the system the two important To maintain control of the system the two important

pieces used to determine beginning inventory levels pieces used to determine beginning inventory levels are projected sales volume and the turnover rate are projected sales volume and the turnover rate desired by the shopdesired by the shop

Credit CardsCredit Cards– Accepting credit cards makes the purchase easier Accepting credit cards makes the purchase easier

for the customerfor the customer– Retailers pay a fee to credit card companies when Retailers pay a fee to credit card companies when

they accept credit cardsthey accept credit cards

The End!The End!

Documents

Chapter 7 Golf-Based Resorts: Managing the Operation