Dec Outside the Ropes Newsletter – Possible Support Level Signs in ’19
This will be an abbreviated issue due to the holiday season but it will provide a preview of the ’19 State of the Industry for our subscribers on the cardinal metrics of industry health (outlined below) as we know them through November (those dependent on rounds demand) or December (those based on weather impact). We didn’t get an abundance of help from the consumer base changes or from weather but supply did continue to contract and rounds, surprisingly, appear to be on track to log a single-digit percentage gain in the face of those headwinds.
In this issue we’ll take a quick tour of where we see the cardinal metrics finishing the year at the topline level:
• Utilization – will finish up for ’19, for the 2nd consecutive year, as Played Rounds inched higher vs. basically flat Capacity Rounds producing a slight uptick in the efficiency of our “factories.” I had confidently predicted back in January that we would get a healthy Played Rounds bounce in ’19 vs. ’18 behind a return to more “normal” weather; I was wrong on both counts
• Velocity (average played annual rounds per 18-hole equivalent) – will likely finish marginally up for the year due to the modest Played Rounds increase and continued fractional decline in Supply (measured in EHEs or 18-hole equivalents). This snaps a two-year decline and at least points us in the right direction for future improvement (i.e. getting help from demand increases vs. solely relying on supply contraction).
• Play Rate (annual rounds per capita, remember this is for ’18 as the consumer survey is a year in arrears) – holds steady, stemming the historical pattern of annual erosion, as the result of steady population growth, a marginal drop in participants and a fractional consumer-reported gain in rounds played. This stops the annual downward march of this measure since ’13 for the optimists in our midst.
We continue to be “naked” with respect to the most important metric of Revenue-per-Available-Round (RevpAR) due to the lack of industry reporting at any breadth or accuracy for Total or Golf-related Revenue. We continue to look at the annual changes in the Internet Golf Course Database (IGDB) in weekend rate-card rates for direction on whether pricing power is improving, eroding or holding steady and I’ll touch on those results (directionally) in the closing section.
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