Have We Reached Peak Golf Revenue?
It Depends on How You Measure It
This month I’ll continue our ongoing study of what we believe is the cardinal metric for the golf industry in general and facility owner/operators in specific, Golf Revenue (GRev). Our industry has an historical penchant for fixating on rounds played in one perspective for good reason (volume tends to fluctuate more than average rate therefore explaining more of the ups & downs in industry fortune) and another for bad reason (it’s the only metric that the vast majority of stakeholders have any visibility into at the industry level). We have two assets that allow us to calculate a quantitative look at GRev and we use them in conjunction as a reality check on what that metric’s trend looks like over longer periods of time (in this issue’s analysis, we’ll go back to 2005).
Prior to 2020 and the post-pandemic surge in demand, the Golf Revenue pattern was pretty much modest annual increases in Average GF rate coupled with pretty wild swings up and down in rounds any given year which then dragged Golf Revenue fortunes up and down with it. The pandemic boom in demand created what I call the “Ely Callaway effect”, the magic convergence of higher volume (sell more clubs) and higher rates (at a higher price). In this issue we’ll look at how and where that’s propelled our estimate of Golf Revenue at the national level since ’19 and whether we’ve “peaked” or not as of the end of ‘22:
- How did we do it? Through our licensed asset of the Internet Golf Course Database (which provides our historical values for Weekend Greens Fees (WEGF) for every US facility) and the information being provided since ’19 from our Golf Market Research Center (GMRC) subscribers (which helps us understand the translation between WEGF and Avg. Rate per Played Round) we can both study the arc of annual price increases as well as project the annual GRev value at the national level
- What does the unadjusted picture of GRev trend and peak look like? It suggests that we did see a peak in ’21 and a modest dip in ’22. But…you know that Pellucid isn’t ever going to produce a quantitative analysis of facility performance without weather impact so we need to dial that into the equation
- Weather-adjusted GRev (AKA Revenue-per-Available Round or RevpAR) shows that the measure is still ascendent and will likely continue yet higher in ’23 when we close the books in December (due to a combination of both higher Played and Capacity rounds)
- As a bonus track, I also couldn’t resist looking at whether our GRev gains have paced, exceeded or trailed inflation since ’05 in constant dollars. The short answer is that the rate increase for the average round of golf has trailed inflation for the period ’05-’22 which means it’s actually, relatively, cheaper to play golf in ’22 than in ’05 and, since the pandemic, we’ve left some money on the table relative to food producers, energy producers, builders/housing providers and most other service providers it would seem
I hope everyone enjoyed the free full issue last month but we’re back to the pay-go model here for the July issue so, if you want the more detailed history and commentary on the arc of GRev, you can join us for this episode and going forward one of three ways (all of the below also have monthly pay-go options, at a slightly higher annual rate):
- Subscribe to the Pellucid Publications Membership for $495/yr (most comprehensive coverage & detail) – Annual subscribers get access to the following:
- Outside the Ropes monthly digital newsletter (including this issue for starters!)
- Annual State of the Industry report portfolio (PowerPoint presentation, PDF commentary report, access to Jim/Stuart video of presentation)
- Geographic Weather Impact Tracking (US, 45 regions, 61 markets) or Cognilogic for Golf Playable Hours/Capacity Rounds for individual facilities
- National Consumer Franchise Health Scorecard (expanded data and tables underlying this issue’s summary figures)
- Subscribe to OtR, 12 monthly issues for $250/yr with a money-back guarantee if you’re not satisfied at any time during your subscription. Subscribers also get access to the historical archive of past issues (last two years) via the members-only section of the Pellucid website
- Subscribe to Golf Market Research Center (for operators wanting a combination of insights and action tools) – In addition to an OtR subscription, you’ll get the State of the Industry presentation along with the full suite of Performance Tracking reports and weather impact services (Cognilogic for historical Golf Playable Hours/Capacity Rds, Foresight for the 60-day forecast for your facility location for Capacity Rds and daily key weather forecast variables)
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