January Weather: Golf benefits from an inconvenient truth

The 2011-12 “winter season” continues to be an extreme anomaly but one that benefits the golf industry in the form of Golf Playable Hours (GPH) being +57% vs. last January at the national level! Since this is the first month of the year, the Year-to-Date (YtD) figures are identical to the January results. Expanding on the good news, regional breadth for the YtD period was significantly favorable at 4.3:1 with 17 regions having favorable weather against 4 regions with unfavorable weather (the remaining 24 either in the neutral zone of +/- 2% or out of season). The only thing keeping the industry from the weather trifecta was that weekdays had slightly better weather gains (+61%) than weekends (+48%) for the month. Regardless, when both weekparts are up that much and they’re that close, the mix doesn’t matter that much in rounds impact.

Looking back on December rounds demand as reported by Golf Datatech/NGF to calculate the facility Utilization Rate, it comes out mathematically as a big drop in Utilization but given that many areas had exponential gains in Capacity Rounds (CR), we know that it’s unlikely in the transitional geographies that a doubling of the CR is going to produce a doubling of rounds. The YtD Utilization registered at 52% (comprised of a 3% decrease in Played Rounds against a 1% decline in Capacity Rounds) which is a full point lower than the 2010 year-end value.  In other words, as an industry at the national level, we basically held our ground against slightly poorer weather. Leading the YtD market utilization “winners”, among the markets that matter in rounds contribution, are Dallas, Seattle, Hawaii and Sacramento all up 2 points or more while the “biggest losers” are led by Cincinnati, Denver and Philadelphia which all lost 3 points or more. Starting this month, Pellucid Publications Members will have access to the market-level Utilization for all 61 markets via the Pellucid website and their membership credentials (see below on how to subscribe).

Jim Koppenhaver comments: “Well, last month I said that if we didn’t see a 5%+ jump in rounds played in December we would have to put a fork in the golf industry; I’m glad to see that golfers nationally didn’t make me eat my words.  The huge upside in rounds played confirms two things in my mind: 1) That we are heavily weather dependent for better or worse and 2) That favorable weather in the late and off-seasons doesn’t drive a commensurate increase in play (bears win over squirrels once again but we’ve seen that favorable pre-season weather comes closer to driving parallel rounds demand). Several of the Chicago courses opened seasonally this weekend as the 40 degree+ temps continue to linger around latitudes for which a 2-day sum temperature should be closer to 40 degrees in February. The net is that a number of courses are generating some small, but welcome, pre-season revenue and with very little cost associated with it as a tiny cushion coming into the season. We’ve compiled the 2012 forecast at the national level and for the 45 Pellucid weather-based regions but to find out what the crystal ball says for the country, your region or your facility you’ll have to buy the State of the Industry, become a Pellucid Publications Member or subscribe to our Cognilogic monthly tracking at facility level.  Will the exceptional weather continue? Should you be revising your rounds and revenue forecast for the year upward? Is this just a January tease? Inquiring minds want to know (as most likely do the people who own your facility or are responsible for its financial performance).”

On the Golf Fees revenue side via the December PGA PerformanceTrak numbers, they’re reporting a 31% gain for the month (slightly lower than their reported 38% increase in rounds meaning rate lagged slightly vs. YA). This brought the YtD GF revenue deficit to -1% which, compared to the 1% decline in rounds, means that rate (revenue per played round or RevpPR) finished flat vs. YA (better than a loss). After factoring in our 1% decline in CR, this would place Revenue per Available Round (RevpAR) at parity with 2010. In other words, according to PerformanceTrak we can explain all of our rounds and revenue loss on slightly unfavorable weather at the national level. This however is slightly rosier than the Golf Datatech/NGF accounting for rounds which showed us -2.5% for the year.

A broader and more detailed scorecard of the monthly key industry metrics can be found in Pellucid’s free digital magazine, The Pellucid Perspective. To register to get the current and future editions, go to http://www.pellucidcorp.com/news/elist, fill in the information and you will be registered for the next edition on 2/15/12.