| In my August column (READ JEFF'S COLUMN HERE), I applaud Bob Lohmann for his philosophical shift in the traditional golf course master plan (READ BOB'S COLUMN HERE). Since then, I have noticed other architects have been jumping on the Cost Ramification Action Plan train. Business-oriented renovations and master plans are the new normal. Design is out. Profit is in, as each architect offers up some specific examples of maintenance cost savings via design of greens and tees that are flatter and bigger – but not any bigger than absolutely necessary – and bunkers that are flatter or smaller or non-existent. Fewer have discussed the payback potential of such changes, and it’s probably worth addressing as part of renovation cost benefit analysis. Currently, it’s hard to get golf managers to think in terms of “revenue upside” but it can – and does – happen. While counter-intuitive, there are great examples of improving and even up scaling a golf course paying dividends in terms of increased revenues. I think more courses should try it, rather than taking the easier route of blindly discounting to remain competitive. I have seen total – in combination with better management and marketing – change the typical pattern of declining rounds and greens fees, turning deficits into profits and totaling a million-dollar net change in annual revenues. One city wanted an affordable, $20 golf course, to please their seniors. However, there were a dozen courses in that same niche, and a few in the $75 market, and exactly zero competitors in between at $45. I convinced them to build in that quality range – with discounts to locals and seniors, of course – and they have enjoyed great success. Low-priced courses can raise greens fees after renovations, and mid-priced courses can benefit greatly from this recession, as golfers trade down from clubs or $200 country-club-for-a-day courses to $100 courses, and those who gladly paid $100 for golf are now seeking out very good $50 courses. It’s easier to sell a necessary improvement package when there is a good chance for “payback potential” when the project is complete. We may never again reach the high-water mark of rounds from about 2000, but rounds will come back, and when they do, you want to have the best possible mousetrap….I mean golf course. For good golf courses, renovations usually cost less than building new, because clearing, cart paths, etc. are already built. It may be quite possible to provide an enhanced experience at a reasonable price, and attract new members or regular public players who will understand and pay a bit more for a better course. Surprisingly, it doesn’t take many new members or rounds to pay for renovations. Presuming $500,000 of renovations at today’s low interest rates, it takes only five net new members over four years, each contributing initiation fees, monthly dues, cart, guest and other fees, as well as meals each year, to pay for renovations. Public courses need about 1,000 “new” rounds at $50 per player for the same project. Do you think an improved course would generate just a little new interest? It usually does, but it naturally depends on your individual market. Value still sells. Golfers don’t consider poor courses or service to be “good value,” no matter how deeply discounted, even in tough times. A good $80 golf experience works better than a poor $40 golf experience. Yet, that is exactly what most courses do right now. You shouldn’t spend only to reduce costs. It’s time to increase your course’s appeal. I know the majority of courses seem to “poor boy” renovations, and downsize expectations, but it’s a great time to be a contrarian. If it’s any comfort, remember that many of today’s successful businesses got their start at the depths of the depression and survived by looking forward and offering a superior product or service in a market as tough as it is now. |
