Golf trip to the Middle East?
It might sound crazy to Americans, who tend to associate the Middle East with Iraq, suicide bombings and terrorist training camps. But Troon Golf, a Scottsdale-based manager of higher-end golf courses, is steering clear of those areas with its expanding business in the region.
Areas like Dubai in the United Arab Emirates are popular for vacation, retirement and second homes for Europeans and other expatriates -- all fueling golf demand.
Housing growth, though, is the main driver. Because the concept of using golf courses to help sell homes is new there, it's also proving fertile ground for Troon to expand its international portfolio in a model already familiar in the United States.
"It's a culturally rich area (and) it's a shame that there are other places in that same region that are very hostile and aren't possible to be actively engaged in," said Dana Garmany, Troon's chairman and chief executive officer.
"For now, we know our limitations and we know who we need to be for the safety of our employees and our clients (and) we think we found the right mix and the right amount of caution vs. expansion, and hopefully we'll see good results."
His privately held company, the second-largest course manager in the world, is expected to do $1 billion in revenue next year. Troon manages two golf course operations in the Middle East, in Qatar and the UAE. It has five other facilities under construction or in planning in the UAE and Kuwait.
Troon has opened a new office in Dubai to oversee regional operations. It's also looking at Oman and Bahrain as Troon seeks to increase its facilities in the Middle East to perhaps 15 within three years.
Foreign expansion is nothing new to Troon, which manages more than 140 courses in 26 states and 12 countries. It has branch offices in Dubai; Tokyo; Brisbane, Australia; and Milan, Italy; and claims about 8,500 employees worldwide, 1,700 of them in Arizona.
On Thursday, it announced its selection to design and run the private Castiglion del Bosco (Castle in the Woods) Golf Club in Italy's Tuscany region.
Garmany estimates about a third of Troon's new business this year will be overseas, the rest in North America. Troon, whose roots date to 1990 with Garmany's opening of Troon North Golf Club, began its international forays in 1998.
Troon feels comfortable in the Middle East. But it's not putting an American face on operations there, and Garmany admits that it's "not Number 1 on the hit parade for USA transfers." Instead, Troon has tapped staff from its European and Australian operations and other expatriates to launch operations.
Many Europeans are familiar with Dubai as a prime winter resort destination, Garmany said. It's about a 4 1/2-hour flight from Switzerland.
"If we had to staff every position there with an American, it would be a big challenge," he acknowledged.
Water would be a challenge, too, if not for the residential desalination plants sprouting like weeds; developers have discovered green grass helps sell real estate. As more homes open and produce more sewage, irrigation will transition from desalinated water to effluent and golf course operating costs will fall, Garmany said.
Richard Grinage, director of the Professional Golf Management Program at Arizona State University's Morrison School of Agribusiness and Resource Management, said he isn't surprised by Troon's maneuvers.
"It's like any business, you go where the market demand is and if there's opportunity, I'm sure that's where they're going to end up," Grinage said. "They have it down pretty good. I think they do a good job of selecting the courses where they can introduce their model and have it be successful."
Quality service is key to Troon's model, he said. The most successful courses in Arizona have strong service and many are Troon-run, he noted.
Edward Gowan, executive director of the Arizona Golf Association, said the Middle East is a natural progression for Troon.
"There are other very good management companies out there that don't have a global vision," Gowan said. "They (have) a level of service and a level of management that fits with the mentality of a lot of current course owners."
Garmany projects Troon will expand by 17 to 25 courses a year, limited mainly by its ability to train enough qualified managers. Each course needs a general manager, director of golf, course superintendent, controller and food and beverage manager, he said.
Troon grows slowly because it "can't create and develop talent quickly enough to take a lot of projects," Garmany said.
He expects the Middle East can support tens of new courses and hopes Troon can land the best half.
The growth will come fast as developers rush to build golf courses to sell homes. Garmany predicts 75 percent of the courses that will be built in the next 20 years will be built in the next three to four years..
It's a fascinating region, he said, cautioning against an American tendency to paint it with a broad brush of danger and instability. It's no more accurate than the "French thinking everybody in America wears a cowboy hat, cowboy boots and talks loud," he said.
Source: The Arizona Republic