Benefits of Software to Manage Golf Revenue, Asia Golf Business magazine, March 2010

INSIDE STORIEScent SPECIAL REPORT I WHY RENOVATION IS ESSENTIAL IN THE LIFECYCLE OF EVERY GOLF COURSE

cent SPECIAL REPORT IV A GOOD WALK SPOILED NO

cent TURF MATTERS IMPROVING GOLF COURSE FAIRWAYS IN NEW ZEALAND

Issue 20 March 2010 wwwasiangolfbusinesscom | wwwasiangolfmonthlycom | wwwgolfconferenceorg

ISSUE 20

SPECIAL EVENTS I SEAIGME | PGA CONFERENCE ASIA | APGS 2010 SPECIAL EVENTS II GOLF INDUSTRY SHOW

GOLF TRADE GOLF COURSE ARCHITECTURE amp DEVELOPMENT TURF MAINTENANCE amp EQUIPMENT GOLF TECHNOLOGY GOLF CLUBS amp RESORTS

SPECIAL FOCUS REPORT

USING TECHNOLOGY TO MANAGE GREENS FEE REVENUE

BY BILL HEALEYGolf amp Leisure Business Analyst SPECIAL REPORT III

GREEN FEE TECHNOLOGY MANAGEMENT


54|55

Revenue Management is a business tool that enables a golf facility to maximize its profitability by managing the price of its fixed and perishable tee time inventory Itrsquos a business practice developed in the 1980s by the international airline industry in an effort to maintain profitability in the face of growing low-cost competition and raising operational costs Later been adopted by the lodging and car rental industries RM can be successfully applied through technology for managing and improving greens fee revenue


SPECIAL REPORT III GREEN FEE TECHNOLOGY MANAGEMENT

In short the use of RM in golf is the selling of the right tee times to the right golfers at the right prices and at the right time It provides the ability to match tee times with the golferrsquos ability or willingness to pay RM also provides the opportunity to mitigate the effects of bad pricing decisions or unexpected downturns in golf course utilization

Integrating tee times to external systems can also significantly enhance revenues Sites such as travel websites (airlines tourist boards) social networking (Twitter and Facebook) and smstext messaging portals allow the course to cost effectively notify golfers of tee time availability

Most golf facilities will recognize that the demand for tee times vary during the course of a week During some periods demand for tee times greatly exceeds the supply while other times demand can be moderate or even excessively low

Using proper data on course demand golf management can set pricing strategies to manage demand at each level In times when demand is strong prices would be increased to bring demand more in-line with supply Most commonly that would involve tee times on weekends and in the mornings In time-slots where demand is relatively low management can set pricing a bit lower to encourage golfers to utilize the course on weekdays and in afternoons Using these two strategies will allow the facility to maintain the higher yield during peak periods while increasing play during weaker demand periods

In this sample case certain data will be scaled back to simply the presentation These however are the assumptions to be used

Golfer Classificationscent Membercent Resort Guestcent Local Guest

Date Seasonscent Peak Season 1 May ndash 30 Septembercent Off Season 1 October ndash 30 April

Time Periodscent Weekend Mornings (Peak Season)cent Weekend Afternoons (Peak Season)cent Weekday Mornings (Peak Season)cent Weekday Afternoons (Peak Season)cent Weekend Mornings (Off Season)cent Weekend Afternoons (Off Season)cent Weekday Mornings (Off Season)cent Weekday Afternoons (Off Season)

For many golf facilities the pricing of greens fees for members is either at no cost or fixed at a relatively low cost without limitations on when they can play In most cases the application of Revenue Management will need to work around the current privileges provided to club members Their simple pricing table will commonly look like this

Other than Members Resort Guests are generally allowed the largest advance booking period in which to reserve tee times This is because their golf normally coincides with corporate or personal travel requiring many months of advance planning

Resort Guests are also the golfers most able or willing to pay higher greens fee rates for premium tee times For that reason greens fees can be structured to charge higher rates during the facilityrsquos peak season and peak time periods such as weekend morning and holidays

Generally speaking the traveling golfer will likely plan their travel to a resort facility when weather and conditions are at their best Therefore golf management can expect to charge the Resort Guest more on Weekend Mornings during Peak Season than at other playing times

In the table that follows a Resort Golfer will be expected to pay $180 for a Peak Season Weekend Morning but only $65 for an Off Season Weekday Morning This may encourage some budget conscious travelers to modify their plans to travel during the Off-Season

The facilityrsquos profitability will increase as the pricing discrimination allows the course to remain at full capacity with higher prices during the Peak Season while maintaining a sustainable rate and capacity during the Off Season

GOLFER TYPE MEMBER

DATE PERIODS TIME PERIODS PRICING ADVANCED BOOKING PERIOD

No Restrictions No Restrictions No Cost 90 days Advance Booking

SAMPLE RM PRICING

GOLFER TYPE RESORT GUEST


Peak Season Weekend Morning $180 9 months

Peak Season Weekend Afternoon $150 9 months

Peak Season Weekday Morning $120 9 months

Peak Season Weekday Afternoon $90 9 months

Off Season Weekend Morning $110 9 months

Off Season Weekend Afternoon $75 9 months

Off Season Weekday Morning $65 9 months

Off Season Weekday Afternoon $50 9 months

A restriction usually placed on the Resort Guest is that they must have a verifiable hotel reservation at the facilityrsquos lodge A cancellation at the lodge could result in a cancellation of the reserved tee time

Yet another Golfer Classification is the Local Guest a group that can be used to fill last-minute course vacancies They generally will not be willing to pay as much for greens fees nor will they be providing the facility with hotel occupancy or the higher food and beverage sales associated with Resort Guests The Local Guest however can be encouraged to pay a reduced greens fee (filling last minute vacancies) to enhance the coursersquos profitability

In the table (see next page) the Local Guest can reserve a tee time three weeks in advance for the same greens fee rate given to the Resort Guest For instance both the Resort Guest and the Local Guest can pay $180 for a Weekend Morning during Peak Season The Resort Guest is given a nine-month advance booking period while the Local Guest is given only a three-week advance booking period The difference is that the Resort Guest has also confirmed a room at the Lodge (The Local Guest can upgrade their classification to Resort Guest by reserving a room at the lodge)

Using proper data on course demand golf management can

set pricing strategies to manage

demand at each level In times when demand is strong prices would be

increased to bring demand more in-

line with supply

56|57

SPECIAL FOCUS REPORTSPECIAL FOCUS REPORT

2|358|59


In this sample there is a price-break given to the Local Guest if they book their tee time less than two days in advance This discount is offered to fill any open slots on the facilityrsquos short-term tee sheet

To book and confirm a Weekend Morning tee time during Peak Season the Local Guest has three options

cent Book the full list price ($180) up to nine months in advance as a Resort Guest (with hotel room)

cent Book the full list price ($180) up to three weeks in advance (no need for lodging commitment)

cent Book the discounted rate ($120) up to two days in advance With this the Local Guest takes the chance that no time slots will remain open

Off Load Last Minute Tee Times Loyal local golfers provide the best opportunity for the golf course to sell tee times left open later in the day or for the coming day or two Filling the dayrsquos remaining vacant tee times further allows the course to maximize the club to maximize revenues This can be achieved through an email blast or sms to registered golfers to notify them of a reduced greens fee for the last minute tee time Use of social networking sites such as Twitter or Facebook provide yet another outlet to notify golfers of the special pricing for last minute times



Peak Season Weekend Morning $180 3 days


Peak Season Weekend Afternoon $150 3 days


Peak Season Weekday Morning $120 3 days


Peak Season Weekday Afternoon $90 3 days


Off Season Weekend Morning $110 2 days


Off Season Weekend Afternoon $75 2 days


Off Season Weekday Morning $75 2 days


Off Season Weekday Afternoon $50 2 days


Bill Healey has been in the golf amp leisure systems market for nearly years with experience consulting for golf courses around the world Along with contributing to Asian Golf Business he is the Leisure Editor for Las Vegas based Gaming amp Leisure Technology Magazine Currently residing in Bali Bill can be reached at heybillhotmailcom

Other Revenue Management OptionsThis can also be considered when building the facilityrsquos greens fee pricing structure For instance

cent Pricing discounts for groups of two three or four players Using the example of a full rate at $180 the course may offer the second third and fourth golfers rates of $170 $150 $120 if they make the booking together A single golfer would remain at $180 two golfers at $350 three golfers at $500 and four golfers at $620 This would encourage a group of golfers to make a commitment all at one time

cent Cancellation fees can be another way to increase profitability while opening the tee time to a new reservation This could be structured to provide multiple levels of cancellation fees Once example would be

cent 30 cancellation fee if within four weeks of the tee timecent 50 cancellation fee if within two weekscent 100 cancellation fee if not cancelled more than two weeks out

The purpose of the cancellation fee is to protect the facilityrsquos profitability from a golferrsquos changing schedule or the whimrsquos of their changing desires The facility has provided them with the convenience of booking and confirming tee times in advance and as the tee time approaches it becomes more difficult for the course to fill the time slot with a higher paying client

The preceding examples are a simplified version of what a golf club goes though to develop a full working RM model There will likely be more than three golfer classifications and more than one discount rate for several of those classifications

Revenue Management does increase the level of complexity in creating greens fee rates and requires significant research and planning prior to implementation Industry studies however indicate that well-planned RM models provide at least a 2 increase in corporate revenue

Revenue Management does increase the level of complexity in creating greens fee rates and requires significant research and planning prior to implementation



BY BILL HEALEYGolf amp Leisure Business Analyst SPECIAL REPORT III

GREEN FEE TECHNOLOGY MANAGEMENT


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GOLFER TYPE MEMBER



SAMPLE RM PRICING


















line with supply

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GOLFER TYPE MEMBER



SAMPLE RM PRICING


















line with supply

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2|358|59


















































GOLFER TYPE MEMBER



SAMPLE RM PRICING


















line with supply

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line with supply

56|57


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2|358|59



































Benefits of Software to Manage Golf Revenue, Asia Golf Business magazine, March 2010

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Transcript of Benefits of Software to Manage Golf Revenue, Asia Golf Business magazine, March 2010