Managing Golf Course Revenue Using Pace of Play Modeling

By Tiger, Andrew A.; Howard, Robert W. | Journal of Business and Entrepreneurship, October 2007 | Go to article overview
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Managing Golf Course Revenue Using Pace of Play Modeling


Tiger, Andrew A., Howard, Robert W., Journal of Business and Entrepreneurship


ABSTRACT

The game of golf, though still popular, has experienced a decline in demand. Since golf courses are small or mid-sized enterprises, managing and increasing revenue falls on a small management team with few support employees. The key is to increase the yield of players through a course by reducing the amount of wait time. We offer here a simulation model that is designed to increase the number of players through a course during the day. The outcome should be increased revenue for the course and increased satisfaction for the player.

INTRODUCTION

In the amusement, gambling, and recreation industries, golf courses and country clubs are second only to gambling in the amount of revenue produced. In 2002, there were 12,189 golf courses in the U.S., producing a total of $17.4 billion (US Economic Census, 2002). We may not think of golf courses as small business entities, but they are. On average, each golf course produced $1.39 million in receipts and employed 26 people; thus, most golf courses fall under the definition of a small business. The United States Small Business Administration size standard for the amusement, gambling, and recreation industries is $6.5 million (U.S. Small Business Administration, 2006).

In 2001, 518.1 million rounds of golf were played. That number has since declined by 4.5%. Kauffman (2005) states that golf just does not seem as in vogue as other leisure activities. The decline in players has been researched by KPMG's golf industry practice. Managing director Tom Bruff claims:

From 1973 to today, the average worker is working 20 percent more... And this game needs time. The money issue? Forget it. You can still play this game pretty cheap. It's time. Anybody I talk to in any peer group has less time (Kauffman, 2005, p. 5).

In the same article, David Smith, president and CEO of Golf Projects International in Lagoura Hills, California, states:

The principal reason for such a decline... is that today's core male golfer is much different than the previous generation... They're no longer permitted to go to the club at 8 a.m. and stay until 6 p.m. Their kids now dictate their schedules as opposed to the old days when dad dictated everything. Look at the grillroom at places like Los Angeles Country Club or Belair. It used to be that Saturday at 12 was the busiest time of the week. Now it's dead because guys have to be in and out by noon so they can get home for the Little League baseball game or soccer game or to go shopping at Costco. Quite frankly, as the guys who have supported the game get older, I don't know if it gets better (Kauffman, 2005, p. 5).

A final reason for decline is that golf courses are designed to be more difficult. "Tiger-proofing" (increasing course difficulty) is occurring not only on the PGA tour, but also on courses designed for daily play. In a recent interview, Lee Trevino addressed the issue of course design on cycle time:

We have a tremendous amount of high-end daily-fee courses in Dallas that are in trouble. They aren't getting the play. The harder you build the course, the more money it costs to maintain it... If you put high handicappers on courses that take 5.5 hours to play, you're going to lose them. And time is money when it comes to golf. You can't get as many rounds in on a tough course (Lowell, 2004, p. 43).

Regardless of whether people are working longer hours or have other commitments, or courses are designed to be more difficult, the major factor in getting people on the golf course is the amount of time it requires to complete a round of golf. If cycle time can be reduced, two benefits may be incurred. The first is that golfers can continue to participate even if they have other commitments. The second is that the number of rounds played during a day (throughput) can be increased. The latter is beneficial when demand exceeds supply; however, the former is beneficial regardless of the supply/demand unbalance.

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