I was speaking to a good friend today in the golf industry who had just returned from an extended (40 day) trip through Asia (China, Thailand, Vietnam, etc) seeking out new golf developments. He was of the view that only a fraction of the currently conceieved projects would indeed become successful....or even get out of the ground. Most smart money has finally realized that golf courses as stand alone business models rarely are profitable. Whether as (new, high end) daily fee or private clubs...the last few years has been tough...and 2009 is a bloodbath. As my friend confirmed, Asia is not immune from the economic problems and here in the USA many established clubs are fighting for their very survival.
I expect to see 5 - 10% of golf/country clubs go bankrupt over the next 24 months in the USA. The fundamental model for many of them is flawed. Society has changed and golf is one of the current losers in the shake-up. Various ideas have been discussed...but one thing is for sure...there are no easy answers or quick fixes. Indeed, there is no cookie cutter solution...every club has it's own unique challenges and solutions.
Leisurecorp from Dubai who recently purchased Turnberry Hotel in Scotland are in the midst of a $50Million refurbishment. Recent reports suggest even Leisurecorp are under pressure to perform...no one is immune.
As the travel press has reported incessently, value added travel offers are everywhere. Availability has never been better and suppliers are working tirelessly to ensure memorable trips. The challenge is that even if trips were free, travelers will not have the confidence to travel if they feel they may not have a job or a business to return to. Lack of confidence.
We need a few weeks of sustained decent news...not great, but a material change from the depressing articles we currently see, hear & read on a daily basis.
The golf travel industry just needs Tiger to win the Masters and the U.S. Open, ideally both events by wide margins...and then off to Scotland he goes with a vast entourage in tow to see history unfold. If only it were all so easy!
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3 comments:
Good analysis, Gordon. Much to chew on here. The days of six-figure initiations here in the US are probably over for the foreseeable future. Golf needs to become more affordable to succeed in this environment. Of course, I would've said that in 2006, too!
Unfortunately, you hear about things like your Leisurecorp all too frequently. $50M?!? I know the Turnberry Hotel is a big place, but that is an awful lot of money. That cost is going to be passed along to the consumer, of course, making a great resort all but inaccessible to most. I don't see the competitive payoff in it, either.
Cheers
td
Your candor is one of your best qualities. Nothing wrong with calling the scenario ugly if it is. Tiger's continued good play is certainly essential, but golf and the facilities that support it may have to redefine themselves or the forseeable future is bleak.
Fingers crossed for good weather too! Here in the 'front line' it's easy to see some courses are not quite as busy as before. This is of course great news if you want a round under 4 hours on one of Scotland's Championship courses. Currently I'm taking a group of 'Perry Golf' clients to St Andrews & Carnoustie who love the fact rounds take less time to play. In addition, many people working in the golf industry are offering a higher level of customer service. This is very refreshing and good news for both the visitor and operator. I have never seen the courses looking in such good condition. A number of hotels are keeping their prices down - it all looks good from here. I'm in no doubt there is no better time to visit Scotland than right now.
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