Pricing for Profit: How to Set Your Business Up for Success

1. Pricing for Profit: How to Set Your Business Up for Success Jarrod Dillon, Vice President, Corporate Partnerships, San Diego Padres; Nikhil Varaiya, Director of Graduate Programs, Finance Professor, San Diego State University; Ryan Walls, Senior Vice President, Operations, Troon

2. Pricing for Profit: How to Set Your Business Up for Success Nikhil P. Varaiya Department of Finance San Diego State University

3. Introduction “Everyone has an opinion on if, how, when, and why to discount” (Price Wars, Peter Blais. “Discounting is a serious business for both the individual course owner and the golf industry as a whole. We may get short-term gains, but we can also jeopardize the long-run health of our business and the industry” ( Kris Strauss, Marketing Director, OB Sports, manager of golf courses). “No matter who wins, the combatants all seem to end up worse off than before they joined the battle. And yet, price wars are becoming increasingly common, and uncommonly fierce” (How to Fight a Price War, Harvard Business Review, March-April 2010).

4. Golf Courses & Country Clubs: Historical Performance

5. Observations from Historical Performance; Q3 - top quartile, Q1- bottom quartile • The last recession has adversely impacted the average golf course owner in the industry. • However, even in this adverse economic environment the top 25 percent of golf course owners have remained profitable throughout the period 2007 – 2011. • Key drivers of profitable future performance: • 1. Increase gross margins • 2. Reduce overhead costs • 3. Increase number of paying customers

6. Implementing Key Performance Drivers • Improve competitive position of business • Relative Cost – Relative Offering – Relative Price • Improve golf course offering • - enhance product offering: golf course quality, pro-shop quality, food & beverage quality, range quality • Enhance effective promotions, and increase customer retention • Reduce cost of offering • Control variable costs • Control overhead expenses • Pursue profitable pricing strategy • Increase gross margins • Segmentation pricing to increase customer volume

7. Pricing Strategies Ryan Walls SVP, Troon

8. How do YOU Price your Price? Understand Data Competitive Marketplace Facility Strategy

9. Develop the Strategy……. • Loyalty Program • Yield Management Program • Online Strategy • Reduce Random Discounting • Best Rate? • Revenue Management Practices • Dynamic Pricing!!

10. Revenue Management • We are Learning from Other Industries • Airlines – US Airways • Hotels – Starwood Hotels • MLB – Qcue, Dbacks, Giants, White Sox and of course the San Diego Padres!

11. “No other business I know sets prices nine months out without the ability to change them. That’s how we did it. But it’s not how we should do it today.” -Joe Strohm St. Louis Cardinals

12. What is Dynamic Pricing? An environment of “constant change” with increases and decreases reflecting supply-demand situations or differentiated offers for delivery of a commodity depending on the time/date of the delivery.

13. More simply put Selling your product to the: Right Person For the Right Price At the Right Time………..

14. Is Golf Ready for This?

19. Why? • Increase Revenue • Cater to a Wider Array of Prospective Guests • Increase Online Booking • Better Marketing Tools • Increase Offering and Improve Guest Experience

20. Pricing Strategies Jarrod Dillon VP Corporate Partnerships San Diego Padres

21. Getting There…….. • 2010-2011 research • Padres did not even variable price • 2012 Launch – entire ballpark • 6th MLB team to go full ballpark dynamic pricing

22. Dynamic Pricing Results? • Revenue • Tickets sold • Influence buying decisions/ballpark optics • PR and Fan Cost Index • Fan experience

23. The Future? • Ticketing • Concessions • Parking

24. Troon Results? • ADR increase worthwhile to continue – 6.2% • Revenue Manager – someone must OWN this!

26. THANK YOU.