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Chapter 7 Golf-Based Resorts: Managing the Operation. Identify the changing trends in and demographic profiles of the golf market. Industry Trends: Golf industry leaders are concerned that the number of future golfers will decline Issues most likely to impact business: Number of rounds

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identify the changing trends in and demographic profiles of the golf market
Identify the changing trends in and demographic profiles of the golf market.

Industry Trends:

  • Golf industry leaders are concerned that the number of future golfers will decline
  • Issues most likely to impact business:
    • Number of rounds
    • Player retention
changing trends cont
Changing Trends (cont.)

Industry Trends (cont.)

  • Water management is the major environmental issue facing the industry
    • Many courses are utilizing water conservative technology

Changing Demographics

  • There are seven segments of golfers: core, seniors, women, juniors, highly skilled players, private club members, and high spending golfing households
changing trends cont4
Changing Trends (cont.)

Changing Demographics (cont.)

  • In 2002, 11 million golfers took an overnight trip that included golf
  • There are more than three times more male golfers than there are female golfers
changing trends cont5
Changing Trends (cont.)

Changing Demographics (cont.)

  • The profile of the average golfer is:
    • Male
    • Around the age of 50
    • College graduate
    • Household income between $100,000 and $149,999
    • Plays about 60 rounds per year and has been playing for roughly 22 years
    • Average score of 88.4
  • Male golfers spend slightly more than female golfers on golfing
identify the critical variables in determining a golf based resort s profit potential
Identify the critical variables in determining a golf-based resort’s profit potential.

Operations

  • The Sun Belt covers the southern states and part of the coastal region
    • These courses are likely to be open year-round
  • The Frost Belt consists of northern states and the mountainous parts of southern states
    • These courses usually shut down for a while during winter
profit potential cont
Profit Potential (cont.)

Income Statement

  • In 1999 U.S. golf resorts reported an average operating median of:
    • 28.9% for Frost Belt resorts
    • 25.3% for Sun Belt resorts
profit potential cont8
Profit Potential (cont.)

Revenues

  • Most revenue comes from annual fees and green fees
  • The second most important source of revenue is from golf cart rentals

Expenses

  • The greatest expense is the cost of merchandise sold, followed by the cost of food and beverages
  • Payroll is usually the largest expense category
profit potential cont9
Profit Potential (cont.)

Staffing

  • Sun Belt resorts staff their facilities with 29 part-time and 34 full-time staff
  • Frost Belt resorts staff their facilities with 60 part-time and 43 full-time staff
identify potential solutions to financial problems faced by golf based resorts
Identify potential solutions to financial problems faced by golf-based resorts.

Tournaments and Events

  • Business Golf
    • Customer Appreciation Events
    • Sales/Product Launches
    • Employee Outings
    • Fund-Raising events
solutions to financial problems cont
Solutions to Financial Problems (cont.)
  • Hole in One Contest
    • Companies organize the activity for the resort and provide the prizes
    • While many think it is virtually impossible to achieve a hole in one, in any given year in the U.S., there are over 40,000 holes in one
solutions to financial problems cont12
Solutions to Financial Problems (cont.)
  • Women-Friendly

Women friendly courses can:

    • Vary tee locations to allow the option of playing a harder or easier course
    • Feature holes in the 5,600 to 5,700 yard range
    • Provide holes where players do not have to carry the ball over a lot of obstacles
    • Where greens can be easily reached
    • Where forward tees are closer to the hole and allow for a better angle at the green
solutions to financial problems cont13
Solutions to Financial Problems (cont.)
  • Banquets
    • Can be an excellent way to bring in additional revenue
    • Golf tournaments are a good market to advertise to
    • Pre-game lunches, box lunches, post game dinners, or cocktail parties have proven successful
    • Social events are the most financially profitable segments, including weddings, bar mitzvahs and anniversaries
solutions to financial problems cont14
Solutions to Financial Problems (cont.)

Pro Shops

  • Margin Enhancers include discounts, rebates, fitting fees, advertising co-ops, freight programs, or free product accounts
  • Accessories
    • The key to increasing sales is in the presentation of items
    • Keep displays neat, use color effectively, develop a theme, cross merchandise, and avoid one level displays
solutions to financial problems cont15
Solutions to Financial Problems (cont.)
  • Inventory Control
    • Controlling inventory can cut down costs
    • “Open-to-buy” refers to the amount of retail dollars set aside for the purchase of merchandise in the future
    • Old sales figures are used to project future sales
    • Merchandise group departments are created
solutions to financial problems cont16
Solutions to Financial Problems (cont.)
  • Inventory Control (cont.)
    • To maintain control of the system the two important pieces used to determine beginning inventory levels are projected sales volume and the turnover rate desired by the shop
  • Credit Cards
    • Accepting credit cards makes the purchase easier for the customer
    • Retailers pay a fee to credit card companies when they accept credit cards