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I recently had a discussion with an estate manager tasked with addressing falling green fees revenues, and he expressed his concern over the fact that the numbers showed a decrease of just under 30% in the total rounds per annum from the previous year.
When I asked if he (and his members) would be happy if he was able to leave the round numbers at about the same levels, but restore the full revenues, he replied ‘heck yes!’
This conversation was then succeeded almost immediately by another with a board member of an HOA at a different estate. This person’s concern was how to move the course from being a red line entry on every financial summary into a profit centre. I pointed out that the facility had no profit history and that the course and clubhouse was, in fact, a service to residents and homeowners, and asked if the board of directors would be happy if the club was brought to break-even point in terms of the overall running costs of the estate. The response was an even more unequivocal ‘yes!’
Tackling these types of challenges and finding suitable solutions requires good business intel that goes well beyond the number of rounds played per annum in order to generate better revenue yields from each round played. I use the word ‘played’ as opposed to sold, because it may be that in terms of a more creative sales approach, you have decided to insert some of the course’s distressed inventory (un-saleable rounds discussed in previous issues) into a package in which the round might actually be included at R0.00.
To put ‘yield’ into a clear context, it is often very simply summarised in business terms as being the return on an investment made.
Against the yield figures the gross number of rounds achieved per annum, as a stand-alone piece of information, is a rather blunt instrument to use in calculating a facility’s profitability (or the return a club might make on the investment it makes in the running and upkeep of its golf course), whereas the alternative intel provided by the total yield achieved per round can offer a number of insights including the following.
- The total amount achieved in sales terms against each green fee sold.
- Where and at what times there is a need to increase the revenues of the level 2 yield, ie., additional sales such as the rental of a golf cart, halfway house, competition entry fees, post-game F&B sales etc.
This second set of information can offer a number of additional insights, such as on what days and when the yield per round is at its highest, and what elements are driving this increased yield. All of this makes planning much easier and helps to ensure that the right strategy to raise the yield levels is implemented.
To return to the narrative and as a specific response to the second conversation, I looked at the board member’s club’s unlimited rounds membership category, and the revenue it was achieving for these pre-sold rounds packages.
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The analysis was based on some hard intel and then supported by an educated guess, as the staff at The Pro Shop had not been keeping full records of the rounds traffic, and the club’s booking system’s software was not able to store or cross-check this type of information.
The average yield per round was R67.40 in the existing unlimited rounds membership package. In this membership type, the second levels of yield in terms of additional spend were estimated to exclude golf carts revenues (given that 99% of members owned their own carts), and halfway house revenues at about a 50% uptake per round because many members are residents on the estate so they bring their own water, drinks and snacks on their carts. And, outside of official competition days, they would often just play through.
The same 50% estimate was then applied to post-game drinks consumption on the basis that, other than for official events and competition days, most of the resident members went home after their games, unless they were likely to feature in the prizes in which case many still went home, and then came back to the club for prize-giving.
Using this as a base, we then constructed an offer for a corporate partnership. The package was designed to allow the four divisions within this corporate group to interact with the club as corporate members.
Each corporate member would be provided with four playing cards and then offered 16 tee times per day (1 four-ball per playing card), for use by their staff, customers and guests.
The cost per round was structured so as to offer the same rate to the corporate partnership as the unlimited rounds fee for individual members. The full potential of yield per round (yield 2) was conservatively estimated as follows.
With halfway house at R75 per person, share of rental cart at R150 and R50 for two post-game drinks, the total revenues for yield 2 for this membership type was R275 per person. This compared with the yield 2 revenues for a single member with unlimited rounds of R62.50. Converted over this particular corporate membership’s maximum possible use per annum, this translates into additional potential yield 2 revenues of just under R1.1 million per annum.
The Roman philosopher Seneca stated that ‘luck is what happens when preparation meets opportunity’. The opportunities to be creative (discounting your club’s green fees more than the next club does not count!) abound, but to be harnessed you will need to have good intel as the base from which to build the solution to match.
On that same theme, and to metaphorise Mark Twain’s character Mulberry Hills’ original statement to ‘there’s gold in them thar tills’, you will need to mine your till’s data effectively, and be prepared to be innovative, so as to have good intel and be positioned to take advantage of the opportunities that are available, thus removing the influence of Seneca’s ‘Lady Luck’ right out of the equation.
