A while ago I was playing golf with the secretary of a high-end heathland course and I asked him what he thought his average green fee was. ‘Eighty pounds.’ He replied with a sense of pride about the status of his desirable golf course. When I questioned him about the breakdown of his green fee business, it became apparent that perhaps this wasn’t the case. Their members’ guest fees actually formed the majority of the green fee revenue and was only £20, and the next biggest source of visitor revenue was golf societies which had a green fee element of £35. So, in reality the £80 figure only formed a small proportion of their visitor business. This confirmed my thoughts and broad reaching data that I have seen in the past that there is only a very small proportion of the green fee market that will pay over £25 for a round.
The reason for this is simple. As a regular visitor golfer it does not make sense to pay more than £25 for a round of golf as golf club membership would be better value. Therefore, with a few exceptions, the golf courses who charge more than this figure for casual green fees should not expect a high volume of visitor business, indeed they may not want it. Alongside the oversupply of golf courses in the UK, and the influx of thousands of barter times that undercut direct rates, this is another reason that green fee pricing remains depressed, despite ever increasing costs.
Another figure that is perhaps more important is average sale price, i.e. how much does the club receive for the whole tee time? Multi player pricing (3 and 4 ball offers) are nothing new and they are proven to increase the average group size and therefore the sale price. The practice of pairing up golfers at busy times can be unpopular but it certainly helps to generate more revenue from the finite amount of tee times that are available. There are a handful of courses that do this in the UK but it is very much the norm in the US market.
One metric that golf courses are starting to consider is the revenue per available tee time or RevPATT. As with many elements of revenue management this is taken from the hotel industry that regularly uses RevPAR (revenue per available room) as a key performance indicator to assess the rate against utilisation. It is all very well keeping your average rate and sale price high, but if utilisation is low then the business may not be benefiting as much it could be. RevPATT considers the revenue received for all available tee times during the day:
RevPATT = Total green fee sales in a single day/Total number of available tee times
When considering this figure, utilisation becomes more of a factor but what it often comes down to is the balancing act between member and visitor, and whether you want to fill the course or keep utilisation low and hold out for a higher rate. Any golf course could reduce its prices and increase roundage but there are the additional considerations of maintaining brand perception and ensuring that full membership still represents the best value for money option to the regular golfer.
The hotel industry looks one stage further by considering TRevPAR – Total Revenue Per Available Room. This takes into account total expenditure of the guest over the course of their stay and places more importance on add on spend in the bar, restaurant etc. There are may ways of achieving this in a golf club and increased focus is required on service levels of the wider organisation to play their part in revenue generation.
However, it is helpful to consider all these factors when setting a rate structure. Most importantly, maintaining the ability to have full control of your pricing and be as flexible as you can in your approach to pricing the golf course. The factors which dictate demand are constantly changing and the ability to adjust your rates accordingly is vital in achieving success in a challenging marketplace.