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P is for Profitable pay & play green fees

The Revenue Club are now working with over 40 golf courses across the UK, and have seen a number of courses exceeding 50% of their total pay and play business booking online, and the share is only heading in one direction! With so many pay and play golfers making the shift to book online, it is increasingly important to consider the costs associated with the online booking process.

In order to make these bookings more profitable, a golf course must consider the costs that are directly related to selling green fees online. Some of key costs include:

  • Website

  • Visitor booking engine and your electronic tee sheet

  • Third party commissions/booking fees and barter times

  • Your time in managing online green fees/systems

  • Payment processors

  • Paid digital advertising

Historically, golf courses have relied heavily on third parties to drive much of their online green fee revenue. A lot of courses will sell tee times online through a third party, but not through their own website (which I still cannot understand!). This can make selling green fees online less profitable as the golf course will either give away a percentage of the green fee (usually 20%) or bartered tee times along with a booking fee per golfer. That said third parties are absolutely necessary and can be a very powerful tool for selling green fees, but to maximise profit must be managed correctly. A golf course should know and manage its channel mix.

Whilst on the subject of third parties, it is important to discuss the impact barter tee times can have on a tee sheet’s pay and play profitability. Some third parties who use barter as a method of payment work on a ratio basis (which in a sense is much like commission as the cost is known), and others work on a 1, 2 or more tee time per day basis depending on the services you receive from them. Whichever method is used a golf course must be aware of the opportunity cost created by barter. The best way to do this is to calculate the average rate for the paid rounds in the same day and day part as each barter round. Generally, the barter times will be sold at a price lower than that of the courses own inventory and receive additional marketing, so it can be argued that these barter times help to stimulate demand through price and the extra marketing. The bottom line is that a golf course must be aware of how much they are paying (the opportunity cost) for the technology/services they are receiving through bartered tee times, after all, you wouldn’t pay an invoice without knowing how much the invoice was for!

Creating more profitable green fees is also about better utilising the golf course, which is influenced by how and when you market visitor golf, along with the price you advertise. For example, a golf course can encourage off peak bookings and increase yield during peak times by using dynamic pricing and increase group size/revenue per tee time through incremental prices. Using dynamic pricing as part of a wider revenue management strategy is very much part of what we do at The Revenue Club, and we encourage any golf course to try flexing their rate to maximise yield and stimulate demand

When pricing green fees it is necessary to consider the on spend which a golfer will deliver. Items such as buggies, trolleys and food & beverage are all highly profitable income streams for a golf course – an increase in occupancy will in most cases lead to an increase in on spend, however make sure you keep an eye on the KPI’s of average revenue per round and revenue per available round.

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