As more and more golfers are booking online, revenue management becomes more relevant and applicable to the golf industry. In turn more golf courses are beginning to understand the importance of dynamic pricing fluctuations.
For a good few years, third party websites have been leading the charge on dynamic pricing, multi-ball pricing and sharing market intelligence which encourages golf courses to engage with the online golfer. But how much faith should a golf course really put into these statistics, and are they applicable to all booking channels?
To examine this further we have to understand the potential conflict of interest between third party tee time websites and a golf course. The conflict lies mainly in the difference between how they make money…
Golf courses measure their profitability based on the bottom line, where as third party websites charge their commission on the top line. The more tee times a golf course sells direct the more money goes to the bottom line. However, there is an additional complication where barter tee times are traded/given away in lieu of technology or services i.e. instead of commission. These barter times are heavily marketed and are generally cheaper than booking directly with the golf course, and therefore have a heavy influence over any statistics.
Golf courses have limited capacity during peak hours where they can influence green fee revenue the most (i.e. Weekend mornings). The third party tee times websites thrive on volume, so even when demand is strong their goal is the cumulative growth of bookings for the region – this is why marketplace websites are all about promotions and deals. We have seen a distinct difference around the statistics for direct bookings versus third party sales; group size and revenue per booking considerably increases for the direct channel.
It is surprising that so many courses offer more attractive rates through a third party versus their direct booking channel, this contradicts the concept of optimal revenue management and negatively affects the golf course’s profits. The short term effects are that your revenue per booking will drop due to cost of sale, however the long term effect trains customers to be loyal to the booking website, not your golf course.
Third party websites are not concerned whether their customers go to you or a competitor, as long as they get their commission (or barter). They have their own competitors which include your direct booking engine. Remember that market place websites are e-commerce experts so are experienced in directing traffic to them with re-marketing campaigns and Google AdWords (amongst other tricks of the e-commerce world).
Mostly, tee time websites assess market demand based on the volume of bookings they receive for a particular region combined with the number of searches/page views. This is incredibly powerful data, however this data tells less than half the story as their analysis is based only on the demand flowing through this particular channel, which makes it biased by default. Also considering the fact that more and more golf courses are starting to shut channels down in high demand periods the demand patterns become distorted. Historically a large portion of third party bookings were in off peak times, this was because golf course’s did not display inventory in real time through connectivity and therefore the course did not want to risk any double bookings during peak demand periods. However, as connectivity has become more widely spread, golf courses have opened up almost all of their inventory and we are seeing the booking patterns change to become more weekend/peak time biased.
This blog is not in anyway intended to be anti-third party websites, merely highlighting the potential conflict of interest.
At The Revenue Club we believe that these organisations are extremely powerful tools at the disposal of a golf course if used correctly. Without wishing to sound like a film… with great power, comes great responsibility. Ultimately these channels have not been managed by golf courses for a number of years, due to technology constraints, minimal returns and lack of manpower/expertise at the golf course. However, online bookings are rapidly increasing and this is becoming a critical area of business that now requires a significant amount of attention and management.