Golf Industry on the Upswing: Market Entry Opportunities
Golfing in the U.S. is estimated to be a $25 billion industry – $20 billion in greens fees, $4 billion in equipment and $1 billion in apparel sales. In addition to operating golf courses and country clubs, other industry activities include providing food and beverage services, equipment rental and instruction. Not included are driving ranges which are part of the $9 billion Golf Driving Ranges and Family Fun Centers industry, which we will highlight in a future newsletter.
As has been the case for many industries, the serious and lingering economic downturn has had an impact on the golf industry as people have cut back on discretionary and recreational spending. However, in 2012, there was a measurable rebound in the number of golf outings with golfers playing about 490 million rounds on U.S. courses, up 5.7% from 2011, according to the National Golf Foundation. Industry analysts estimate that U.S. golf course revenues will grow at a compound annual growth rate (CAGR) of 3.75% by 2016.
Successful companies in the industry are those who drive up demand through strong marketing and maintain efficient operations as many costs are fixed, whether players are on the fairways or not. Some of the most successful US companies include American Golf, ClubCorp, Evergreen Alliance, and KemperSports. Small companies can be successful as well using location and unique marketing strategies to their advantage.
There are approximately 15,500 golf facilities in the US, both public and private. Nearly three-fourths are public courses, and of those about 20% or, 2,450, are municipal courses. Much of the revenue for private courses is generated from annual membership dues, while public courses rely mainly on “daily fees.” While the total number of golf courses has dropped from its all-time high of 16,000 set in 2004, IBISWorld reports that interest in golf continues to grow.
In order for the golf industry to remain strong, the sport must not only continue to appeal to the retiring baby-boomer generation, it must also engage young new players. Creating affordable entry points for players, especially juniors, is a must. One group doing just that is the Wadsworth Golf Charities Foundation. The organization is partnering with a variety of community and business organizations to build ‘feeder short courses’ of three, six or nine holes.
Golf courses come in many different sizes and settings, offering a variety of price point opportunities for market entry.
- 18 hole: standard, full-size course with a mix of par 3,4 and 5 holes
- 9 hole: half a standard course with a mix of par 3, 4 and 5 holes
- Executive: 9 or 18 holes, shorter than standard course, with more par 3 and fewer par 4 and 5 holes
- Par 3: 9 or 18 holes, shorter than an executive course, with all par 3 holes
- Approach or “Pitch and Putt”: 30-40yd length holes used by players to practice pitching and chipping and by beginners (drop a ball, pitch it to the green and putt it in)
- Links course: built on sandy coastlines, open to the wind, few trees, natural watering of rough and fairways, fast fairways, slow greens, large and deep bunkers
- Parkland course: typically located inland, built in park like atmosphere, plenty of trees, manicured fairways, fast greens
- Desert course: built in the desert, tees, fairways and greens are lush, but often the only grass in the area
Source: about.com guide
For any current or prospective business owners interested in the golf industry, GeoMetrx can provide an in-depth site location analysis including demographic, income and traffic data as well as a view of the competitive landscape. Call us at 1.888.848.4436 or visit us on the web to request a demo today.