Issue #20          March 2010                        www.asiangolfbusiness.com | www.asiangolfmonthly.com | www.golfconfer...
SPECIAL REPORT III
                       BY BILL HEALEY
                       Golf & Leisure Business Analyst




GREEN ...
Revenue Management is a
business tool that enables
a golf facility to maximize
its profitability by managing
the price of ...
SPECIAL REPORT III
GREEN FEE TECHNOLOGY MANAGEMENT


In short, the use of RM in golf is the selling of the right tee times...
"Using proper data on course          A restriction usually placed on the Resort Guest is that they
                      ...
SPECIAL REPORT III
  GREEN FEE TECHNOLOGY MANAGEMENT
  SPECIAL FOCUS REPORT


  In this sample, there is a price-break giv...
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Benefits of Software to Manage Golf Revenue, Asia Golf Business magazine, March 2010

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Software to Manage Golf Reservations Revenue.

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Benefits of Software to Manage Golf Revenue, Asia Golf Business magazine, March 2010

  1. 1. Issue #20 March 2010 www.asiangolfbusiness.com | www.asiangolfmonthly.com | www.golfconference.org INSIDE STORIES: ¢ SPECIAL REPORT I: WHY RENOVATION IS ESSENTIAL IN THE LIFECYCLE OF EVERY GOLF COURSE ¢ SPECIAL REPORT IV: A GOOD WALK SPOILED? NO! ¢ TURF MATTERS: IMPROVING GOLF COURSE FAIRWAYS IN NEW ZEALAND GOLF TRADE GOLF COURSE ARCHITECTURE & DEVELOPMENT TURF MAINTENANCE & EQUIPMENT GOLF TECHNOLOGY GOLF CLUBS & RESORTS ISSUE #20 SPECIAL EVENTS I: SEAIGME | PGA CONFERENCE ASIA | APGS 2010 SPECIAL EVENTS II: GOLF INDUSTRY SHOW
  2. 2. SPECIAL REPORT III BY BILL HEALEY Golf & Leisure Business Analyst GREEN FEE TECHNOLOGY MANAGEMENT SPECIAL FOCUS REPORT USING TECHNOLOGY TO MANAGE GREENS FEE REVENUE
  3. 3. Revenue Management is a business tool that enables a golf facility to maximize its profitability by managing the price of its fixed and perishable tee time inventory. It’s a business practice developed in the 1980s by the international airline industry in an effort to maintain profitability in the face of growing low-cost competition and raising operational costs. Later been adopted by the lodging and car rental industries, RM can be successfully applied through technology for managing and improving greens fee revenue. | 54 55
  4. 4. SPECIAL REPORT III GREEN FEE TECHNOLOGY MANAGEMENT In short, the use of RM in golf is the selling of the right tee times, to For many golf facilities, the pricing of greens fees for members is either the right golfers, at the right prices, and at the right time. It provides at no cost, or fixed at a relatively low cost without limitations on when the ability to match tee times with the golfer’s ability or willingness to they can play. In most cases, the application of Revenue Management pay. RM also provides the opportunity to mitigate the effects of bad will need to work around the current privileges provided to club pricing decisions or unexpected downturns in golf course utilization. members. Their simple pricing table will commonly look like this: Integrating tee times to external systems can also significantly enhance revenues. Sites such as travel websites (airlines, tourist boards), social GOLFER TYPE: MEMBER networking (Twitter and Facebook), and sms/text messaging portals DATE PERIODS TIME PERIODS PRICING ADVANCED BOOKING PERIOD allow the course to cost effectively notify golfers of tee time availability. No Restrictions No Restrictions No Cost 90 days Advance Booking Most golf facilities will recognize that the demand for tee times vary during the course of a week. During some periods, demand for tee Other than Members, Resort Guests are generally allowed the largest times greatly exceeds the supply, while other times demand can be advance booking period in which to reserve tee times. This is because moderate or even excessively low. their golf normally coincides with corporate or personal travel requiring many months of advance planning. Using proper data on course demand, golf management can set pricing strategies to manage demand at each level. In times when demand is Resort Guests are also the golfers most able or willing to pay higher strong, prices would be increased to bring demand more in-line with greens fee rates for premium tee times. For that reason, greens fees supply. Most commonly that would involve tee times on weekends can be structured to charge higher rates during the facility’s peak season and in the mornings. In time-slots where demand is relatively low, and peak time periods, such as weekend morning and holidays. management can set pricing a bit lower, to encourage golfers to utilize the course on weekdays and in afternoons. Using these two strategies Generally speaking, the traveling golfer will likely plan their travel to a will allow the facility to maintain the higher yield during peak periods, resort facility when weather and conditions are at their best. Therefore, while increasing play during weaker demand periods. golf management can expect to charge the Resort Guest more on Weekend Mornings during Peak Season than at other playing times. In the table that follows, a Resort Golfer will be expected to pay $180 SAMPLE RM PRICING for a Peak Season Weekend Morning, but only $65 for an Off Season Weekday Morning. This may encourage some budget conscious travelers to modify their plans to travel during the Off-Season. In this sample case, certain data will be scaled back to simply the presentation. These however, are the assumptions to be used: The facility’s profitability will increase as the pricing discrimination allows the course to remain at full capacity with higher prices during Golfer Classifications the Peak Season, while maintaining a sustainable rate and capacity during the Off Season. ¢ Member ¢ Resort Guest ¢ Local Guest GOLFER TYPE: RESORT GUEST Date Seasons DATE PERIODS TIME PERIODS PRICING ADVANCED BOOKING PERIOD ¢ Peak Season 1 May – 30 September Peak Season Weekend Morning $180 9 months ¢ Off Season 1 October – 30 April Peak Season Weekend Afternoon $150 9 months Time Periods Peak Season Weekday Morning $120 9 months ¢ Weekend Mornings (Peak Season) Peak Season Weekday Afternoon $90 9 months ¢ Weekend Afternoons (Peak Season) ¢ Weekday Mornings (Peak Season) Off Season Weekend Morning $110 9 months ¢ Weekday Afternoons (Peak Season) Off Season Weekend Afternoon $75 9 months ¢ Weekend Mornings (Off Season) ¢ Weekend Afternoons (Off Season) Off Season Weekday Morning $65 9 months ¢ Weekday Mornings (Off Season) Off Season Weekday Afternoon $50 9 months ¢ Weekday Afternoons (Off Season)
  5. 5. "Using proper data on course A restriction usually placed on the Resort Guest is that they must have a verifiable hotel reservation at the facility’s lodge. A cancellation at the lodge could result in a cancellation of the reserved demand, golf management can tee time. Yet another Golfer Classification is the Local Guest, a group that can be used to fill last-minute course vacancies. They generally will not set pricing strategies to manage be willing to pay as much for greens fees, nor will they be providing the facility with hotel occupancy or the higher food and beverage sales associated with Resort Guests. The Local Guest however, demand at each level. In times when can be encouraged to pay a reduced greens fee (filling last minute vacancies) to enhance the course’s profitability. demand is strong, prices would be In the table (see next page), the Local Guest can reserve a tee time three weeks in advance for the same greens fee rate given to the Resort Guest. For instance, both the Resort Guest and the Local increased to bring demand more in- Guest can pay $180 for a Weekend Morning during Peak Season. The Resort Guest is given a nine-month advance booking period, while the Local Guest is given only a three-week advance booking period. The difference is that the Resort Guest has also confirmed a room line with supply. " at the Lodge. (The Local Guest can upgrade their classification to Resort Guest by reserving a room at the lodge). 56 57|
  6. 6. SPECIAL REPORT III GREEN FEE TECHNOLOGY MANAGEMENT SPECIAL FOCUS REPORT In this sample, there is a price-break given to the Local Guest if they "Revenue Management does increase book their tee time less than two days in advance. This discount is offered to fill any open slots on the facility’s short-term tee sheet. To book and confirm a Weekend Morning tee time during Peak Season, the Local Guest has three options: ¢ Book the full list price ($180) up to nine months in advance as a the level of complexity in creating Resort Guest (with hotel room), ¢ Book the full list price ($180) up to three weeks in advance (no need for lodging commitment), greens fee rates, and requires ¢ Book the discounted rate ($120) up to two days in advance. With this the Local Guest takes the chance that no time slots will remain open. significant research and planning prior GOLFER TYPE: RESORT GUEST to implementation." DATE PERIODS TIME PERIODS PRICING ADVANCED BOOKING PERIOD Peak Season Weekend Morning $180 3 days Other Revenue Management Options Peak Season Weekend Morning $120 2 days This can also be considered when building the facility’s greens fee pricing structure. For instance; Peak Season Weekend Afternoon $150 3 days Peak Season Weekend Afternoon $95 2 days ¢ Pricing discounts for groups of two, three or four players. Using the example of a full rate at $180, the course may offer the second, Peak Season Weekday Morning $120 3 days third and fourth golfers rates of $170, $150, $120 if they make the Peak Season Weekday Morning $75 2 days booking together. A single golfer would remain at $180, two golfers at $350, three golfers at $500 and four golfers at $620. This would Peak Season Weekday Afternoon $90 3 days encourage a group of golfers to make a commitment all at one time. Peak Season Weekday Afternoon $70 2 days ¢ Cancellation fees can be another way to increase profitability while opening the tee time to a new reservation. This could be structured Off Season Weekend Morning $110 2 days to provide multiple levels of cancellation fees. Once example would Off Season Weekend Morning $70 2 days be: Off Season Weekend Afternoon $75 2 days ¢ 30% cancellation fee if within four weeks of the tee time, Off Season Weekend Afternoon $65 2 days ¢ 50% cancellation fee if within two weeks, ¢ 100% cancellation fee if not cancelled more than two weeks out. Off Season Weekday Morning $75 2 days Off Season Weekday Morning $50 2 days The purpose of the cancellation fee is to protect the facility’s profitability from a golfer’s changing schedule or the whim’s of their Off Season Weekday Afternoon $50 2 days changing desires. The facility has provided them with the convenience Off Season Weekday Afternoon $40 2 days of booking and confirming tee times in advance, and as the tee time approaches it becomes more difficult for the course to fill the time slot with a higher paying client. Off Load Last Minute Tee Times The preceding examples are a simplified version of what a golf club goes Loyal local golfers provide the best opportunity for the golf course to though to develop a full working RM model. There will likely be more sell tee times left open later in the day or for the coming day or two. than three golfer classifications and more than one discount rate for Filling the day’s remaining vacant tee times further allows the course to several of those classifications. maximize the club to maximize revenues. This can be achieved through an email blast or sms to registered golfers to notify them of a reduced Revenue Management does increase the level of complexity in creating greens fee for the last minute tee time. Use of social networking sites greens fee rates, and requires significant research and planning prior to such as Twitter or Facebook provide yet another outlet to notify golfers implementation. Industry studies however, indicate that well-planned of the special pricing for last minute times. RM models provide at least a 2% increase in corporate revenue. Bill Healey has been in the golf & leisure systems market for nearly years, with experience consulting for golf courses around the 58 59 | world. Along with contributing to Asian Golf Business, he is the Leisure Editor for Las Vegas based Gaming & Leisure Technology Magazine. Currently residing in Bali, Bill can be reached at: heybill@hotmail.com

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