Florida is one the busiest vacation destination states in the USA. Most come for the ocean, beaches and warm, sunny days. Many of the more than 130 million tourists who come to Florida are golfers. Combine these numbers with the many year-round residents who golf and you come up with a $20 billion industry. Most of the tourists come during the winter season, roughly November through April. During this time, most of the golf courses are so busy they have the luxury to turn players away. The other six months of the year are the hottest, with sun that beats down every day. This is the price Floridians are willing to pay for not having to buy parkas, shovel snow, or slip and fall in the ugly gray slush. The number of golfers playing during the high season is roughly twice the number who play during the summer season when the tourists have gone home. There are more than 1,200 golf courses in Florida, more than any other state. While the customer base fluctuates wildly, the number of golf courses remains the same.
Types of golf courses
At the low end of the economic scale are the municipal courses owned and operated at the city and county level. While some are quite nice, the typical city or county muni is run on a small budget. The courses are mostly geared to recreational golfers with modest budgets. Some are attractive and well-maintained, but not all. State owned golf courses tend to have larger budgets and thus better golf courses in more beautiful environments (TPC Sawgrass is a muni and so is The Links at Key Biscayne, my favorite Florida course). At most munis, lunch is a hot dog and a beer.
A step above munis are what are called daily fee golf courses. These are typically privately owned courses that are run much more like efficient businesses than most city and county courses. Most daily fee golf courses are more beautiful and more challenging than munis and come with more upscale amenities and better service. Lunch is ordered from full menus. Private clubs that admit daily fee players willingly surrender their exclusivity by admitting outsiders because they want the money.
At the top are totally private golf clubs that were designed by legendary golf course architects. These member-only golf clubs are closed to outsiders. Most also keep to a bare minimum the number of times members can invite guests, further reinforcing their exclusivity. At the top of the top are golf courses where membership is by invitation only and annual dues are in the hundreds of thousands of dollars. Lunch is provided in sumptuous surroundings, prepared by award-winning chefs and served on china, crystal and silver by attentive, deferential, and contented professional staff.
All Florida courses that admit golfers for a daily fee use sliding scales, just like hotels. The rates are adjusted four times a year. The playing fees are at their lowest in the dog days of summer and their highest during the holiday season. In between, in what is called shoulder season, the rates are somewhere in the middle. Rates vary by day of the week, too. Saturday and Sunday fees are set at the highest prices the market will bear.
Supply and demand
While the number of courses remains steady throughout the year, the number of tourists doubles in season. The math is simple: in the winter months there are twice as many golfers trying to play on the same number of courses. This is a textbook example of the supply/demand ratio and the factor that justifies golf courses charging much higher in-season rates, usually around double the summer rates.
How private golf courses mismanage the imbalance
Lots of golf tourists jump in and out for only a few days or weeks. Many are migratory snowbirds who live in Florida in second homes for half the year and move back up north only when the weather warms up in the spring. An attractive option for some part-time residents is to join a private club while living in their second homes, but when they try, they find few clubs are smart enough to develop programs for half-year memberships. Most don’t offer that option because they want to make part-time members pay full-time fees. This decision is driven by pride and greed, two criteria that make for bad decision-making. The unintended consequence for many private golf clubs is that they actually make less money because their heavy-handed policies anger snowbirds so much that they quit the club. The private clubs fail to understand they are betting double or nothing and losing too many customers who are now paying zero because they are no longer members when they could have had them as a guaranteed revenue stream. They also overlook the probability of a half membership now may turn into a full membership in time. Many snowbirds who retire move permanently to their Florida homes.
A lesson in market segmentation
Most private golf clubs charge one fee that allows golfers to play at any time on any day of the week. Because many golfers work, the courses are at their busiest on weekends. To maximize the number of golfers who pay to play at private courses, the smartest golf clubs have devised different programs for different fees. The smartest golf courses have learned how to segment their market and design packages that appeal to different groups. In addition to full member programs that allow play seven days a week, here are two of the market segments the most well-run businesses now cater to:
- Weekdays only. Some golfers are happy to pay less by giving up the right to play weekends. They have free time during the week and are happy to avoid the inevitable congestion on weekends.
- Twilight. Most golfers like to play in the mornings, especially in hot weather, so to encourage afternoon play when the courses are mostly deserted, they offer packages that allow play only after a certain time.
- Once a week. Some private clubs allow outside play on their slowest day. They see this one day of insider access as an opportunity to attract new members.
This kind of thinking applies outside the golfing world, too
Many business are driving off customers because they don’t offer à la carte options that let people pay for only what they want and only when they want it. Take a look at your supply and demand numbers by year, month, week, day and even time of day. If you’re creative, you can design programs that capture and retain more customers while driving fewer of them away.
My golf creds
For many years I specialized in investigating, understanding and charting the golf industry. I traveled all over conducting face to face interviews with thousands of people in and around golf from the board room to the bag room: Owners, Boards of Directors, General Managers, PGA Professionals, Course Superintendents, Driving Range Operators, Mowers, Mechanics, Contractors, Vendors, Sales and Marketing People, Banquet and Food & Beverage Providers, Avid Golfers and Occasional Golfers, Members of Public, Private, Municipal, and Daily Fee Courses, and others. These interviews were formally planned and informally conducted, and each was videotaped for further analysis. Along with tens of thousands of surveys, they formed the basis of reports I wrote and presented to study sponsors about their industries, their competitors, their customers, and themselves.
I was connected to golf in other ways, too
I was in charge of hundreds of tournament volunteers at PGA Tour events in South Florida and caddied at Doral, Honda, and Bay Hill on the PGA Tour. I’ve worked in the bag room, the pro shop, and at the driving range, been a member of the groundskeeping crew, a club bartender, and was once a Demo Day Rep for both Nike and Ping.
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