Carr Golf Services last Friday hosted ‘Road to Recovery — Golf Business Conference’ in Dublin at which it presented findings of the first comprehensive research report into the Irish golf industry.
Among those findings were revealed a significant level of debt amongst clubs, a lack of strategic planning and an average of only 1% of revenue allocated towards marketing, while over-capacity could cause the constriction of the industry and the closure of as many as 50 clubs and courses across Ireland.
Carr Golf Services chief executive Marty Carr told the Irish Examiner that as a result of the survey undertaken by FGS and Carr Golf Services, in conjunction with the Golf Union of Ireland (GUI) and the Irish Ladies Golf Union (ILGU), improving efficiency and consolidation was the only way forward for the Irish golf industry.
The survey produced a 35% response rate from the 433 golf clubs in Ireland, who between them have seen a 10% decline in membership numbers and a reduction in rounds being played by members and visitors, as well as a decline in golfing tourists visiting their courses.
It found that the Irish golfing industry has the capacity to support more than 23 million rounds of golf in a given year but a maximum of 14.7 million rounds were actually played in 2009, suggesting a level of under-utilisation around 30%.
“The key things that came out of the survey was that around 57% of the courses had seen a decline in revenue,” Carr said, “that 80% of the courses do not have a yield management strategy, 40% of the courses do not have a strategic plan and only 1% of golf course budgets is being spent on marketing.
“But the main overall conclusion is that the industry is very fragmented. You have more than 400 golf courses that are managed individually, and about 65% of the courses that responded were cooperative member clubs run by committees, which is not necessarily the most efficient way to run a business.
“The business has moved on from needing an administrator to administer subscriptions and bookings to business management, which is managing your costs and driving revenue. That’s the transition that’s taken place but I’m not quite sure the clubs particularly realise that.”
Moving with the times will not save all clubs, though, Carr warned.
“Probably over the next few years you’re going to need some closures. I think it is (inevitable). We asked the courses, and we’re not totally convinced this is correct but we asked the total number of rounds and in terms of utilisation being at 100%, it would be 23 million rounds. At the moment we’re in the region of 14 million played this year.
“If there were in the region of 50 courses closing over the next three to five years, that would be 12% of the supply taken out and if that was the case, then utilisation would go up by about 7% which would take you up to about 65% (utilisation).
“But that could be going off what I think is a lot of the clubs estimating rounds because members’ rounds aren’t recorded.”
Asked which clubs are most vulnerable to closure, Carr replied: “A lot of clubs have already taken action and are bringing their costs down but a lot of the clubs were ill-conceived in the first place, that were based on a property development and the ones that have a lot of debt. I think the chances are that some of the newer courses that were developed at great cost are the ones that are in trouble while the older, poorer courses are the ones that are probably more likely to survive.
“And is there a chance of maybe consolidating some of the courses, where clubs move to different venues? You also have clusters of clubs where some areas are very oversupplied. There’s one case in point where there are three courses within five miles of each other and collectively have about €11 million of debt between them. So, there’s a classic example, if you could find a way, to get those all sitting down and saying ‘why don’t we have one vibrant club at one venue and close the other two and try and find an alternative use, short or long-term?”
What is needed, Carr told the conference, which attracted 255 industry stakeholders including clubs, banks, accountancy firms and suppliers, was an umbrella body was needed to steer the industry through trying times.
“What we’re hoping to do, and what became very clear, is that there’s no national strategy for golf. The GUI do a fantastic job in amateur golf, the PGA do their job and you’ve got the Golf Tour Operators (IGTOA). I think out of this, we’re probably going to try and find an umbrella group representing everybody where we can actually speak as an industry employing 8,000 people and generating €150m a year in tourism revenue.
“There was agreement there needs to be greater training, greater cooperation, sharing of costs such as maintenance, so we’re driving down costs.”