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Chapter 7 Golf-Based Resorts: Managing the Operation

Chapter 7 Golf-Based Resorts: Managing the Operation. Identify the changing trends in and demographic profiles of the golf market. Industry Trends: Golf industry leaders are concerned that the number of future golfers will decline Issues most likely to impact business: Number of rounds

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Chapter 7 Golf-Based Resorts: Managing the Operation

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  1. Chapter 7Golf-Based Resorts:Managing the Operation

  2. Identify the changing trends in and demographic profiles of the golf market. Industry Trends: • Golf industry leaders are concerned that the number of future golfers will decline • Issues most likely to impact business: • Number of rounds • Player retention

  3. Changing Trends (cont.) Industry Trends (cont.) • Water management is the major environmental issue facing the industry • Many courses are utilizing water conservative technology Changing Demographics • There are seven segments of golfers: core, seniors, women, juniors, highly skilled players, private club members, and high spending golfing households

  4. Changing Trends (cont.) Changing Demographics (cont.) • In 2002, 11 million golfers took an overnight trip that included golf • There are more than three times more male golfers than there are female golfers

  5. Changing Trends (cont.) Changing Demographics (cont.) • The profile of the average golfer is: • Male • Around the age of 50 • College graduate • Household income between $100,000 and $149,999 • Plays about 60 rounds per year and has been playing for roughly 22 years • Average score of 88.4 • Male golfers spend slightly more than female golfers on golfing

  6. Identify the critical variables in determining a golf-based resort’s profit potential. Operations • The Sun Belt covers the southern states and part of the coastal region • These courses are likely to be open year-round • The Frost Belt consists of northern states and the mountainous parts of southern states • These courses usually shut down for a while during winter

  7. Profit Potential (cont.) Income Statement • In 1999 U.S. golf resorts reported an average operating median of: • 28.9% for Frost Belt resorts • 25.3% for Sun Belt resorts

  8. Profit Potential (cont.) Revenues • Most revenue comes from annual fees and green fees • The second most important source of revenue is from golf cart rentals Expenses • The greatest expense is the cost of merchandise sold, followed by the cost of food and beverages • Payroll is usually the largest expense category

  9. Profit Potential (cont.) Staffing • Sun Belt resorts staff their facilities with 29 part-time and 34 full-time staff • Frost Belt resorts staff their facilities with 60 part-time and 43 full-time staff

  10. Identify potential solutions to financial problems faced by golf-based resorts. Tournaments and Events • Business Golf • Customer Appreciation Events • Sales/Product Launches • Employee Outings • Fund-Raising events

  11. Solutions to Financial Problems (cont.) • Hole in One Contest • Companies organize the activity for the resort and provide the prizes • While many think it is virtually impossible to achieve a hole in one, in any given year in the U.S., there are over 40,000 holes in one

  12. Solutions to Financial Problems (cont.) • Women-Friendly Women friendly courses can: • Vary tee locations to allow the option of playing a harder or easier course • Feature holes in the 5,600 to 5,700 yard range • Provide holes where players do not have to carry the ball over a lot of obstacles • Where greens can be easily reached • Where forward tees are closer to the hole and allow for a better angle at the green

  13. Solutions to Financial Problems (cont.) • Banquets • Can be an excellent way to bring in additional revenue • Golf tournaments are a good market to advertise to • Pre-game lunches, box lunches, post game dinners, or cocktail parties have proven successful • Social events are the most financially profitable segments, including weddings, bar mitzvahs and anniversaries

  14. Solutions to Financial Problems (cont.) Pro Shops • Margin Enhancers include discounts, rebates, fitting fees, advertising co-ops, freight programs, or free product accounts • Accessories • The key to increasing sales is in the presentation of items • Keep displays neat, use color effectively, develop a theme, cross merchandise, and avoid one level displays

  15. Solutions to Financial Problems (cont.) • Inventory Control • Controlling inventory can cut down costs • “Open-to-buy” refers to the amount of retail dollars set aside for the purchase of merchandise in the future • Old sales figures are used to project future sales • Merchandise group departments are created

  16. Solutions to Financial Problems (cont.) • Inventory Control (cont.) • To maintain control of the system the two important pieces used to determine beginning inventory levels are projected sales volume and the turnover rate desired by the shop • Credit Cards • Accepting credit cards makes the purchase easier for the customer • Retailers pay a fee to credit card companies when they accept credit cards

  17. The End!

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