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According to interviews with 56 golf course managers in South and West regarding effects of Sept. 11 By Ronnie
L. Galloway, MAI, SGA There was hardly a business or industry that wasn’t affected, directly or indirectly, by that day. And for a nation that had struggled to stay out of recession, the attacks on the World Trade Center and Pentagon violently pushed the economy downward, leaving a rash of layoffs and poor stock performances for the rest of 2001. The golf course industry was not immune to the effects of Sept. 11. Golf course play suddenly dried up at all course types. Resort courses, so heavily dependent on tourist travel, were most adversely affected. In the immediate aftermath of Sept. 11, when all commercial flights were grounded so new safety measures could be implemented in the nation’s airports, play mostly ground to a halt. “Everything stopped in the first two weeks after Sept. 11,” says Paul Kline, director of golf operations for the Norman Course at Barefoot Resort in North Myrtle Beach, S.C. “People weren’t making plans until they were comfortable.” As time passed, play slowly began to pick up again at courses throughout the South and West. Most courses say that by February of this year, play was back to pre-Sept. 11 levels. Kline says that after the initial two weeks, play began to pick up again at the Norman Course. By mid-October, the course was again doing a brisk business. “We had a huge increase,” he points out. “We went from nothing to a major flood of bookings.” Galloway Golf conducted an unscientific telephone survey of more than 50 golf courses in the South and West to assess the affects of the Sept. 11 tragedy on golf course play. The courses contacted ranged from public to semi-private to resort (See breakdown following story) in 10 states. Here is a breakdown of what the courses said: Resort courses—Most resort courses contacted indicated a 10 percent to 20 percent drop in play through at least November, if not until the end of the year, compared with play in the same period a year earlier. “The first two months [after the attack] were very slow, then we had one of our busier Thanksgivings,” says Jeff Crittenden, first assistant at The Resort Golf Course at Orange Lake in Kissimmee, Fla. “Then it slowed down again and picked back up in March and April. We’re back to where we should be [for this time of year].” Crittenden attributes the slow play for the first two months to the tragedy, then the resulting struggling economy for the slow down that began after Thanksgiving. Resort courses
directly tied to hotels were hit even harder. These courses initially
after Sept. 11 suffered a 75 percent to 80 percent drop in play
after tourist canceled hotel reservations. In Florida, Arizona
and South Carolina, these numbers began to rebound in November. “Right now [April 2002] we’re close to normal—about 90 percent to 95 percent,” says John Gardner, vice president of golf for the Estate Golf Course at PGA National West in Palm Beach, Fla., a combined resort and private club. “October and November are usually good months for us, but not last year.” Public
and semi-private courses—These courses, which depend
more on local patronage than tourism, fared better than their
resort counterparts. After the initial shock of the tragedy wore
off, play returned to pre-Sept. 11 levels. Semi-private course
Glen Garden Golf & Country Club in Fort Worth, Texas, was
a notable exception to play in its category. Jason Rocha, first
assistant, says the first two to three months following Sept.
11 “had a significant impact” on play. The turnaround
began in January, he adds, and the course is currently back to
pre-Sept. 11 play levels. “Percentage-wise, it knocked play down by play 20 percent,” says Byron Cone, head golf pro at Palute Resort in Las Vegas. “We attribute it all to the tragedy and recession. It is still slow, although it has begun to pick up. Midweek green fees are down quite a bit, but weekends are starting to pick up.” “People are more conscience about flying and that affects us,” says Dan Forey, director of the pro shop at the Las Vegas National Golf Club. One of the pros at Las Vegas National Country Club, who wished not to be identified, says play has been down significantly, but has slowly begun to rebound. “We were hit hard because we depend on hotel occupancy on the strip,” he says. “When occupancy is down, play is down. We’re still behind [compared with the first three months of last year].” Reno, Nev., courses had their share of turmoil like everyone else, but were not hit as hard as courses in Las Vegas. “For about three weeks after Sept. 11, we were knocked down by 10 percent to 15 percent,” says Fred Elliott, head golf pro at Wildcreek and Northgate golf courses, both resort courses in Reno. “We’ve been right back on track since the beginning of 2002.” Reno caters to many golfers in the San Francisco Bay area. Last year’s economic woes, specifically concerning the plight of dot-com companies, conspired to slow down play at Wildcreek and Northgate even before the events of Sept. 11, Elliott says. “The economy did affect us,” he points out. “We were slightly down in our rounds before Sept. 11.” Most courses said they did not lower green fees or develop packaged deals to entice golfers to return. A large majority of golf directors interviewed believed that golfers would eventually return as life got back to normal around the country, and that they needed to ride out the storm. One exception to the greens fee issue is Eagle/Osprey Course at Okeeheelee Golf Course, a public course in West Palm Beach, Fla. The course decreased its fees from $43 to $37 in an effort to attract golfers in a very competitive environment, says Steve Cox, general manager for the course. The lower fees stayed in effect through the end of the season (in mid-April). “In October and November, our business was off 25 percent,” he stresses. “We had to lower the fees to maintain a consistent level of activity. So, our rounds are consistent but our revenues are down.” All of the courses interviewed face stiff competition from a plethora of courses within nearby driving distance. Business
prior to Sept. 11 Tom Stein, co-founder of Golf Datatech, a Kissimmee, Fla.-based market research company, says overall play in 2001 was down by 1 percent. That’s a trend that has been going on for several years, he adds. Stein says it’s difficult to pinpoint the reasons why play has been flat for the past several years. He says the economy had some affect in 2001. “A slower economy can affect people’s ability to join a new club or take an out-of-town golf trip,” he points out. “It’s not that these people stop playing golf; they just play at their same clubs because they can’t afford the initiation fees, or they can’t afford a golf vacation.” Research indicates that play has increased more than 6 percent for the first two months of 2002, compared with a year earlier, Stein says. He attributes the increase to a mild winter in the Northeast and Midwest, which prompted more play than usual in these areas. But Stein cautioned that the “amount of participation” has leveled off in recent years, meaning either people are not taking up golf as much as they were a decade ago, or existing golfers aren’t playing as much. After peaking in 1990, golf participation dropped somewhat, and then remained relatively constant, until a 7 percent increase in 1997, according to a report by the National Golf Foundation (NGF). In 1998, participation slightly regressed. During the next decade, the combination of both natural population growth and favorable demographic changes almost ensures that the number of golfers and rounds played will continue to grow at steady rates of 1 percent to 2 percent per year. “This is healthy growth, though not meteoric,” according to the report. “There exists, though, a huge latent demand of 41 million Americans who want to play or play more. The stimulation of even a small portion of this demand reservoir could translate to growth rates in rounds played of 3 percent to 4 percent per year. Courses interviewed for this story believe that the worst is over—both in terms of the after affects of the Sept. 11 tragedy and the slow U.S. economy. Analogous to DOW Jones and NASDAQ finding bottom shortly after the attack, most golf operators think it can only go up from here. All believe that play will continue improving through the remainder of this season or when the 2002 peak seasons begins later this year. No doubt the sharp contraction in building new golf courses in already overbuilt markets will help allow demand to catch up with existing supply. New golf construction hit an eight-year low in 2001, according to NGF. Relative to the golf industry, this may prove to be the only silver lining in the 911 cloud as developers and lenders carefully evaluate proposed projects and the overbuilding cools. When making decisions about future budgets, pricing, capital improvements, etc. it is important to understand the competitive position of your golf course with respect to nearby golf facilities as well as overall regional and national industry trends. One thing is clear from 911, we are all tied together as a part of a larger community and while some courses are affected more than others, no one is immune to the socio-economic stress resulting from regional, national or global threats. About the
survey Ronnie L. Galloway, MAI, SGA is a principle of Galloway Golf, Appraisers & Consultants w w w. golfappraiser.com Galloway Golf
Appraisers & Consultants is a national/international golf
course appraisal and consulting company headquartered in Louisville,
KY with affiliate offices located in 21 states across the United
States. The company gives golf decision-makers information to
plan their future needs. The company provides pragmatic recommendations
relative to current issues facing the golf industry, including
increasing golf competition and slow industry growth, the national
economic trends, the 911 Impact. |