So many businesses have struggled to stay afloat during the pandemic, in part because of mandates on capacity or other restrictions aimed at preventing the spread of COVID-19. But other industries have actually been thriving as a result of the pandemic. You might initially think about companies that make personal protective equipment, cleaning supplies, or video conferencing technology, but another niche that has been booming is golf courses and country clubs.

The ideal COVID-19 sport

Golf courses have offered people an ideal recreational and exercise opportunity during the pandemic. It is outdoors, easy to remain socially distant, and with a few precautions put into place, simple to reduce high-touch surfaces. Golf was considered an “essential recreational activity” in some states, and courses remained open throughout March and April, even during the height of the first wave of COVID-19.

As a result, golf rounds played increased a whopping 32.2 percent year-over-year in October, according to Golf Datatech. Rounds played were up 10.8 percent year-over-year for the first 10 months of 2020, despite losing 20 million rounds in the spring due to the coronavirus. The National Golf Foundation (NGF) projects that total rounds for 2020 could be up as much as 15 percent over 2019.

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The big picture of golf course operations

Golf courses and country clubs can be broadly classified as public, private, or semi-private facilities. Golf courses typically offer only golf, and related golf services or products, while country clubs usually offer more extensive recreational activities, such as swimming and tennis. Country clubs also tend to be more private facilities, and usually offer more social-type services, such as a full-service restaurant, formal dining room, and banquet/meeting facilities.

An average golf course generates annual revenue of about $2.4 million and employs about 37 workers. In the U.S., around 9,800 courses generate revenue of $24 billion and employ over 366,000 people.

Profit drivers

Maintaining revenue levels

Golf courses and country clubs have very high fixed operating costs and are particularly vulnerable to any loss of revenue during economic downturns. During difficult economic times, they may be forced to offer special reduced rates, lower initiation fees, or other special packages during off-peak times, like midweek, to generate revenue.

Reducing maintenance costs

Golf courses incur high maintenance costs for mowing, fertilizing, pest and weed control, debris removal, green and fairway repair, and sand trap repair. Maintenance costs can be 40-50 percent of revenue for a public course and can sometimes exceed $1 million per year for a typical 18-hole course. Most maintenance must be performed regardless of how busy the course is.

Minimizing outlays for maintenance equipment

Golf courses require a significant amount of specialized, often expensive equipment for maintaining the golf course grounds. Sometimes a golf course will rent or lease equipment from a dealer or equipment manufacturer to avoid the up-front cash outlays needed for ownership, or even share equipment with another nearby course.

Tightly managing payroll costs

Golf courses and country clubs are labor-intensive businesses. Payroll costs average 22 percent of revenue but may exceed 50 percent of revenue at a high-end country club. Golf courses must carefully manage payroll costs to match revenue levels, particularly given seasonal swings in demand.

Top trends for golf courses

Renovations to reduce maintenance expenses

Many golf courses are using course renovations and new equipment to reduce maintenance costs and increase profitability. Reducing the amount of fairway grass acreage by creating more waste areas and increasing the acreage devoted to rough reduces the mowing and the irrigation required. Still others are replacing some sand bunkers with grassy hollow areas that can simply be mowed with the fairways instead of hand raked.

On-course defibrillators and CPR

Golf courses are among the most common public places where sudden cardiac arrest occurs. Because of their large area and often-remote location, golf courses are also among the most difficult places for emergency medical teams to reach quickly. As a result, more courses are placing automated external defibrillators (AEDs) and other emergency response equipment, such as radio transmitters or other communication devices, in strategic locations on the golf course property, and training their staff in cardiopulmonary resuscitation (CPR) techniques.

Computerized irrigation systems

The average irrigated 18-hole golf course requires 200,000 to 500,000 gallons of water every day and will have between 600 and 1,000 individual sprinkler heads. Fully automatic/computerized systems are operated by radio from hand-held controllers that are capable of isolating single heads or any series of heads. They can be linked to a golf course superintendent’s home or business computer, allowing the system to be remotely monitored and shut off. This not only saves labor, but also is more efficient and flexible.

Ownership of multiple courses

Investors are finding success in acquiring and operating multiple courses in one geographical area as a way to pool resources, reduce maintenance costs, and market attractive combined playing options. These courses are sometimes linked by a centralized reservation system that is more efficient and cost-effective than a stand-alone course might have. Turf maintenance equipment can often be shared among the group’s courses. Special group membership options can be offered that allow members or patrons to play any of the courses included in the group, or to participate in multiple course tournaments or leagues.

Risks to the golf course industry to consider

  • Dependence on economy: Golf is a recreational activity and people will often curtail recreational expenditures during an economic downturn.
  • Impact of improving equipment: Industry experts say that a course today should be 6,500 or more yards in length to compensate for the improved club and ball technology. The cost to renovate a shorter course, assuming appropriate land is even available, can cost in the millions.
  • Overbuilt supply of courses: After a building boom in the 1990s, the golf course facility count fell by 10 percent from 2006 to 2019. Despite this drop, the industry still faces an oversupply of golf courses with many courses struggling to survive.
  • Time and expense constraints: Golf is time-consuming, tends to be more of an individual sport (dominated by men), and can be expensive. At the same time, the dynamics of the American family have changed with more women working, men performing more household and child-rearing duties, and children involved in more activities, leaving less time and money for adult recreational activities.
  • Environmental and government regulations: Concerns over health and environmental impacts are increasingly limiting some popular golf course chemicals. In addition, increasing land use restrictions and adverse zoning restrictions are limiting what a golf course can do.
  • Additional risks: Lack of professional management, adverse weather, new competition, lack of water for irrigation, and greenskeeping problems

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All of the industry information in this post came directly from the Vertical IQ Industry Profile on Golf Courses and Country Clubs. Reviewing this profile, or even doing a quick five-minute review of the industry’s Call Prep Sheet, gives you valuable insights into your prospect within this niche — their opportunities as well as the issues that may be keeping them up at night.

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