Last Update :9/25/2023

Current Golfer Mindset and it’s impact on Facility Planning

Jon (Last) is the expert on consumer trends in the sports and leisure world and often has his pulse on the golf consumer. His recent research concluded the following:

Only 35% think America is on the right track, 79% sense the high inflation and 65% are more budget conscious than at any time during the past 2 years. Only 31% expect to begin spending freely again on luxuries again in 2023. How does this bode for golf?

His survey of private club members found that 63% of respondents felt their club needed to reinvest, however, the same number – 63% also expressed concern about the financial stability of their club, I suspect due to high debt. In one of the other sessions, Century Golf’s Jim Hinckley predicted that with the preponderance of high spending at many clubs, combined with more debt at higher interest rates, a significant # of clubs that may have overspent on capital projects will become targets for acquisition. Though most in attendance, and speaking we’re optimistic about golf’s near and short term future, most objective observers are waving the caution flag, while still encouraging intelligent spending.

It’s agreed by many that to achieve real and sustainable growth golf’s culture needs to evolve. I heard several speakers suggest that golf needs to “look more like America” and that if the game is to attract the next generation of golfers, clubs and courses need to adapt to their culture of a more relaxed environment. One GM I spoke with last week came from the ski industry and said she aimed to create the ”ski vibe” at her private club. That’s a great start!

As one might expect, I got plenty of questions about golf property values and where they’re headed. Confirming what I’ve observed in recent months, so far, prices being paid in the golf transactions I’ve observed have remained stable on the basis of revenue or cash flow multiples, according to the buyers that were there. Conventional wisdom is that despite rising interest rates, the higher returns available in golf (low double digit cap rates) are now attractive to many investors from other market segments (multi-family, office, retail) who’ve turned over their previous investments and need to place their money. They perceive golf as safer than the pre-COVID days and pricing has been surprisingly strong. We’ve brokered some transactions in short order this year with prices satisfying to sellers. How long will it last?

Among other topics discussed were the pricing of golf. With high demand, pricing has been strong, however more than one of the industry experts (including me) suggested that the price elasticity was not infinite and that resistance will occur, especially in light of Last’s consumer data. Pugliese expressed concern about the availability and pricing of materials and equipment for both renovation projects and daily operations. Again, it gets to the culture of golf evolving to become broader and more inclusive.

Investment will be necessary as clubs realize that the next generation wants better practice facilities, gamified ranges and more amenities not heretofore part of many clubs. It really comes down to who clubs seek to attract. Some parting questions:

• Will we see different club operating models, like those in the UK that manage the cost of membership while welcoming guests/visitors?
• How elastic is the pricing of golf and club membership?
• Will clubs become more hospitality conscious as opposed to prestige conscious?
• How will off-course golf related activities (TopGolf, PopStroke, etc) impact on-course participation and club membership?

Please feel free to share your comments. It helps us do our job better. Larry@golfprop.com.

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