Golf Business Community

Andrew Stanley
CEO
Golfbreaks.com








MARKET PERFORMANCE

What is your assessment of the golf travel market’s business performance in the past year?

The market has become tougher and margins have been squeezed. A number of large golf travel companies who have been around for more than 20 years went out of business. The reasons for this include significant fluctuations in the currency exchange rates, which has been a major issue. However, some of those businesses had also not updated their marketing strategies to align themselves with customer needs, including the use of the internet.

There’s no doubt the market has also become more price sensitive. Demand in Spain and Portugal, generally speaking, is down, although Golfbreaks’ business is tracking on a 30% increase this year to both destinations. However, Spain and Portugal both dropped their prices to stimulate demand, followed by France and latterly Ireland. Demand for the USA and South Africa also diminished, although the rest of the world and the top end of the market have been less affected. One of the results, in the UK at least, is that the domestic market is stronger than ever, with more golfers opting to take their golf breaks at home.

Overall, there’s been a market shakeout of golf travel companies with the strong companies becoming stronger and the weak becoming weaker. And while choice is always a good thing for customers, what we are seeing now is a greater focus on service and value, which also benefits the customer.

So price and service, as well as choice, are the watchwords for golf travel companies?

Correct. There are now some great deals to be had, the likes of which we haven’t seen in 10 years. For example, the decline of corporate business in hotels has meant resorts have been able to look at mid-week availability and create some great golf offers. But service is also key – you can’t just put great offers out there, take the money and run. The time you spend with your customers, following up with them after they have placed their deposit, seeing if they need to amend their booking, is crucial. The customer expects high standards of service and the golf travel market has to ensure customers are satisfied.

What impact did the volcanic ash cloud have?

For us, the biggest impact was repatriating customers and postponing bookings without creating extra charges for the customer, which required us to set up a special team. We certainly went quieter on bookings to Continental Europe for a while, but we are fortunate to have a strong domestic market, so we saw a sizeable increase in UK bookings, which offset the temporary fall in demand for Europe. Our domestic business is up 12% this year.

What about the World Cup?
Demand for South Africa before and during the World Cup took a knock, which we anticipated because of the cost of flights and people wanting to avoid the area, but we are surprised not to have seen any uplift subsequently. We thought people would have been more interested in going, but there is no evidence to support this.

What countries are the most popular currently?
The UK is still our number one market, both by volume and price. Interestingly, Wales, which is hosting the Ryder Cup, has had a very strong year driven by some high profile marketing. As I said, Spain and Portugal have been strong for us, although this may not be reflected in the wider market. France has also bounced back for us after a quiet year in 2009. I think all of these countries have addressed their pricing issues and have looked carefully at their yield management to successfully stimulate demand.

What about the emerging markets?
There is very strong demand for Turkey now, which is benefitting from word-of-mouth recommendations. It’s one of the fastest growing destinations, albeit starting from a low base – we are 50% up year-on-year for Turkey. One of the attractions, besides the good quality courses and climate, are the all-inclusive hotel packages, which are appealing in a price sensitive market, as people know exactly what they are paying. The barriers are that flights are comparatively expensive and while airlines have put on more flights to Antalya, they are still not at the same levels as Malaga or Faro.

Which countries have suffered most over the past two years?
The long-haul destinations have been worst hit – the USA in particular. Airlines have cut back the number of flights so prices have increased, putting people off. Ireland and France also suffered, largely because they were very slow to react to price reductions and tactics to stimulate demand.


CHANGING CUSTOMER

Have customers’ needs changed in the past two years? If so, how?
Yes, in two ways. The all-inclusive packaged has proved popular and we have seen an increase in demand for this. Customers expect value-for-money and these packages are seen as good value.

Secondly, we are seeing shorter lead-in times for bookings. So, people are making their decision to take a golf break later and later, with more last minute bookings. While groups tend to book four to 12 months in advance, depending on the size of the group and availability, smaller groups are booking much later – 50% within a month of travelling, 50% of these are within 10 days.

You said the market is more price sensitive – what are the average costs of a golf break?
For golf breaks in Europe, the average price, excluding flights, is €300. For UK golf breaks, the average is €195. Venues in Spain, in particular, have been proactive and put some excellent rates out there, shifting golfers’ expectations on prices.

What is the average length of a golf break?
For Europe and rest of the world, it is four nights, although the most popular package is three nights and three rounds of golf. For UK golf breaks it is 1.7 nights, typically one night and two rounds or two nights and three rounds.


DESTINATION STRATEGY

How have destinations responded to the changing market? Are they spending more on marketing?
Certain tourist boards and venues have been more proactive. Tourist boards have grasped that golf travel is a lucrative part of the travel industry and have definitely become more active. Spain, Scotland and Wales, with the Ryder Cup, have definitely put more into promotion. We are also seeing venues become more proactive, sending their sales managers to see us and the other golf travel companies – they now see us as extensions of their own sales teams.

What about the way resorts and hotels manage their business?
Corporate and leisure travel is down, so many hotels have targeted the golf market more. They have become more creative and looked at ways to discount golf or rooms to create demand through very attractive packages.

What are the common failings you see in destination marketing?
From our perspective, it is still not targeted enough. On average, the golf traveller spends 20% more on site than the leisure traveller – that’s because they spend more on food and beverage, in the pro shop and on extras such as golf buggies. The leisure market as a whole is still going to be bigger, but there is money to be earned in the golf travel market.

Which destinations are being proactive and proving successful?
The Murcia region of Spain has seen a lot of tourist board activity and I believe they are increasing the number of golfers going there.

What about Asia – there is a lot of interest in the region as both an inbound and outbound market?
Inbound and outbound, Asia is a tough nut to crack. Tour operators need to ask, ‘Are we selling golf holidays, or holidays with golf?’ Thailand is not on our radar at the moment because the number of people going over there to play golf is small. Of course, there are golfers going there, but they are going for a holiday and maybe playing a couple of rounds of golf while there.

Which destinations do you see as the most important for the future – what are the golf travel hot spots?
The tried and test regions still come top, and that means Spain, Portugal and France will remain very important. As I’ve said, Turkey is on the up and we are keeping a close eye on the United Arab Emirates, too, which is looking promising. Over the next couple of years, we’ll start to see airline capacity to the USA and the Caribbean increase again, and I think we’ll see resurgence in these two regions. These will be the future hot spots, in my opinion.


FUTURE BUSINESS OUTLOOK

You’ve said the market is tough – what have golf travel companies got to do to survive and prosper?
The golf travel companies that are doing well are using technology – that’s clear. I think while companies will have to keep an eye on costs, they will need to increase their marketing budgets, not decrease them. I think they will also need to be proactive and regular in their communications with tourist boards and venues, rather than just having annual reviews.

I think the golf travel market also has to be innovative and provide the higher standards of service customers are now demanding. For example, we have introduced a loyalty card scheme, similar to what you would see from a supermarket, but offering golfers ‘Break Points’ every time they book with us, which they can redeem with Golfbreaks.com, or our other businesses, Teeofftimes.co.uk and BookaSpa.com.

With the internet it’s increasingly easy for venues to market themselves, and for golfers to book direct. Is this a trend we will see more of?
Of course, for venues it is beneficial is for customers to book direct, so they don’t have to pay the tour operator a commission. However, most venues accept they are not going to have the distribution to generate the supply they need, so they will always need third parties working with them. We are seeing resort chains doing more direct marketing and selling, but it is a balancing act. You have to remember customers also want choice.

What is the business outlook for 2011 and beyond in your opinion?
I think the next couple of years will remain tough for the market as a whole and a number of golf travel companies will get caught out and either go bust or be taken over. That’s unfortunate, but it is a natural adjustment to the market.

Also, many resorts and hotels will still be too focused on the leisure and corporate market, which will continue to be tough because customers are holding back. This will put pressure on them to achieve their figures and encourage them to use distribution channels such as fully bonded Tour Operators. Proactivity is the key.

However, I believe the outlook is actually extremely positive. Despite the economic uncertainty, golfers have shown they want their fix of golf and are willing to travel. Golfbreaks.com is predicting significant growth in its business this year, possibly double digit growth.

What about the golf travel market as a whole – will it continue to grow?
Yes, I do believe the market will continue to grow. Take the UK for example, the largest golf market in Europe with 4 million golfers. We are booking golf breaks for 150,000 golfers, so we still have a long way to go. Golfers here and in the major golf travel markets of Scandinavia and Germany still want their golf travel fix and winter sun, so the potential is all there.

However, the golf travel market – venues and golf travel companies – needs to get itself up-to-date and use the latest marketing strategies and techniques. Most importantly of all, though, the market needs to offer the customer value, service and choice.