Golf Business Community

Golf course owners and operators from 15 different countries participated in the second edition of KPMG’s Golf Benchmark Survey in the Caribbean region, the only one of its kind, aimed at allowing courses to compare their individual operational and financial results against high, average and low performers in their geographic markets.

Not unexpectedly of those courses surveyed, 87% indicated that the economic downturn had a negative effect on their operations, with 76% of golf course operators reporting a decrease in the number of rounds and 64% stating a decrease in revenues as a consequence of the financial crisis.

According to the survey, courses in Bermuda recorded the highest average number of rounds annually (24,000), as compared to other locations such as Costa Rica, Dominican Republic and Jamaica who recorded only half that number. In 2008, the average number of total rounds played at 18-hole facilities in the Caribbean was approximately 18,450.

Bermuda’s performance can be attributed in part to the fact that unlike comparative jurisdictions who rely very heavily on golf tourism, the island enjoys a higher proportion of resident member golfers. However, when put into perspective against other locations with similar year-round playability, Bermuda’s numbers are still well behind those of the Middle East and South Africa which average 40,200 and 33,600 annual rounds respectively.

Other key findings emerging from the survey include:

• Only 45% of the participating golf courses reported a positive gross operating profit (GOP), compared to 64% in 2006 when the first edition of the survey was conducted. These courses had an average GOP of almost US$600,000 in 2008, with the top 25% of performers achieving on average a GOP approaching US$1.0 million.

• The top 25% of golf courses in the Caribbean (based on annual turnover) reported revenues of US$3.2 million, almost twice as high as the regional achieved average of US$1.7 million.

• A total of 45% of the courses surveyed reported a decrease in the number of their members in 2008, with half of these indicating a 10% to 30% drop.

• The average green fee charged for 18 holes of golf was US$129 in the winter and US$109 in the summer season.

• Fifty-five percent of respondents expected improvement in market conditions during 2010 and 13% had already recognized an improvement by the time they responded to the survey (fall 2009). However, one- third did not foresee the end of the downturn before 2011.

Golf course operators were asked what measures they had implemented in 2009 to offset the negative effects of the economic downturn. We have found from our survey that most courses have already taken proactive steps to address the changes in market conditions in terms of staffing, pricing strategies and marketing activities. Almost all respondents took operational cost cutting measures (87%); over two-thirds changed their marketing strategy; approximately half changed their pricing policy; 15% refinanced or restructured their developments.

In conclusion, it is evident that on average, golf courses in the Caribbean have performed worse in 2008 than in 2006, which can mainly be attributed to the global economic downturn and, consequently, to the decrease in golf travel, especially from the North American market. This weaker performance is reflected in the lower number of rounds played (-8% on average) as well as in lower levels of achieved revenues
(-17% on average). Additionally, according to the survey’s results, top performing courses, like lower performers, have also been significantly impacted by the crisis.

It will be interesting to see how these golf courses’ performance will change in the coming years, considering the relatively pessimistic expectations of golf course owners and operators in the region regarding their future prospects.

KPMG’s Golf Advisory practice remains at the disposal of local courses to assist with the development, operational and restructuring challenges and opportunities.

A copy of the full survey can be downloaded from www.golfbenchmark.com

For more details about the Golf Benchmark Survey please contact

Zita Valint
KPMG’s Golf Advisory Practice in EMA
zita.valint@kpmg.hu
tel: +36 1 887 7264