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Many of the World’s Largest Golf Course Owners and Operators Will Continue to Invest During Economic Downturn, According to Survey of Executives at NGCOA Leadership Retreat

MONTEREY, CALIF. (July 7, 2008) – The nation’s economic slowdown is taking a bite out of the business of many of the golf industry’s largest ownership and management companies, but a number of owners and operators say they will continue to invest in their facilities in hopes of growing revenues and gaining competitive advantage during the downturn.

Those were among the results of the annual MCO Pulse Report based on a survey of executives attending at the NGCOA’s Multi-Course Owners Leadership Retreat held here July 1-3. The annual gathering of many of golf’s most influential executives attracted representatives from more than 50 of the industry’s largest course owners and operators.

“The economy is certainly casting a shadow over golf right now, as it is with any business that relies on discretionary spending,” said Jim Hinckley, partner and CEO of Dallas-based Century Golf Partners. “But most large operators understand business cycles and are using this time as an opportunity to position themselves for better days ahead.”

According to the survey, the economy is moderately (54%) or significantly (32%) affecting current performance at the nation’s multi-course businesses.

Most of the owners and operators (67%) surveyed think their business will remain flat or decline as much as five percent in the second half of 2008. Twenty-three percent think they will see gains of less than five percent.

As was the case in the aftermath of 9/11, outings seem to be the first to feel the economic pinch. Fifty percent of the survey participants said the number and size of outings sponsored by business and charitable groups was the area of their business being most affected. Thirty-one percent said the number of customers playing their courses was where they were feeling the biggest effect.

The majority (55%) of the golf course executives said they plan to deal with the situation by pulling back on expenses and holding on until conditions improve.

A number of respondents, however, said they will remain aggressive during the slowdown. Twenty-three percent said they plan to invest in more marketing to grow their business, and 22 percent said they will make course or facility improvements to become more competitive.

Owners and operators of multi-course operations also are increasing their efforts to attract new players from non-traditional segments. Forty-eight percent said they had introduced player development programs in the last year aimed at women, Hispanics and juniors; 32 percent said they had hosted events aimed at one of these groups.

The slowdown may present opportunities for acquisitions among this group of dealmakers. Forty-nine percent said they expect to acquire courses for their portfolios over the next 12 months. Fourteen percent predict they will dispose of properties during the same period.

Among attendees whose companies are not in the homebuilding business, 55 percent said they have courses in the planning stage or plan to build a course in the next two years.

With the U.S. golf market still overbuilt in many areas, the owners and operators are bullish on international opportunities. Eighty-nine percent said they believed new business opportunities would increase in international markets in the next two years.

While the economy poses the biggest challenge in the next five years, according to 49 percent of survey participants, player development and retention (31%) ranks as the second biggest challenge to the growth of their businesses.

The environment is also clearly on the minds of owners and operators. Eighty percent said water was the environmental issue most threatening to the golf industry, and 44 percent said they had reduced the area that requires irrigation and fertilizing at their courses to curtail water consumption and expense.

The invitation-only NGCOA Multi-course Owners Leadership Retreat included executives from companies that own and manage seven or more courses. Attendees represented multi-course companies that have interests in nearly 2,000 courses worldwide.

For more information regarding the NGCOA MCO Leadership Retreat, contact Mike Tinkey at 800-933-4262.

© 2000, National Golf Course Owners Association