Vital Signs, june 7, 2013

     HVS Golf has attempted to calculate the losses suffered by U.S. golf properties since the salad days of the mid 2000s. In the ensuing years, says the Boulder, Colorado-based consulting firm, our average course has lost 15 percent of its rounds and 10 percent of its ancillary revenues and seen its average greens fee drop by 20 percent. “The golf industry is in a painful period of distress,” notes a report by Darius Hatami. “Golf course values are down, lending is still difficult, and the ability of the industry to alter these constraints is going to be tested in the years to come.” That being said, HVS Golf has reason to believe better times are ahead. It promises to tell us why in the next installment of Hatami’s report, which will be published later this summer.

     The number of U.S. golfers continued to fall last year, although the pace of the decline eased. According to a brief provided by Pellucid Corporation, our business lost nearly 2 million golfers in 2011 and 400,000 more in 2012. The total number left standing: a little over 24 million. Pellucid’s report raises several red flags, the biggest one being this: The demographic group that saw the largest percentage decline was juniors. In other words, the desperately needed replacements for our aging golfers are slipping through our fingers.

     Passions aren’t easily quantified, but a new report by KPMG’s Golf Advisory Practice suggests that Scotland’s lust for golf may be unrivaled. Though Scotland is a small country -- it had a population of just 5.25 million in 2011, about the same as metropolitan Atlanta’s -- during that year it could count 240,000 people who belonged to golf clubs (almost 4.6 percent of the population) and 400,000 (about 7.5 percent) who played at least 12 rounds annually. This is an exceptionally high level of commitment. What’s more, in 2011 Scotland had a whopping 597 golf courses (one for every 9,800 people), which is more than can be found in the entire state of Georgia. These and many other facts and figures can be found in “The Value of Golf to Scotland’s Economy,” which assesses all the various sectors of the nation’s golf industry, including facility operations, tourism and real estate development. The bottom line: Directly and indirectly, golf contributes £1.17 billion (almost $1.82 billion) to the gross national product in “the home of golf.”

     If you feel as though our planet might be tilting on its axis just a bit, it’s probably because most of the world’s construction workers are headed to Dubai. By the end of the current decade, Dubai expects to have roughly 160,000 hotel rooms, double its current stock. The new rooms will be built to accommodate the 20 million tourists who are expected to visit the emirate annually by 2020. To attract those travelers, Dubai also plans to build theme parks, entertainment venues, and other attractions, including more golf courses.

     The National Golf Foundation has a new idea for growing the game, one that has a familiar ring to it. The trade group is encouraging our industry to tap “latent” demand -- that is, people who have some desire to play golf but haven’t yet acted on the impulse. There are something like 25 million Americans who are either “very” or “somewhat” interested in giving the game a try, the NGF has determined, a number large enough that even a 20 percent slice of it would have a salutary effect on our fiscal health. “They are fresh, optimistic prospects who, if welcomed to the game properly, can become committed golfers on some level,” the NGF believes. The trouble is, golf has never had a problem finding qualified prospects. Our problem is the “welcoming” part, especially as it applies to women and minorities. That’s the one we need to solve.

     The number of international tourists visiting New Zealand continues to increase, but over the last five years they’ve been spending less. So, to get the cash registers ringing, New Zealand’s tourism officials have set out to double the number of golfers that they currently attract. These days the nation draws about 50,000 golfers a year, most of them from Australia, the United States, and Asia. As is often noted, vacationing golfers typically spend twice the amount that other tourists do.

     The golf courses in California’s San Joaquin Valley are “headed for their third straight year of growth,” according to the Business Journal. This is good news, but it’s a small sample size. Membership sales at Copper River Country Club in Fresno are said to be up by roughly 15 percent, and sales of annual passes at the city of Dinuba’s golf course are said to be 7 percent ahead of projections. “The economy is getting better, and people are wanting to play a little golf and spend a little more for recreation,” a local general manager explained. So far this year, unfortunately, markets with chillier, wetter weather haven’t fared as well.

     Researchers in Scotland estimate that next month’s Open Championship at Muirfield will be worth £70 million ($109 million) in direct and indirect benefits to East Lothian and greater Edinburgh. The event is expected to attract an audience of 160,000, about the same number it got in 2002, when it was last played at Muirfield. By contrast, the U.S. Golf Association believes that this month’s U.S. Open at Merion Golf Club will attract 190,000 spectators and inject as much as $120 million into the Philadelphia area’s economy.