Using Technology to Manage Greens Fee Revenue

from Asian Golf Monthly Magazine

March 2010 issue

www.asiangolfmonthly.com

Revenue Management is a business tool that enables a golf facility to maximize its profitability by managing the price of its fixed and perishable tee time inventory.  It’s a business practice developed in the 1980s by the international airline industry in an effort to maintain profitability in the face of growing low-cost competition and raising operational costs. Later been adopted by the lodging and car rental industries, RM can be successfully applied through technology for managing and improving greens fee revenue.

In short, the use of RM in golf is the selling of the right tee times, to the right golfers, at the right prices, and at the right time.  It provides the ability to match tee times with the golfer’s ability or willingness to pay.  RM also provides the opportunity to mitigate the effects of bad pricing decisions or unexpected downturns in golf course utilization.

Integrating tee times to external systems can also significantly enhance revenues.  Sites such as travel websites (airlines, tourist boards), social networking (Twitter and Facebook), and sms/text messaging portals allow the course to cost effectively notify golfers of tee time availability. 

Most golf facilities will recognize that the demand for tee times vary during the course of a week.  During some periods, demand for tee times greatly exceeds the supply, while other times demand can be moderate or even excessively low.

Using proper data on course demand, golf management can set pricing strategies to manage demand at each level. In times when demand is strong, prices would be increased to bring demand more in-line with supply. Most commonly that would involve tee times on weekends and in the mornings.  In time-slots where demand is relatively low, management can set pricing a bit lower, to encourage golfers to utilize the course on weekdays and in afternoons. Using these two strategies will allow the facility to maintain the higher yield during peak periods, while increasing play during weaker demand periods.

Sample RM Pricing Model:

In this sample case, certain data will be scaled back to simply the presentation.  These however, are the assumptions to be used:

ž            Golfer Classifications

Member

Resort Guest

Local Guest

ž            Date Seasons

Peak Season 1 May – 30 September

Off Season  1 October – 30 April

ž            Time Periods

Weekend Mornings (Peak Season)

Weekend Afternoons (Peak Season)

Weekday Mornings (Peak Season)

Weekday Afternoons (Peak Season)

Weekend Mornings (Off Season)

Weekend Afternoons (Off Season)

Weekday Mornings (Off Season)

Weekday Afternoons (Off Season)

For many golf facilities, the pricing of greens fees for members is either at no cost, or fixed at a relatively low cost without limitations on when they can play.  In most cases, the application of Revenue Management will need to work around the current privileges provided to club members.  Their simple pricing table will commonly look like this:

Golfer Type:  Member
Date Periods	Time Periods	Pricing	Advanced Booking Period
No Restrictions	No Restrictions	No Cost	90 days advance booking

Other than Members, Resort Guests are generally allowed the largest advance booking period in which to reserve tee times.  This is because their golf normally coincides with corporate or personal travel requiring many months of advance planning.

Resort Guests are also the golfers most able or willing to pay higher greens fee rates for premium tee times.  For that reason, greens fees can be structured to charge higher rates during the facility’s peak season and peak time periods, such as weekend morning and holidays.

Generally speaking, the traveling golfer will likely plan their travel to a resort facility when weather and conditions are at their best.  Therefore, golf management can expect to charge the Resort Guest more on Weekend Mornings during Peak Season than at other playing times.

In the table that follows, a Resort Golfer will be expected to pay $180 for a Peak Season Weekend Morning, but only $65 for an Off Season Weekday Morning.   This may encourage some budget conscious travelers to modify their plans to travel during the Off-Season.  The facility’s profitability will increase as the pricing discrimination allows the course to remain at full capacity with higher prices during the Peak Season, while maintaining a sustainable rate and capacity during the Off Season.

Golfer Type:  Resort Guest
Date Periods	Time Periods	Pricing	Advanced Booking Period
Peak Season	Weekend Morning	$180	9 months
Peak Season	Weekend Afternoon	$150	9 months
Peak Season	Weekday Morning	$120	9 months
Peak Season	Weekday Afternoon	$90	9 months
Off Season	Weekend Morning	$110	9 months
Off Season	Weekend Afternoon	$75	9 months
Off Season	Weekday Morning	$65	9 months
Off Season	Weekday Afternoon	$50	9 months

A restriction usually placed on the Resort Guest is that they must have a verifiable hotel reservation at the facility’s lodge.  A cancellation at the lodge could result in a cancellation of the reserved tee time.

Yet another Golfer Classification is the Local Guest, a group that can be used to fill last-minute course vacancies.  They generally will not be willing to pay as much for greens fees, nor will they be providing the facility with hotel occupancy or the higher food and beverage sales associated with Resort Guests.  The Local Guest however, can be encouraged to pay a reduced greens fee (filling last minute vacancies) to enhance the course’s profitability.

In the table below, the Local Guest can reserve a tee time three weeks in advance for the same greens fee rate given to the Resort Guest.  For instance, both the Resort Guest and the Local Guest can pay $180 for a Weekend Morning during Peak Season.  The Resort Guest is given a nine-month advance booking period, while the Local Guest is given only a three-week advance booking period.  The difference is that the Resort Guest has also confirmed a room at the Lodge.  (The Local Guest can upgrade their classification to Resort Guest by reserving a room at the lodge).

In this sample, there is a price-break given to the Local Guest if they book their tee time less than two days in advance.  This discount is offered to fill any open slots on the facility’s short-term tee sheet.

To book and confirm a Weekend Morning tee time during Peak Season, the Local Guest has three options:

•  Book the full list price ($180) up to nine months in advance as a Resort Guest (with hotel room),
•  Book the full list price ($180) up to three weeks in advance (no need for lodging commitment),
•  Book the discounted rate ($120) up to two days in advance.  With this the Local Guest takes the chance that no time slots will remain open.

Golfer Type:  Local Guest
Date Periods	Time Periods	Pricing	Advanced Booking Period
Peak Season	Weekend Morning	$180	3 weeks
Peak Season	Weekend Morning	$120	2 days
Peak Season	Weekend Afternoon	$150	3 weeks
Peak Season	Weekend Afternoon	$95	2 days
Peak Season	Weekday Morning	$120	3 weeks
Peak Season	Weekday Morning	$75	2 days
Peak Season	Weekday Afternoon	$90	3 weeks
Peak Season	Weekday Afternoon	$70	2 days
Off Season	Weekend Morning	$110	3 weeks
Off Season	Weekend Morning	$70	2 days
Off Season	Weekend Afternoon	$75	3 weeks
Off Season	Weekend Afternoon	$65	2 days
Off Season	Weekday Morning	$65	3 weeks
Off Season	Weekday Morning	$50	2 days
Off Season	Weekday Afternoon	$50	3 weeks
Off Season	Weekday Afternoon	$40	2 days

Off Load Last Minute Tee Times.  Loyal local golfers provide the best opportunity for the golf course to sell tee times left open later in the day or for the coming day or two.  Filling the day’s remaining vacant tee times further allows the course to maximize the club to maximize revenues.   This can be achieved through an email blast or sms to registered golfers to notify them of a reduced greens fee for the last minute tee time.  Use of social networking sites such as Twitter or Facebook provide yet another outlet to notify golfers of the special pricing for last minute times.

Other Revenue Management options can also be considered when building the facility’s greens fee pricing structure.  For instance,

ž            Pricing discounts for groups of two, three or four players.  Using the example of a full rate at $180, the course may offer the second, third and fourth golfers rates of $170, $150, $120 if they make the booking together.  A single golfer would remain at $180, two golfers at $350, three golfers at $500 and four golfers at $620.  This would encourage a group of golfers to make a commitment all at one time.

ž            Cancellation fees can be another way to increase profitability while opening the tee time to a new reservation.  This could be structured to provide multiple levels of cancellation fees.  Once example would be:

ž           30% cancellation fee if within four weeks of the tee time,

ž           50% cancellation fee if within two weeks,

ž           100% cancellation fee if not cancelled more than two weeks out.

The purpose of the cancellation fee is to protect the facility’s profitability from a golfer’s changing schedule or the whim’s of their changing desires.   The facility has provided them with the convenience of booking and confirming tee times in advance, and as the tee time approaches it becomes more difficult for the course to fill the time slot with a higher paying client.

The preceding examples are a simplified version of what a golf club goes though to develop a full working RM model.  There will likely be more than three golfer classifications and more than one discount rate for several of those classifications.

Revenue Management does increase the level of complexity in creating greens fee rates, and requires significant research and planning prior to implementation.  Industry studies however, indicate that well-planned RM models provide at least a 2% increase in corporate revenue.

Technology in Multinational Spa Management. Discussion with Jurgen Meyer

from Gaming & Leisure Magazine

Spring 2011 

G&L website:   www.gamingandleisuremagazine.com

Full issue at:  www.gamingandleisuremagazine.com/spring2011/Spring2011_Complete-C.pdf

I recently had an opportunity to catch up with Jurgen Meyer, a hospitality and leisure IT executive with significant global experience.  With his recent postings with Bangkok-based Six Senses Spas and Minor International, we were given an opportunity to explore technology issues facing multi-national spa management groups.

A few of the quick notes show that a) the number of spa and wellness sites continues to grow in most regions around the world, b) global economic realities are pressing these sites to continue to search for ways to reduce up-front capital expenditures and daily operating costs, and c) investment in technology remains important, but also out-of reach for many.

First, a bit about Jurgen Meyer:  After graduating from a Swiss hotel management school, Jurgen began his hospitality career in hotel operations and accounting in several hotels in Luxembourg and Paris. As computer systems became an evermore presence in the industry, Jurgen’s focus shifted to hospitality technology while at the Sheraton Paris.  His IT role with IHG progressed on as travelling installer worldwide and regional CIO.

Recruited by Mandarin Oriental Hotel Group, Jurgen became their first CIO for over 13 years. This was followed by a role as Senior Associate at Pertlink Limited where he was involved in some spectacular hotel IT projects. Jurgen discovered the Spa world in 2008 with Six Senses and currently with Minor Group, looking after IT in Anantara Hotels & Resorts, Anantara Spa and Mandara Spa.

[BH-G&L]  In your role as IT Director for a multi-national Spa Management firm, how valuable is data collection from remote sites to a central database?

[JM]  Spa businesses have evolved from their localized and independent focus into an international, tightly knit network of wellness providers worldwide. This evolution of a localized membership into a highly mobile, international clientele has required all services and administration to be centralized and available 24/7.

Spa brands have grown exponentially, allowing jet setting guests to find their preferred spa brands around the world. Allowing the multi-national to keep track of product in all locations worldwide allows the operator to better forecast procurement, negotiate better pricing as well as shipping costs. Seeing winners and losers everyday allows us to make quicker and better business decisions.

[BH-G&L]   How well do current systems address the data collection requirements of a multi-national?

[JM]  There are good systems out there which are installed in each spa and do a great job running the spa operation, inventory and membership programs. Many of these providers are only starting to address multi-national needs or even a global membership system.

[BH-G&L]   I have noticed the same.   There are various systems providing for the needs of a single site, and do so very well.   However, when a Director of Spas is looking to review spa data across all spas, there is a bit of work yet to be done.   Additionally, as these Corporate Directors travel around the world, they have been searching for better access to all their data through web-applications.

[BH-G&L]   Are there issues in converting currencies into comparative reports for corporate review?

[JM] Currency conversion issues have become a challenge well beyond spa businesses. Whilst a system can only report what it carries, the interpretation varies from company to company, from owned spas to managed spas and so on. 

[BH-G&L]   In your experience, have cloud computing and SaaS models  been employed by multi-national Spa groups? 

[JM] I wished there were many more cloud computing and SaaS options out there. This is the most economic and user friendly solution for all spa businesses. All spas need a system to operate, take bookings, sell products, keep inventory and pay commissions to practitioners.

A single local IT set up for a spa can be a capital investment ranging from 40-60k USD, which is huge when the spa has only 6 treatment rooms. This cost typically does not provide for any multinational needs or global database. Reducing this cost with a cloud based SaaS is the solution for this fast growing business.

At Six Senses I had introduced the SaaS solution provided by SpaBooker.   The system passed all the stringent Six Senses quality and operational requirements. They have been around for a very long time as the underlying SpaFinder engine and is available as SaaS.  It features online booking (also as mobile app), point of sales and inventory, full CRM, membership service, PMS interfaces and more.

[BH-G&L]   Aside from the cost of purchasing a system, spas have also needed to spend considerable time building their database.  One method some multi-nationals use to reduce the cost of implementation is to use a “database shell” that they can drop in on new spas.  Jurgen, what is your experience in using a "database shell", allowing the group to drop a database template into new spas?

[JM] The shell approach has worked well as most products and treatments are the same within the brand. The training time and installation time is reduced while we can pull in opening resources from sister spas  

[BH-G&L]   Similar to using a database shell to reduce the start-up cost across a group’s many spas, another method to reduce costs is to use internal staff to train staff at each new spa.   Jurgen, has "train-the-trainer" been an effective practice?

[JM]  Train the trainer is essential in the spa business. This "skin contact" operation very, very much relies on its practitioners and their skills which require very personal training. 

[BH-G&L]  An added benefit to having well trained staff within their organization, a multi-national can potentially reduce the cost of annual maintenance by covering the first line of support internally.  Rather than pay standard single-site support fees at a dozen or two sites, a group with well trained technicians may be able to pay reduced support fees .. economies of scale.

Multinationals have needs in common with the single site … reducing costs while implementing the best management system for their site(s).  However, they do also have a set of unique needs involving the collection of data, reporting standards and giving access to very mobile directors.

I’d like to thank Jurgen for his time and contributions to this review.

Jim & Pat Healey's CanAmAthon Golf Odyssey

As published in OB Golf & Lifestyle Magazine, Indonesia

April - May 2011 issue

www.obgolfandlifestyle.com

Several years ago, avid American golfers, Jim & Pat Healey set-out on a unique 61-day golfing odyssey crossing into all 50 US states, Washington DC and 10 Canadian provinces.  The endeavor had the husband and wife team playing a round of golf every day, followed by a flight, drive or boat ride to the next state or province on their pre-set agenda.

Very few people have accomplished this arduous golfing feat.  What makes this accomplishment more astonishing is that the retired couple successfully completed the 61-day journey while in their seventies (at the time Jim was 74 years old, his wife Pat was 72).

Jim & Pat titled their journey “CanAmAthon” in recognition of their golfing “marathon” across Canada and America.    They provide the following summary of CanAmAthon, from their home in Hudsonville Michigan, 5KM from Sunnybrook Country Club, their home golf club since 1964.

A daily journal can be found on the web at: www.canamathon.com

CanAmAthon

in their own words, by

Jim and Pat Healey

Introduction

Between the two of us we have been playing golf for 115 years.  Jim started playing at the age of 13, and Pat began the year we were married in 1956 (50 years ago).  Jim has played quite steadily through the years, at least once a week, but usually 2 or 3 times weekly (during Michigan’s golfing season - April to September).  Pat played occasionally through the years; however she spent more time at the swimming pool with our four children than she did on the golf course.  After the children were grown, Pat began to get more serious about the game of golf.

Jim practiced hard on his game through the years, and reached his best handicap of 8 when he was about 35 years old.  (An 8 handicap means that he scored in the high seventies or low eighties most of the time.)  For the majority of his golfing life, his handicap hovered between 10 and 12.  He has had one or two scores in the high 60s on easy courses (5500 yards), but his best score on a course of 6000 yards or greater was 74.  He has had several scores of 74 on Sunnybrook Country Club, which is our home course since 1964.

Pat’s best rounds have been in the mid-90s and her handicap averaged around 25 in her prime.  She now carries a handicap in the low to mid-thirties and fights to break 110 at Sunnybrook Country Club.

We have traveled considerably in our 55 years together and have played a lot of golf around the world.  Prior to CanAmAthon, we had played in 28 states, 5 Canadian provinces, Puerto Rico, the Bahamas, St. Croix, Bermuda, Ireland, Scotland, England and Portugal. 

One sleepless night in late 2004, Jim came up with the idea to play in every state.  He approached Pat with his plan at breakfast the next morning.  After some initial reservations, we both concurred that we might be able to make the attempt.  In the next few days we refined our plan.  We originally thought about playing in all 50 states in 50 days.  Since Jim’s dad was Canadian, we added 10 Canadian provinces for a total of 60 days. We decided to include Washington DC  (a governmental region within mainland USA), making it a 61-day journey.

Early in 2005 we started the preliminary planning and had the trip quite well organized in early August.  We began our CanAmAthon on August 20, 2005 at beautiful Anchorage Golf Course in Anchorage, Alaska, and completed the journey on October 19, 2005 at beautiful Pearl Country Club in Honolulu, Hawaii.

We knew that it would be impossible to do something like this without a lot of planning. We actually worked on it for several months before we mentioned anything about it.  We used an atlas of North America and began mapping our route.

As we were organizing the route and thinking more about this odyssey, it entered our mind that it could be quite expensive. Motels, food, golf fees and gasoline could add up to at least $14,000, which would be prohibitive. We were so carried away with the excitement of the trip that we didn’t take into account the hard financial realities.  Once we had our route mapped, we had to find a way to cut expenses. We knew that our air travel would be free since our son Ken is a pilot with Delta Airlines, providing us free air travel. We knew that we would drive about 14,000 miles, costing about $2000 worth of gasoline, and there was no way to cut gasoline costs.

We estimated the golf fees would run US$5000 to US$6000. What could we do to minimize the cost? After locating our prospective courses, we wrote letters to each of them telling about our intended CanAmAthon.  We asked if they would give us a reduced rate on either the green fee or cart fee, or both.  We included stamped post cards for them to fill out and return to us.  We were pleasantly surprised when most of the post cards were sent back to us, and that so many of the courses responded favorably to our request. Some of those who didn’t respond favorably had a change of heart when we finally arrived at the golf course on the appointed day.  Many then gave us reduced rates or even at no-cost.

Lodging costs for 63 nights of motels figured to be about $5000. What could we do in this area? We wrote to some of Pat's cousins in eastern United States, some of Jim’s Canadian cousins and several long time friends, asking for one or more nights of free lodging. We were quite successful in the fact that that we were invited into peoples homes for 24 nights. This also meant that we spent very little on food during those days. Not only were we offered a bed, but we were quite well fed.

There were 11 different relatives and friends who were kind enough to welcome us into their homes for one, two and even four nights. You might be wondering about the 4 nights at one place. When we stayed in the US state Rhode Island, we were very close to golf courses in Massachusetts, Connecticut, New Hampshire, and Rhode Island.  When we stayed in Maryland, we were very close to golf courses in Deleware, Washington DC, Virginia and Maryland. We were able to play 8 courses from only 2 locations. Similar circumstances prevailed as we traveled along the Canadian border from Minnesota to British Columbia.

In all, we stayed 24 nights with friends and relatives and 2 nights at our home when we played our Michigan round.  We had 3 nights when we didn’t have lodging----we flew the all night “red eye” from Alaska to Salt Lake City, Utah at the beginning of our trip, and we flew all night at the end of our trip from Honolulu to Cincinnati. We also took the all night ferry from Newfoundland to Nova Scotia. The remainder of the 34 nights we stayed in motels.

Prior to leaving on the trip, we worked with Mick Force, a software programmer with Handicomp (www.handicomp.com) to establish a website which would completely record our trip on a daily basis.  We had two laptop computers with us.  Every night Jim would assemble the pictures on one computer and Pat would type the daily journal on the other.  We would then assemble the pictures and script and email the complete journal to Mick, and he would post it on the CanAmAthon website the next morning. 

Sometimes we would fall a day or two behind in our postings.  Usually this was because we were visiting friends and relatives, and it was difficult to break away from the conversation to compose the journal.  Several people who were following our journey via the website emailed us with their concerns if we missed a day or two.  Some said they had "CanAmAthon withdrawal symptoms" as well as being concerned about our welfare.  For the most part we kept up to date.  On some days if we had a long drive after golf, we would compose the journal as we traveled.  Pat or Jim would drive and the other would work the laptop computer.  During the whole 9-weeks we received about 400 emails and we had over 20,000 website hits.  We really appreciated the emails from friends and strangers alike.  They were encouraging and helped to keep our spirits up.

MEDIA: As we were leaving the motel in Salt Lake City for our third round of golf at WingPointe Golf Course, our mobile phone rang.  It was Tom Rademacher, a writer from the Grand Rapids Press (Michigan), wanting to do an interview about our venture.  He had spoken with family members in Grand Rapids and wanted to get more information directly from us. The telephone interview resulted in an article that appeared in the next day’s news.

Tom Rademacher put his article on the Associated Press wire which sparked an international interest in our golf odyssey. That was one of the surprises of the trip, that there was so much interest from various media.

During the trip we were interviewed by 14 newspapers, on 8 radio talk shows, and met at 5 different golf courses by television cameras and reporters.  Our story appeared in countless newspapers including USA Today, The Los Angeles Times, The Chicago Tribune and others. We were featured on several international cable channels including the Golf Channel and the Weather Channel.  We were also featured on several national radio talk shows.

One of the first questions the reporters asked us was WHY?  Well, we suppose it comes from the same mentality that drives the mountain climber, long distance swimmer, or other people who engage in extreme activities.  These people are attempting extreme feats to prove both their physical and mental strengths.  We both love to travel and love to play golf, so we thought we’d try to test our endurance and see if we could actually do it.

We might add that much of the interest came early in the trip, and it had us worried that it would be an embarrassment to all concerned if we should be unable to complete the trip for any one of several reasons such as illness, car problems, or bad weather.  Also, many of the golf courses had let us know that they had some welcoming ceremonies awaiting our arrival, and we certainly didn’t want to disappoint them.  Perhaps the fear of failure was one of the driving forces that kept us going.   It has certainly become a story that we’ve been asked to tell many times over.