Global Edition

 

KPMG’s new report quantifies downturn in golf business

12.38am 9th March 2010 - Management Topics - This story was updated on Monday, June 27th, 2011

KPMG’s Golf Advisory Practice has published an important new report analyzing the effects of the economic downturn on the golf business in Europe, the Middle East and Africa (EMA).

The report measures the impact of the economic downturn on golf through the business performance of golf courses in 2009 and reveals that two-thirds of the golf courses surveyed in the EMA region said the financial crisis had impacted negatively on their operations, with nearly half of all courses reporting reduced revenues and profitability.

Golf courses forming part of a mixed-use residential community or a tourist resort were worst hit with 78% saying they had experienced a negative impact on operations.

More worryingly, 35% of golf courses said they were experiencing lower or stagnant revenues without being able to reduce costs, raising the prospect of unsustainable business operations based on current trends.

Half of the golf businesses surveyed – totaling more than 300 courses in 32 countries – said they had made redundancies or cut staff jobs.

The regions worst affected by the crisis, measured by revenue, were golf courses in Western Europe (-8%), Great Britain and Ireland (-6%) and South Africa (-5%), the average for the EMA region being -4%.

However, there were rays of hope with golf courses in some regions actually increasing their revenues, namely Eastern Europe (6%), the Middle East and North Africa (4%) and Central Europe (3%), although this growth may well have been even higher had it not been for the downturn.

Golf course managers are also relatively optimistic for 2010 with 54% predicting excellent or good performance in the coming year, although managers in Great Britain and Ireland are the most pessimistic with 49% expecting ‘medium performance’ and 11% foreseeing poor or very poor performance.

Andrea Sartori, head of KPMG’s Golf Advisory Practice in EMA, said: “While golf course operators, on average, are feeling more positive about their future prospects, two fundamental business factors suggest the way back to the fairway will not be straightforward.

“Firstly, 35% of the golf courses surveyed are facing the worrying combination of decreasing revenues and increasing costs. For some golf courses, the narrowing of profitability might come sooner than expected and it would not be a surprise if we saw some golf courses going out of business in 2010. The depressed transaction prices of golf courses are evidence to the fact that the industry is really struggling.”

“Secondly, nearly half of all the courses surveyed reported a drop in revenues, fuelled in part by one or more of the following: a fall in memberships, green fee revenue, as well as food and beverage spending. While this decline in revenue may not be significant when averaged out (-3% to -5% across the EMA region), it is still worrying that 13% of courses have reported a reduction of more than 20% in the number of rounds played.”

Andrea Sartori added: “Golf courses – particularly those linked to tourist resorts and the ones operating in mature markets like Great Britain and Ireland – will have to work very hard on their relationship marketing, pricing strategies and service levels to attract new customers or lure back the old ones.”

KPMG’s report, Golf and the Economic Downturn, is available to download, free of charge, from the new website: www.golfbusinesscommunity.com

For more information about the annual KPMG Golf Business Forum, which takes place this year at The Gloria Hotels & Resorts, Belek, Turkey, 12-14 May 2010, visit: www.golfbusinessforum.com

       

You can see the latest news letter here.

Follow us on Twitter and LinkedIn.            

Use the buttons above to control the search results you want.

Prefixing a search term with a hyphen will exclude results matching that term.
For example 'green -greenkeeper' will return results containing 'green' but not 'greenkeeper'.