Global Edition

Postcards from America

1.36am 20th December 2012 - Management Topics - This story was updated on Thursday, December 20th, 2012

Henry DeLozier

Many of golf’s hard-earned lessons of the last decade can be traced to developers and builders’ lack of understanding of their customers and markets. Their uninformed decision making led to hundreds of failed projects that have littered the golf landscape, according to Henry DeLozier, a principal of Global Golf Advisors.

“In the ‘90s and early 2000s, golf communities and golf courses were planned and loans were approved without a true sense of customer demand and market research. So we ended up with far too many courses that were built on shaky financial footing,” DeLozier told attendees of the Asia Pacific Golf Summit last week.

The good news, according to DeLozier, is that “we’ve learned some valuable lessons that we can now pass along in the hopes they aren’t repeated.”

In a presentation titled “Postcards from America,” DeLozier cited a number of lessons that foreign developers and builders could take from the missteps of their peers in the U.S. Among them were the following:

  • Refundable memberships were and remain a flawed concept.
  • Bundled communities (where the golf club membership is included in the cost of the property) fared much better than those where residents had the option of buying club memberships.
  • Phased development – building only what membership or the market can sustain – kept projects from taking on too much debt and allowed developers to adjust to market conditions.
  • Too much debt doomed numerous projects.

The common mistake that most failed projects shared was too little research.

“Too many developers did not put enough strategic thinking into their projects before they broke ground,” DeLozier said. “They didn’t research their markets thoroughly. They didn’t know their potential customers and members. They were seduced by the belief that, ‘If I build it, they will come.’”

DeLozier also noted that a lack of research led builders to incorporate “too much lifestyle” – swimming, tennis, croquet, bocce ball, etc. – when there wasn’t a proven market or credible research to support the investments. In addition, DeLozier said, many developers “fell in love with their location” or over-committed to their own locales.”

“They didn’t do the proper due diligence to determine that the market was broad enough and deep enough to sustain the project,” DeLozier said. “They didn’t anticipate the ebb and flow of economic conditions and that new competition would emerge. They didn’t realize that their execution would be less than perfect.”

To avoid repeating history, DeLozier encouraged developers and builders to start with a strategic vision, a thorough understanding of their markets and a careful alignment of research, strategy, execution and pricing. “Strategy informs disciplined execution. Without it, risk is inevitable and accelerated,” he said.

Global Golf Advisors



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