The state of the golf industry in the Myrtle Beach area: Consolidating

The Myrtle Beach golf industry was built on cooperation, evidenced by the pooling of money to fund marketing cooperative Myrtle Beach Golf Holiday to promote the market in its entirety for the past four-plus decades, and the combined efforts necessary in golf packages.

Along with that, however, there has always been intense competition for play inside the market, each course attempting to outdo the other for rounds and revenue.

The competition within the market has been shifting in recent years, and it has evolved into a group effort in itself.

The lagging economy, coupled with the prospect of being isolated without inclusion in golf packages or group marketing campaigns, have been forcing courses to enter into management and/or marketing agreements in increasing numbers to help them survive.

“An independent in today’s market is just about dead in the water,” said Heron Point Golf Club managing partner Roy Clyburn, whose course joined what is now East Coast Golf Management this summer. “A lot haven’t survived and won’t. You have to have multiple courses and you have to have year-round membership. It takes members to give you the basis for your cash flow.

“At this point the golf business is more challenging because of market deterioration coupled with the economy.”

Even the Strand’s two largest course ownership/management companies – Myrtle Beach National and Burroughs & Chapin Golf – are in the process of merging to create a 24-course goliath that will account for more than a third of the courses in Horry and Georgetown counties and stretch into Brunswick County, N.C. The intent to merge was first announced in early August, and the joining of forces remains an ongoing process.

“That’s still a work in progress,” said B&C executive vice president of championship golf Bob Swezey. “It’ll be [complete] early in 2012. Things are progressing.”

Choosing an allegiance

Myrtle Beach National, which owns 10 of the 14 courses it manages, and B&C, which owns five of the 10 courses it manages, are the biggest of the multitude of course management companies on the Strand, and have been growing.

MBN has added five courses in the past three years, and B&C has added two in the past four years after first expanding with three management contracts in 2001.

They are joined in Strand course management by the five-course Century Golf Partners, four-course Classic Golf Group, four-course Glens Group, and five-course East Coast Golf Management, which took over the management contracts of the disbanded Signature Golf Group in November.

There are also several multiple-course facilities including the four-course Barefoot Resort, four-course Ocean Ridge Plantation and three-course Sea Trail Resort -- Sea Trail recently filed for Chapter 11 bankruptcy protection -- and marketing cooperatives such as the 17-course Brunswick Isles Golf Trail.

Nearly all of the few stand-alone courses remaining in the market that haven’t joined management companies have joined forces with them through marketing agreements. For instance, Wedgefield Country Club and Diamondback at Woodland Valley are marketed by Century Golf Partners, and five courses have marketing agreements with East Coast.

It’s difficult to battle for rounds – particularly package rounds that bundle lodging with golf – without surrendering your independence these days.

“It’s hard to be a stand-alone golf course,” Swezey said. “It’s why you want to go into business, but … by teaming up with other facilities it enables you to hopefully garner a greater percent of the market share.

“When you get groups together there are cost savings, saving in marketing costs, cross training between team members, membership and loyalty programs. There are a lot of advantages to team up with others in your market. I think you’ll see efforts by others to create alliances.”

The consolidation has trickled down to the private sector as well. The 12-year-old Reserve Club in Pawleys Island spent its first full year in 2011 as a member of the McConnell Group consortium of private courses throughout the Carolinas, which is up to eight courses and seemingly growing.

“I don’t think it’s just here in Myrtle Beach,” Swezey said. “I think it’s happening all across the country. It’s occurring because there’s strength in numbers.”

The state of packages

Golf Holiday figures based on the collection of a per-round transaction fee show the percentage of package rounds compared to walk-in rounds hasn’t changed much in the past decade, holding steady near 50 percent.

But the destination of those package rounds has apparently shifted.

It appears the more upscale courses, and the larger management groups, are getting the bulk of the coveted rounds booked through hotels and package providers.

“I think you have a situation where some courses are getting as much or more package play than they used to, and you have others who are almost living off local play,” said Rich Jacobs, owner of the Myrtle Beach Golf Desk package business, which opened in 1991. “Most of the locals will play lower priced courses. I think there are courses that are a lot more local and [employ short term booking specials] now.”

Myrtle Beach National, for instance, is aided by having its own package business and common owners with hotels that participate in golf packages.

“Package play has really decreased [for some courses] in the past few years, and one of the reasons is you have companies like Myrtle Beach National, which is a fine group, but they have to feed their own courses,” Clyburn said.

Classic Golf Group general manager Tommy Smothers said he’s seen the percentage of package rounds on his four courses noticeably decrease in recent years.

“Package business used to be close to 30 percent of our business. Now it’s down to about 21 percent of our business,” Smothers said. “It’s certainly concerning, but I think the golf courses have learned to adapt.”

Walk-in rounds rule the non-member business for many courses, but they’re often coming at rates below even package rounds rather than traditionally higher walk-in rates. Discount cards have joined longstanding discounted local rates to overrun the market, including the Myrtle Beach Golf Passport offered by the Myrtle Beach Area Golf Course Owners Association, Grand Strand Senior Center cards, Grand Strand Golf Association cards, and The Golf Card from the American Cancer Society.

“We’ve got discount cards everywhere,” Smothers said. “Whether they’re benefiting or hindering us as far as the revenue stream goes that will remain to be seen. But we’re adapting.”

So as paid rounds have stabilized, with decreases of less than 2 percent in each of the past two years following significant decreases for several years, according to Golf Holiday statistics, revenue is well below what it was per round a few years ago, when green fees rose following the closing of 20 courses from 2005-07.

“Certainly we’d always like to charge more based on the product,” Swezey said, “but based on the climate, what your competition is doing and what you think you can garner, it’s all about getting rounds on the golf course. It has been harder to increase revenue. I think everybody is probably getting less per round.”

Century Golf Partners has been at the forefront of the discounting, and it doesn’t rely on package play. The company’s full tee sheets at its seven affiliated courses are built predominantly on local play, with inexpensive memberships and local specials including 18 holes, a cart, breakfast, lunch and two beverages for as little as $29. Several competitors have enacted similar promotions.

Technology and industry and market trends illuminate a possible diminishing future for golf packages.

Though packages will always be beneficial for large visiting golf groups, the availability of tee times, accommodations and prices on the Internet has made booking easier for individuals and small groups.

The Strand’s strong history of repeat business works against it retaining a high percentage of package play, as well.

“There are more residents living here, and some are previous package golfers who have moved here,” said Golf Holiday president Bill Golden. “Or [visitors] have access to a house or condo or some accommodation. The Internet has had some impact on that as well … I can go online and book it myself, whereas years ago you had to do everything over the phone and that channel didn’t exist.”

Strand courses are having to adjust to an altered existence.