Paid golf rounds on the Grand Strand nearly held steady for the third consecutive year in 2012.
Golf course operators would have welcomed the stabilization three years ago, when the market was coming off several years of significant decreases.
They’ll take it, but they’re hoping 2013 produces the first increase in rounds played in a year since 2004, which is the last year more than 4 million total rounds were played on the Strand, according to statistics compiled by marketing cooperative Myrtle Beach Golf Holiday.
Paid rounds were down 0.73 percent in 2012, based on Golf Holiday’s collection of a $1.50 per-round transaction fee on package and walk-on rounds.
Those rounds do not include member, replay, charity tournament, complimentary or promotional rounds. Promotions include specials granting a free round for every four or five paid rounds, for example.
2012 marks the third consecutive year rounds dropped less than 2 percent, and second consecutive year they dropped less than 1 percent.
“It’s been flat for the past couple years, which is flat against the years in which we were in the heart of the recession,” Golf Holiday president Bill Golden said. “So naturally those numbers need to begin to increase.
“The economic slump hasn’t changed, so we continue to be in an economic time where discretionary expenses are at a minimum, and a golf trip is about as discretionary an expense as you can have on a personal budget. So that consumer confidence issue still haunts us. … But we need to begin to get back to years pre-recession to begin to feel better about the demand.”
Many courses on the Strand struggle to turn a profit despite the rounds stabilization. Green fees are lower than they were in 2008 and ’09, when they spiked following the closing of 20 courses between 2005-07, so golf course profits on average have diminished over the past few years.
That has increasingly led to independently-operated courses joining larger management companies, and also likely contributed to the dissolution of the management company Signature Golf Group in 2012. The proliferation of promotions, discount cards and membership programs, along with aggressive pricing by Century Golf Partners, which manages five Strand courses including three at Legends Resort, has contributed to the rate decrease.
National Golf Management president Bob Mauragas, whose company operates 22 Strand courses, and Tommy Smothers, general manager of the five-course Classic Golf Group, both say their rounds were up at least slightly but revenues were not.
“Revenue was still trailing,” Mauragas said. “That’s really the consternation right now for operators. We’re seemingly doing better [with rounds], but the revenue aspect is trailing. I think it’s going to take some time.
“I think it’s no secret we continue to be an affordable destination, and maybe too affordable. … We’re all competing for the same space. There aren’t enough new golfers coming into the marketplace.”
Smothers, who said his properties’ revenue was flat in 2012 despite an 8 percent increase in play – including a 12 percent bump by members – will take the additional rounds with the hope the economy soon improves.
“It’s progress by getting the consumer back on the golf course,” Smothers said. “We need them to keep playing golf. If we can keep that going when the economy turns around we can increase rates and not have to offer all the specials to get them out.”
The promotions and specials in the market aren’t just a luxury for some courses to increase play, they are a means of survival for some. “Obviously it’s difficult to survive in this market,” Smothers said. “You have to be creative. I think most courses are doing what they can to stay afloat.”
The market benefitted from sensational weather early in 2012, as paid rounds increased 13.5 percent in January, 4.7 percent in February and 5.9 percent in March. “We don’t generally count on a lot of rounds in the first couple months of the year and they were up substantially and skewed numbers for the year a little bit,” Mauragas said.
The Myrtle Beach golf market generates much of its revenue in the spring and several weeks in the fall when green fees are at their peak. Spring rounds in the combined months of March, April and May fell 2.4 percent for the first drop in the spring since 2009. Golf Holiday believed in June that there was a slight spring increase, but Golden said the numbers decreased once the accounting was completed.
The market took a hit with the abrupt closing and bankruptcy filing by Myrtle Beach-based Direct Air in mid-March. The airline flew passengers from several golf markets, and booked passengers had to make alternate travel arrangements to honor planned golf vacations.
According to Myrtle Beach International Airport figures, the number of passengers that flew to Myrtle Beach on Direct Air in March fell to 3,150 in 2012 compared to 5,998 in March 2011. Direct Air accounted for 16,877 deplanements in Myrtle Beach in the months of April and May in 2011, as well as 10,327 deplanements in October 2011, which is the peak of the fall golf season. A good percentage of those were likely golfers.
“That was a hit that was hard to overcome,” Golden said. “Clearly there was an effect. … A lot of that was completely lost business, particularly in markets like Niagara Falls (N.Y.), Plattsburg (N.Y.) and Latrobe (Pa.), where [air] service wasn’t picked up by anybody. In some of those Direct Air markets, there was no other option.”
Total deplanements at Myrtle Beach International Airport in March-May 2012 dropped nearly 40,000 and 16.4 percent compared to those three months in 2011, and both September and October deplanements dropped more than 10,000 and 13.5 percent in each month.
The addition of several nonstop flights by Spirit Airlines to Myrtle Beach originating from many of the same markets lost by the demise of Direct Air has Golden and others in the golf market optimistic about an increase in rounds in 2013. The airline is also starting seasonal service earlier in key golf markets.
Nonstop Spirit service from Chicago, Detroit, Latrobe/Pittsburgh and Niagara Falls/Toronto begins by Feb. 15, flights from Charleston, W.Va., begin March 2, and flights from Philadelphia and Baltimore/Washington begin April 25, which is too late for much of the golf season, however.
Golden said Spirit’s seat capacity into Myrtle Beach in 2013 will increase approximately 24 percent. “That increase alone will help us to overcome the loss of Direct Air and the overall loss of deplanements we saw this year,” Golden said.
Package rounds, which include at least hotel/villa accommodations bundled with the golf rounds, and walk-on rounds are nearly equally split according to the collection of the transaction fee.
“The package still works for certain groups, like larger groups and groups that are coming from farther distances that are going to be booking further in advance,” Golden said. “That’s a much better way to organize and purchase the golf product. The positive part of that is no matter what you’re looking for, we have the ability for you to purchase what you need in a variety of ways and through a variety of channels.”
The margin of error in the accounting of transaction fee-eligible rounds can be fairly significant because courses are relied upon to self-report and pay the fee for at least a portion of their walk-on rounds, particularly those that are booked on short notice and aren’t registered in the market-wide Grand Strand Tee Time Network.
But Golden believes courses have generally been honest since there hasn’t been much fluctuation in the reporting of walk-on rounds since the transaction fee was implemented in 2007.
“Walk-on rounds have been fairly consistent year in and year out,” Golden said, “and if [non-payment] was happening you’d think you’d be able to see it over a period of time.”
According to Golf Datatech, which has tracked rounds played across the nation since 1999, rounds increased 6.1 percent nationally in 2012 through November. Golf Datatech has rounds in South Carolina decreasing more than 2 percent in 2012 through November.
In the last 10 years, rounds played nationally have dipped approximately 11 percent.
“We are still in a situation with the economy that I don’t think is going to change much anytime soon,” Golden said, “but I feel we are doing things now to prepare ourselves so when the economy does improve we’re positioned to take advantage of it.”