_June/cornerstonesofsuccess.jpg "Cornerstones of Success")
By Steve Donahue
Scott Hoyt leverages the strength of his course, its location and a unique business model to his advantage at Pasatiempo
It’s no secret that many factors—tangible and intangible—must coalesce to ensure a thriving, well-oiled golf operation. However, regardless of how flourishing or profitable, most truly successful golf facilities feature an outstanding course as the cornerstone of their business.
Take, for instance, Pasatiempo Golf Club in Santa Cruz, California. General manager D. Scott Hoyt and his staff aren’t bashful about creating major initiatives that improve and strengthen the high-end operation’s bottom line. Yet, Hoyt readily admits Pasatiempo’s success and reputation wouldn’t be possible without its highly acclaimed, Alister MacKenzie-designed course that overlooks Monterey Bay.
“It all has to start with our golf course and location,” Hoyt says. “We combine these attributes with the most unique business model I have ever heard of.”
The semi-private daily-fee’s business model allows anyone to become a Pasatiempo member by purchasing a share of stock in the corporation, but the course remains open to public golfers willing to pay up to $250 to play. It costs members $100,000 for one share of stock in the corporation, plus a new-member fee of $8,500, which goes directly to the corporation. There are currently 415 shareholders who have the option, on an annual basis, if they want to join the golf club. On average, 290 take advantage of the opportunity.
“The business model gives us the flexibility to keep dues low and help supplement all our revenue with outside sources,” Hoyt says. Aside from the base public green fee, Pasatiempo offers just one discounted fee seven days a week.
“Travelers from all over the world come to play Pasatiempo,” Hoyt adds. “Where the vast majority of individuals will never be able to play Cypress Point and Augusta National—two [ultra-private] MacKenzie courses—they can pay a green fee and tee it up here.”
Half of Pasatiempo’s approximately 40,000 annual rounds come from non-members, accounting for 65 percent of the club’s yearly golf revenue. This level of cash flow enables Hoyt to eschew most outings, promotional specials or programs, league play and twilight fees.
“We don’t hold many ‘outside’ events,” Hoyt says. “We’re busy enough with members and the general public. In fact, we would actually like to reduce rounds.”
However, Pasatiempo does do a solid off-course events business. The club hosts approximately 40 weddings, 20 business meetings and 50 special events annually, all of which adds about $1.2 million to the coffers, or roughly 17 percent of the club’s annual revenue. “We also have two restaurants [the Hollins House and MacKenzie Bar & Grill],” adds Hoyt, “so it allows maximum flexibility to utilize our spaces and service all the customers.”
Pasatiempo’s recent course improvement initiatives have also bolstered the bottom line. In 2010, the club and architect Tom Doak finished replacing 31 acres of irrigated turf with native grasses, even briefly using goats for controlled weed and overgrowth control.
“We have taken one-third of our course off irrigation,” says Hoyt, “which equates to approximately $150,000 per year just in direct water-cost savings. The turfgrass reduction has also saved us almost $225,000 in labor and expenses, and about 15 million gallons of water annually.” The club also recently upgraded to a computer-operated irrigation system with 2,000-plus individually controlled sprinkler heads.
During his three-year tenure as Pasatiempo’s general manager, Hoyt has had countless discussions to bring effluent water to the club from the Scotts Valley Water District, whose pipe runs past the course and carries processed wastewater downhill to the bay. However, Pasatiempo is the City of Santa Cruz’s customer, and thus considered by SVWD—whose treatment plant overlooks the course—to be out of its jurisdiction.
“Being considered an ‘out-of-district customer’ is making the process much more difficult and political,” Hoyt says. “But I still believe it will happen in the next year, as we are piped for it from the local water district. Right now, our only source of irrigation water is potable water from the City of Santa Cruz.”
Pasatiempo’s water situation isn’t where Hoyt wants it to be, but its revenue stream continues to flow freely.
Steve Donahue is a Connecticut-based freelance writer.