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By David Gould
Golf Course owners are working to reclaim tee times from third-party sellers
In 2001, the GolfNow tee-sheet system arrived online, just as golf’s decade-long bubble began leaking air. Rounds played in the United States ended their steady rise that year and started a long decline. In 2003, the country’s golfer population topped out at 30.6 million and has tracked downward since. The 2001 tally of new golfers came in lower than in the peak year of 2000—a pinnacle U.S. golf has never again reached.
Online tee-time platforms engaging in third-party selling have endured harsh criticism, even as they’ve grown their base of partner courses. The environment in which GolfNow, TeeOff, GolfBook (formerly Golf Pipeline) and others have operated has been consistently demoralizing—a post-Tiger exodus of all those fad-chasing golfers along with an oversupply of holes fueled by real estate-development courses. How relations between course owners and the digital tee-sheet companies may have differed had the parties begun collaborating amid an expanding market is a matter for speculation.
Veteran club manager Cathy Harbin (she has also served as executive director of Golf 20/20) watched third-party aggregators enter an arid marketing desert for golf and build a fertile oasis there.
“GolfNow came to course managers like me offering advanced technology we wouldn’t have to write a check for,” recalls Harbin, who managed the World Golf Village courses outside Jacksonville during that era. “They were able to provide a marketing effort we didn’t have time for and probably lacked the skill set for.” Harbin, who just bought a course of her own in Paris, Texas, will use the services of a digital solutions company to manage her tee sheet—but she will pay for the privilege.
“I’m setting it up as a monthly fee,” Harbin says. “It’s the first time in all these years that I won’t be doing trade.” She believes third-party redistribution filled a vacuum that course owners didn’t realize was there. “Owners and operators saw it as a tool for selling remnant times, and maybe that was the case at first,” she surmises. “Third-party selling went beyond what we expected. We kind of gave away the steering wheel and at some point down the road we wanted it back.”
Penetration of online green-fee selling, whether by the facility itself or an outside entity, is still modest—perhaps one in five reservations are web-enabled. That said, the image of a customer calling one golf shop at a time to speak live with a staff member about making a reservation seems antiquated.
“Online booking is part of the customer experience now,” says Patrick Renner, operations manager at Wilson Golf Management, a management group with facilities in Colorado and the Upper Midwest. “You can choose to outsource it, and by doing that expose your product to many more potential customers, but there are trade-offs for that, including having your own brand overshadowed by a third-party’s brand.”
As the lodging industry learned in the late 1990s with the arrival of Travelocity and its competitors, online booking engines are disruptive to a market. Industry expert Richard Gale believes “commoditization” overtook all but the true luxury hotels. “Potential guests became persuaded that price is the main determining factor,” comments Gale. He feels the pre-internet reservation process “allowed upselling,” because a live phone connection made it possible to use the power of suggestion. “In my experience, 90 percent of online bookers select the cheapest room they can find,” he says.
Many a public-golf manager reports seeing a similar pattern in golf, along with a marked tendency on the part of customers to book much closer to the day of play than they previously had. It stands to reason that the chance to comparison-shop in a few keystrokes will make price more prominent in a consumer’s mind, at least initially.
For Tim Hartson, whose Par 5 Golf Group owns and operates two courses outside of Grand Rapids, Michigan, GolfNow’s early adoption of dynamic—or at least “variable”— pricing is just one of many benefits in working with the company. “You can use the services of GolfNow in whatever way you like,” says Hartson. “I get a full-service digital tee sheet from them, I get email blasts sent out by them at my request, I get an easy way to adjust prices on the fly and keep my tee times from going unsold. If I stay on top of things, I can use the relationship very much to my advantage.”
Part of staying on top of things for Hartson is studying his booking patterns and asking for modifications far enough in advance that price-conscious golfers will have time to respond. It’s likewise with outbound promotional emails to fix weak spots that are showing up on his sheets in the week or two ahead. In addition, Hartson brings some diligence to spotting the rare double-bookings or incorrectly appropriated tee times that appear on his computer screen.
“I usually trade the same two times each day,” says Hartson. “By accident they might take over a third time, especially if I’ve switched my request. That happens very rarely, and once I point it out they fix the problem right away.” The other glitch is that two separate groups can end up plugged into the same box on the digital sheet—again, it’s a rare occurrence and getting it straightened out is, to Hartson, a shared responsibility of the course manager and the solutions provider.
Hartson tries to decipher the consumer attitude toward price and value, but he doesn’t overthink it. When a tee sheet is full of blocks with green fees around $40, plus two blocks with a special logo and a pulse-pounding fee of $18, the golfer may think he’s looking at a $40 course or at an $18 course. Asked which it might be, Hartson can’t reply with any certainty. “I don’t know really what they’re thinking,” he says. “All I can do is use common sense and make adjustments. I go to seminars with marketing experts standing up front telling people they should never lower their prices. But golf is oversupplied, so that’s easy for them to say.”
The simple metric of capacity utilization sends important messages, according to GolfNow director Will McIntosh—including indicators that the fee for certain time blocks could be moved up. For courses that work with GolfNow, “pricing is 100 percent their decision,” even as the immense trove of statistical information at GolfNow gets more reliably predictive.
“We will point out to a client course, ‘You have some headroom to raise your rates in a particular period,’” says McIntosh. “The relevant factors are going to be utilization patterns, weather and number of days out. Sometimes they take our advice and move a price upward, although we know it isn’t a decision they make easily.” If suddenly there were macro stats showing U.S. golf participation moving swiftly back upward, it might change the context of such a recommendation.
Burton Webb is part of the management team at R.N. Thompson Golf, which has six courses in greater Indianapolis bookable through its IndyGolfForeLess portal. Webb says his firm generated significant volume through GolfNow, but came to the conclusion it was too easy for the price-happy player to take advantage of the system. “About every third or fourth tee time we sold would come through GolfNow,” says Webb. “It wasn’t uncommon for that time to be bought by a customer standing near the shop counter looking down at their phone—they’d make the purchase right there and it would cost us 10 [percent] to 20 percent.”
The six-course R.N. Thompson reservation portal, as Webb explains it, is based on dynamic pricing. Again, one of the intriguing consequences of third-party selling has been the adoption of the dynamic-pricing concept by small management groups or even individual courses. More pricing power is a goal of the Thompson micro-engine, but almost as important to managers is stretching out the interval between reservation and date of play. “Our tee sheets are getting filled earlier now,” says Webb. “That helps us prepare to serve customers and makes us more efficient in our staffing.” It’s required of any golfer using IndyGolfForeLess that they book an hour in advance so that, in Webb’s words, “they can’t stand in the shop and bargain-hunt.”
It’s said that all politics is local, and partisan rancor surrounding tee-time redistribution seems to bear that out. Renner says the markets where Wilson Golf operates are penetrated, but not dominated, by major third-party resellers, which in his view supports pricing power. “Owners in Minnesota, Wisconsin and our portion of Colorado have been relatively selective about how their tee sheets get managed and marketed,” says Renner. “Golfers in these areas know they have to go to multiple portals to see what’s available. As a result, they don’t go online expecting a one-stop shop, which makes price less of a fixation for them.”
Sean Taylor of Up to Par Management in Lexington, Virginia, notes a similar pattern in most of the markets where his company is active. “Roanoke would be an exception,” says Taylor. “That market is overbuilt and there hasn’t been much price discipline at all—it’s your classic race to the bottom.” He defines “the bottom” as a late-book, price-is-everything consumer attitude.
Gene Pizzolato, CEO of GolfBook, has seen a similar variance in how discounting fever has moved through the market. “The good operator can become a victim of their most desperate competitor,” says Pizzolato. “If your neighboring facility is a $100 course and decides to start charging $40, your $40 course will be negatively impacted through no fault of your own. We believe courses learning from each other can have a positive impact on the bottom line.”
It wasn’t possible for the rules of engagement between golf courses and the digital tee-time aggregators to be developed in advance—some type of crystal ball would have been needed. The freewheeling, even frontier-style dynamic that unfolded was marked by outcries over deeply discounted fees, patent-infringement lawsuits and disputed use of keywords and trademarks in search-based marketing. Obviously, if there hadn’t been all these potholes along the road to high-tech revenue management, the Golf USA Tee Time Coalition would not exist and the NGCOA-developed Guidelines for Online Tee Time Distribution wouldn’t be in place. But there they are, offering a framework by which third-party, online agents and course operators can conduct business to their mutual benefit.
In his role as managing director of the Tee Time Coalition, Jared Williams works exclusively on this issue and its various controversies. One notable result of the Coalition’s establishment, in his view, is that “course owners and operators aren’t dealing with this in their silos anymore—they’ve got a forum and a clearinghouse for any questions or grievances to be heard.” Williams, a former college golfer with a law degree, as well as PGM training and behind-the-counter experience as a golf manager, has visited the major third-party companies and works with a dedicated contact person at each one.
“As contentious as the tee-time issue has been, when golf courses have contacted the Coalition, my experience is that the tee time companies have bent over backward to remedy problems and clear up any of those misunderstandings,” says Williams. Looking forward, he says the contracts being written today are better understood by course operators and better negotiated. “Yet, we’re still seeing courses locked into two-year agreements that aren’t cancelable,” he notes.
Williams and his colleagues have been studying the results of a cours owner survey on this topic, in preparation for a detailed report on the findings. Among the highlights is a two-part list showing owner attitudes, positive and negative, toward various aspects of their dealings with tee time distributors, to use the survey’s term of art.
“Tee time distributor customers,” the briefing states, “are most satisfied with the following (where at least half of all customers are truly satisfied): speed of payment transfer, open contract, reasonable process for terminating contract, up-to-date inventory, adherence to payment standards, yield management tools and ease of doing business with.” The second part of that survey question turned up several points of relatively low satisfaction for respondents. These were: provision of digital reports analyzing customer data, full disclosure of all marketing channels used, fair and reasonable pricing structure, and accurate representation of pricing for barter-rounds.
Cutting to the core of the relationship between a course and a tee time distributor—to the basic structure of how it operates—a sizable portion of survey respondents viewed it as competitive. Asked if they agree that “I am in direct competition with the online tee time distributor I use,” 45 percent said yes, 24 percent said no and 31 percent expressed uncertainty one way or the other.
Interestingly, the contentious issue of barter-round pricing did not produce any sort of call for the practice to be eliminated. Among survey-takers who partner with a tee time distributor and use barter payment, “84 percent would like to see [the practice] continued.”
Like Richard Gale, Cornell University professor Cathy Enz has seen echoes of the lodging industry disruption in golf, but the tee-time version of third-party reservations is, in her view, more nuanced. Traded-out times and the eye-catching discounts applied to them have shone a bright light on price-obsessed purchasing, making it seem more prevalent—and more inevitable—than it actually is (see sidebar, page 39).
Whether a golfer is price-conscious, service-conscious or fixated on details like slope rating and green speed, there’s a “cost of acquisition” to get them onto any tee sheet. Shining a bright light on that metric makes all the sense in the world to GolfNow’s McIntosh. “There is a real cost to attracting golfers to reservation sites, and in our case it’s significant—customizing the interface, ensuring against system breakdowns, supporting our 550 employees,” says McIntosh. “It’s not particularly visible but it’s an immense overhead.” Those fixed costs don’t include the constant promo spots that run on Golf Channel, telling viewers to go to the GolfNow site and get their next golf game booked. It’s a so-called soft cost in the customer-acquisition effort, but the dollar value of it can’t be underestimated.
There’s no investment by third-party tee time sellers in fertilizer, herbicides, range balls or divot mix, but the money they spend on tech upgrades and customer service centers is heavy-duty.
“When you recognize that selling traded-out times is our principal form of revenue, and if you have a sense of what we spend to run this operation, you would see that it would be counter-productive for us to discount lower than we need to on the barter times,” explains McIntosh, adding that hot-deal times are non-refundable, therefore they must be further discounted to keep golfers interested. Meanwhile, the portion of hot-deal times that go unsold basically matches up with overall utilization ratios, according to GolfNow’s metrics: Half of all times, including those that are most aggressively priced, perish without anyone purchasing them.
Interestingly, a new brand extension called Ride actually has put GolfNow in the business of seed, fertilizer, fresh produce, office supplies and the like, at least as a cooperative-style central buyer capable of passing on significant volume discounts to its partner courses. More than 1,000 courses now take part in the program, modeled upon a longstanding business segment of Comcast, which owns NBCUniversal and its Golf Channel/GolfNow subsidiaries.
When Harbin talks about giving away the steering wheel, many a course owner would equate that to customer data collection as much as to pricing and discounting. For the price-sensitive golfer, having a third-party portal not only means shopping convenience, but also a way to limit his or her sources of promotional e-blasts to a couple of third-party portals, instead of receiving them from six or seven courses. On the other hand, it’s considered only fair by course operators that the guy who maintains the 125 acres and hoses down the sticky golf carts gets to store and leverage golfer contact info.
Up to Par Management is the golf half of a company that also manages hotels and restaurants. Taylor, the firm’s founder, has long felt that the best way for a course to exploit its relationship with the third-party platforms is to leverage their databases. “People book online instead of by calling your shop, so that generates an email address,” says Taylor. “Having that supplied to you is the best value of the third-party packagers, except that quite often, golf courses get the address and don’t do anything with it. They miss a chance to go back and re-market to that golfer.”
Taylor compares online tee time agents to Expedia and OpenTable, in their respective categories. “The marketing power of these online providers is phenomenal—you get eyeballs looking at your product that you would never get on your own.” That said, Taylor chooses not to use an online agent for his golf bookings.
“Everybody in the lodging business will pay the contracted commission of 15 percent to 20 percent to a third party,” says Taylor. “The rub on the tee-time resellers has been the bartered times and how low those green fees can get. A golfer can pay $16 or $17 against a rack rate of $40, and to me that takes away rate integrity.”
Along with the R.N. Thompson group in Indianapolis, St. Louis-based Walters Golf Management (WGM) is part of a slim-but-gung-ho segment of operators that sees full-on dynamic pricing as the way forward. It’s a logical next stage for the green-fee sales process, goes their thinking, providing a way for courses to feel both responsive to the consumer and more in control of their destiny at the same time. WGM, with its Dynamic Revenue Services subsidiary, has put the concept into use at its own portfolio of facilities and at an additional 50 golf courses that are DSR clients.
Aaron Gleason, WGM corporate vice president, has 20-plus years of industry experience, both as a golf professional with PGA Class A status and also in a short stint as a GolfNow area sales manager. He says there are multiple business models under which a golf course can get dynamic with its digital tee sheet.
“From the day I walked through the sales center at GolfNow headquarters in Orlando and saw the rate modifications they were doing for partner courses—in real time—I’ve been sold on dynamic pricing as a tool for courses to harness,” says Gleason. “In my time at WGM, we’ve worked hard to develop this method of pricing golf so that it can work best for each individual course.”
Gleason says Dynamic Revenue Services “is not a third-party aggregate company” and is built strictly to serve the course operator. “We don’t have an email tool for communicating with golfers,” he says. “We work with the email marketing firm our client courses use and we send files to each course in buckets” for outbound marketing. There are analytics conducted by DRS to study the captured customer data—that’s how the various “buckets” are set up, according to Gleason. “Golfer A,” he explains, “always books inside 24 hours of the time when he’ll play, he asks for a twosome and pays $30 max, while Golfer B pays $45, books days in advance and brings a foursome. It would make no sense to send the same outbound message to those two customers.”
Its dedication to an alternative model would suggest that Walters/DSR steers clear of bartered tee times as a form of payment, but that’s not the case. That approach was tried, but course owners balked at it, so the option was presented to pay by some type of commission. This, too, was unwelcome. “Monthly fee didn’t work, then commission didn’t work,” says Gleason, “which is how we ended up with our barter option. Our policy on bartered times are strict—we abide by floors, we abide by day-parts, and most importantly, we aren’t leveraging consumer data. Our customer is the golf course, not the golfer.”
As our first looks at the new Tee Time Coalition survey indicates, course owners and third-party tee time distributors have come to a coexistence that in many ways is mutually beneficial and in certain other ways has proven contentious. Given the ever-growing importance of online booking, that relationship can seemingly move forward, in a productive manner, toward higher levels of transparency and compromise. If the overall marketplace can inch its way toward a healthier, more profitable balance of supply and demand, the process of reconciliation can unfold that much easier.
David Gould is a Massachusetts-based freelance writer and frequent contributor to Golf Business.