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October 2017

Destination Detectives

destinationdetectives.jpg‭

By Rob Carey

Investigating the balancing act of third-party and direct-booking strategies in resort golf

“Can’t live with them, can’t live without them.” Everyone in the hospitality and golf industries knows the object of that phrase isn’t merely about romantic partners. It’s also about the third-party booking engines that help fill inventory but also manage to warp market pricing, push consumers into detrimental habits and chip away at net revenue.

The rise of third-party booking engines came from a period of deep distress in the hotel industry. After the events of September 11, 2001, “hotels had countless guest rooms that they couldn’t give away,” says Greg Duff, chair of the hospitality, travel & tourism practice at Seattle-based law firm Garvey Schubert Barer. “A few new internet companies came along and said, ‘What if we could sell them for you, and you pay us 25 [percent] or 30 percent of each booking?’ That was much better than getting nothing, so hotels dumped inventory to the third parties under terms and conditions they didn’t understand or appreciate.”

The deep recession of 2008 further strengthened the grip of third parties on the lodging industry such that even to this day, “hotels are still trying to claw back financial terms and other elements they believe they’re entitled to, such as customer data,” Duff notes. “It’s been very hard.”

In the golf industry, the situation of the past 10 years has often felt as dire as what the lodging industry faced. And a few internet players connected to big golf-related brands seized initiative to dominate golf’s third-party booking landscape—aided by many courses that handed over too much of their inventory with no analysis of the short-term costs, nor the longer-term effect on pricing power.

Fixing the Current Dilemma

here is a consensus among hotel and golf course management veterans that third parties do have a legitimately valuable role in the marketplace. Although every hospitality operator wants to minimize the cost of each customer acquisition—and third parties are usually the most expensive acquisition channel—“you always have to try to reach new audiences, ones who might not know anything about you,” says Brett Stark, senior director of marketing and e-commerce for Marriott International. “Especially with destination courses, you have to constantly expand awareness outside your market. I think the most valid reason to work with third parties is this acquisition need.” Brian Benitz, director of sales and marketing for OB Sports, agrees: “The real value of third parties is getting new eyeballs, and aiming them at less desirable tee times.”

The problem lies in what too many golf facilities give away in return for eyeballs that might, or might not, be new. “Handing a third party a foursome a day as barter is usually seen by operators as an opportunity cost rather than a real cost,” says Matt Carrier, director of e-commerce for Kalibri Labs, a firm that helps hospitality providers evaluate revenue performance net of acquisition costs. “Operators don’t look at barter as a hard cost because they aren’t cutting a check for it. That has to stop.”

Benitz explains why, in stark terms: “If you’re closed for a shotgun [start] or maintenance or whatever, the third party doubles up on its barter take the next day, so now you’ve given away eight spots. It always keeps rolling. So don’t think of it as a foursome per day—think of it as 120 players per month.” What’s more, when potential customers see on third-party sites that some tee times are priced significantly lower than ones a few minutes earlier or later, that entire rate band is eroded over the long term.

One development that provides golf facilities a ray of hope for better negotiability with third parties is the rise of several feasible competitors to what is presently the biggest third-party site, GolfNow, owned by Golf Channel. Most notably, TeeOff.com—owned by EZLinks Golf, LLC, a PGA Tour-affiliated company—can deliver a sizable audience precisely because of that pro-tour affiliation. Then there’s Golfbook, which is affiliated with CBS Sports Digital and therefore appears across CBS Sports’ portfolio of sites.

Stark has engaged Golfbook to partner with Marriott to some degree, while OB Sports has an agreement with TeeOff. “Alternative booking engines are saying they know what facility operators don’t like about many third-party agreements, and building their agreements in ways that are different from GolfNow,” says Benitz, who removed all of OB Sports’ inventory from GolfNow more than a year ago. “So they’re gaining the attention of facility managers by offering other ways of accepting compensation.”

Some of the concessions Benitz has gotten from TeeOff and smaller third-party sites include receiving customers’ contact information; keeping rates for bartered tee times above a facility’s loyalty-program playing rate until 48 hours out; and switching from barter to a 15 percent back-end commission, with no booking fees for the customer.

Given all the recent action in the third party niche, Stark finds that even GolfNow has become a bit more flexible in coming to terms with facilities. For instance, “at our properties with strong member play, we will barter a prime-time foursome Monday through Thursday, but on weekends the barter must be later in the day. We also need to agree on a price floor,” he notes. “They’re also open to considering a combination of commission and barter, or commission and booking fees. The terms vary across our properties depending on each one’s specific business issues. We show GolfNow some revenue-pattern data for each facility, and they’re willing to listen. They’re seeing the big picture on our side and making it more of a partnership.”

For stand-alone facilities, moving away from barter agreements might be more difficult, but is likely a matter of long-term survival. Michael Tebbetts, director of sales and marketing for Indian Wells Golf Resort in California’s Coachella Valley, transitioned his 36-hole property away from all barter agreements about three years ago. “Rate integrity is part of a facility’s proprietary product,” he notes. “Barter is leverage that works against rate integrity. So third parties are just another wholesaler on commission with us, which lets us get maximum revenue for most of our tee times. If third parties want to make money off us, they’ll shake our hand on terms that benefit both of us.”

Bill Golden, president of Myrtle Beach Golf Holiday, works with a lot of standalone courses in his destination. His advice: Every course must do its own analysis on how well the third-party channel serves the facility’s desired customer mix, and whether the right customers come through that channel to justify the compensation terms. “The equation differs for every facility: What is your optimal percentage of member play, local play, seasonal-resident play, and traveler play? And are the third parties delivering new customers or ones you’ve hosted before?”

There’s one other tactic that facility operators must keep at the ready during third-party negotiations: “You have to be willing to walk away from the table,” Stark says. After all, it’s possible that working instead with two or three smaller booking engines who agree to better terms will provide a facility with sufficient exposure to new people. And if it doesn’t pan out, a facility can always restart dialogue with the third party they walked away from.

“The third parties don’t own any land or equipment—their business relies solely on our product,” Benitz says. “We have to stick together and protect our better times, keep rate integrity and manage the payment terms.”

Maximizing the Direct Channel

Right now, one advantage third parties in both the hotel business and the golf business have is perception. “Facility operators must understand why consumers prefer intermediary websites for booking” and adapt their own sites accordingly, says Charlie Osmond, founder of direct-booking consultancy TripTease and the annual Direct Booking Summit. “Like hotel guests, prospective golfers use intermediary sites because they perceive them to be cheaper or containing an exclusive deal, because the site is easier to navigate, and because they trust that brand name. To reduce bookings through intermediaries, a property must address these issues.”
Specifically, a golf facility’s website should be thought of not as a utilitarian shopping cart, but as part of the overall golf experience, Osmond notes. “That means an easily navigable structure, rich content and touchpoint possibilities with real people. These are avenues to differentiate your brand and re-educate the customer.”
The common public perception is that third-party sites always have the lowest price, “and that’s even stronger in golf than in lodging,” says Marriott’s Stark. He’s conducted tests with some of his courses where a specific tee time costs $5 more on a third-party site versus the course’s site, plus a booking fee—and a customer books it anyway. “That’s because people are conditioned by third-party marketing campaigns to think that’s the best available deal. Users are also comfortable with the buying process on those sites. We need to get our own sites to be perceived that way.”

If, because of a barter agreement, a facility can’t guarantee the lowest price on its own site to players not in its loyalty program, then creating value-added deals available only through direct booking is one remedy. There are many possibilities that can be included with a round of golf: a sleeve of balls, a bucket of practice balls, a breakfast or lunch sandwich, a post-round beverage, a future restaurant discount and so on.

In fact, Myrtle Beach’s Golden wants to see fewer F&B promotions and more value-added elements “that focus on the core product we offer—great golf and a friendly, helpful staff.” The element that delivers value most effectively and efficiently: instruction. “If you do three minutes of evaluation and offer a tip that gets a customer hitting the ball better, you’ve instantly developed a relationship but without cutting your profit margin.”

In combination with a robust website that offers those value-added deals and is easy to book through, social media channels must be used in ways that drive people to buy their rounds on the facility’s site. “You can do exclusive offers for players who sign up to follow your Facebook and Instagram accounts, and then you have a long-term mechanism for reaching them with direct-booking special offers,” says Jim Stegall, executive vice president for KemperSports.

At Indian Wells, front-line staff encourage customers to submit photos they took while on the course so they can appear on the facility’s social media accounts. “And whenever they tag your course in a photo they put on their own page, repost that to the course’s page,” Tebbetts explains. “Some facility managers aren’t deep into the technology stuff, but you have to get to know some of this.”

One other factor: optimizing the website for easy navigation on mobile devices. With more people now willing to watch longer videos on their small screens, “facilities can post their own instruction videos or link to content from other golf-related sites, and people will watch. Or highlight another interesting element of your property, like the chef showing a new or popular dish.”

Going a step further, courses in a destination should get together as a group and talk about how they can partner up to cast the wider net for new customers and also drive direct booking from all customers, adds Golden. With social media channels, for instance, facilities can agree to mention one another in occasional posts or create friendly photography contests that customers can take part in. “We use the word ‘coopetition’ all the time in Myrtle Beach and manage demand as a group.”

One set of partners that a standalone course should have is local hotels. Tebbetts has four hotels surrounding his facility, and he helped create a proprietary booking engine for stay-and-play business at those facilities. But even if a facility can’t go to those lengths, there’s much benefit in having a presence on the websites and social media accounts of nearby hotels and creating packages that are available only through direct bookings. “We don’t wait for people to find us,” Tebbetts says. “We go out and work hard in different arenas to be the tip of that spear. You have to be aggressive.”

When players finally arrive on site, the front-line staff must be prepared to capture contact information from an entire foursome—perhaps with a value-added amenity or even a small discount on the greens fee offered in return. An alternative: At OB Sports facilities each month, every player on the tee sheet who provided an email address is entered into a drawing for some type of free future play. “We have a sign in the pro shop about it, and it gets everyone in the group to give their email addresses,” says Benitz. OB Sports’ goal is to capture contact information from 80 percent of players. To get email addresses another way, Tebbetts uses a post-round survey featuring “just a few questions that players like to answer” along with a small incentive for a future direct booking.

In conjunction with this, “you always have to change up your email and social media campaigns, and do analysis to see which contests or offers work best to push people to your site.” Benitz adds. “That takes lots of effort, but over time you’ll reduce the number of third-party bookings from players who know your course” by getting them into the habit of looking at the facility’s website before a third-party site. Tebbetts agrees: “A lot of people will use the third parties to shop, but then go to the direct channel of the places they know in an area.”

For prospective customers who might not know about a specific golf facility, Matt Carrier of Kalibri Labs says “it’s important to routinely check that your Google Local and Yelp information is correct and up to date. A lot of people use the search function of these aggregator sites first” when learning about the possibilities within a destination.

Granted, many golfers go to third-party booking sites to do that research. So if a facility has a strategic presence on one or more of those sites—not the majority of their tee times—then it serves the purpose of informing new prospects of the facility’s existence.

And with those players who book a tee time through a third party, how the facility staff engages them once they arrive is the critical factor in converting them to booking direct in the future. “The course controls the service experience, so they have every opportunity to convert that person even if they don’t get customer data from the third party,” Carrier says. “You can see on the screen that they booked outside your system, so train your front-line people to explain the value-added benefits of direct booking and to capture contact information.”

Stark has instituted across all Marriott Golf pro shops what he calls the “elevator speech” aimed at third-party users. In about 30 seconds, the staffer thanks the customer for choosing to play there; notes the best rates are always found on the facility’s site with no booking fee; mentions the brand-wide loyalty program; provides a business card with a promo code for a small discount on a future direct booking; and asks for an email address.

“Nothing electronic is going to sell someone—it’ll get simply get them interested to try the place,” Benitz adds. “It’s up to the staff to make someone a repeat customer, and to get them to book directly.”

Rob Carey is a freelance writer and principal of Meetings & Hospitality Insight.

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