When we connected with Jay Karen, the CEO of the National Golf Course Owners Association, at the PGA Show last year, he was happy to share his thoughts on the state of technology in the golf industry. He had some very interesting opinions and inspiring ideas as to where golf course owners and operators were getting technology right, as well as where they could make improvements. So we were very excited to chat with him recently to dig in further on the topic, chatting about how the industry has fared during the pandemic, what new tech he’s most excited about, and why bartered tee-time is the worst thing to happen to the industry in modern times.
What are your thoughts on the current health of the business of golf? Have you seen any changes over the past 3-5 years?
The pandemic gave us a shot in the arm. We’d been on a precipitous, but marginal decline for about 15 years in the industry. When you look at our key performance indicators – rounds played in America, number of golf courses in America, number of people playing golf since around 2004 or 2005 — those KPIs have been on a slow downward trend. The high water mark of players was 30 million. For every one golf course that opened in America now, 10 had closed.
But there’s a story behind that, too. When you actually look at it, it isn’t necessary because of the dropping demand. We were overbuilt as an industry, the housing market, overbuilt. Housing developers built golf courses like crazy in the late 90s and into the millennium to add an amenity to these housing developments that really had little regard for actual demand for golf; it was to sell houses. And so you had this oversupply situation in America and this is part of the correction. The flattening of demand was going to make that correction happen. So anyway, everyone could agree that up until the pandemic golf was on a slow decline, nothing existential, but we were just kind of coming down off of a high watermark from 15 years ago.
Then COVID-19 happens and the world shuts down. With golf, we were able to convince governors and local authorities that we’re different and our members will be safe. We are 200 acres of land and water, letting four people on at a time, so we should be able to stay open. And it worked. Not only did we stay open, but because we were one of the only things that were open, people gravitated towards us that hadn’t played before. People that used to play once or twice a year were now playing four or five, six times during the pandemic. So we saw record numbers that we hadn’t seen in a long time. Even after the universe opened up from a recreational standpoint, we still saw high levels of play in our industry.
People sometimes complain that golf is too expensive. The average green fee in America has been under $40 for many years. So really, when you compare it to everything else that has gone up in price in our lives, golf is kind of cheaper than ever. The increase in demand and utilization rates have finally allowed course operators to make their own corrections when it comes to the price question.
So I’d say the health of the industry is solid, and the rate of course closures has slowed down, which is an indication that demand is able to keep these businesses afloat. So quite honestly, it’s been a good couple of years.
In terms of technology, how would you characterize golf course operators’ adoption of technology to optimize their businesses?
The golf industry, I like to say, is about as conservative as the church business or the banking business — just not quick to adopt new technology overall. But in any industry, in any situation like this, you’re going to have a bell curve. There may be as many as 2,000 golf courses in the United States that don’t even have websites or are using paper and pencil tee sheets. Most operators are using standard Golf Management Software, what we call GMS applications, and most of them now are cloud-based. It’s not really that the golf course owner-operator is adopting cloud-based software, but that companies have moved in that direction.
When we think about tech in the golf operations space, we’re usually looking at the software used to power your business, point of sale, and online booking. We have more competitors in the space now. Even Tiger Woods announced that he’s getting into the space.
The next big thing that’s going to change the way we do things will be automating or changing some of the points of interface with customers, such as using iPads or kiosks for check-in. The very early adopters are few and far between with that kind of self-service. I think that there’s room for more of that because the experienced golfer, which is the lion’s share of people who play golf, are the self-serving kind: just point me to the first tee and I know what to do. If I need a bucket of balls, I don’t need a lot of hand-holding. It’s kind of like when you go to the airport, you can check yourself in at the kiosk or you can go to the counter. I think a lot of golfers would choose the kiosk.
I’d also say one of the trendy pieces of technology in our space, though, is what we call golf entertainment. Think golf simulators. The Toptracer range experience out on the driving range where you’re turning the driving range into an entertainment venue, instead of just a place to beat a $5 bucket of balls. A lot of clubs and courses are building out a golf entertainment business where they’ll put in three, four, or five simulators and build a business and a revenue stream around the simulator business because these things are amazing and they’re fun. That’s really where we’re seeing a lot of action right now. I anticipate that to grow where one day this could be ubiquitous around the markets in the United States like it is in South Korea, where they call them “golf cafes.” Essentially they’re an F&B business built around golf simulators. They’re everywhere in South Korea.
There’s a golf course operator in the middle of Iowa. Her name is Allison George. She basically shut down her pro shop. Instead, she used that square footage to build out a simulator business, because the revenue possibilities of using that for fun and food and beverage is a lot higher than making a little bit of margin on some shirts and shoes and balls. There’s still a way for you to go get the golf balls and the gloves, but there’s not the same merchandise shop that we see in most places. That to me is telling, when someone is willing to give that up in order to build out a simulator business. So I’m very bullish about how this can really be an opening for the golf industry, especially resorts. A really cool thing would be, you’re staying at a golf resort, and it’s eight o’clock at night, and you think, “What do we do?” If the simulators are open at night, what fun to go play? If you’re at some resort in the middle of Indiana, you can play Pebble Beach Golf Resort on the simulator. That’s pretty fun.
Is there one piece of technology that you would recommend to golf course operators that you think would have the most marked improvement on their business?
I guess to answer that question I’d have to see where they are starting from. I’m looking at that one side of the bell curve that doesn’t even have GMS applications. For them, I’d say, get on board, build a customer database, use that customer relationship management software, come into the 21st century, please! So for that segment, I’d say just get the bare bones cloud-based software that’s out there, assuming you’ve got broadband access. There is an actual issue for some courses in areas where they just can’t get broadband so they’re still using local server-based applications.
“I’m of the opinion and I represent golf course owners that have the opinion that the barter method of compensation with technology companies is the worst thing that’s happened to our industry in the modern times.
I would also want to make sure that you’ve got GPS technology available in some way for your clients. This is a tricky one because 10-15 years ago if you wanted GPS on the golf course, you probably had to rely on a golf cart with built-in GPS. Now people carry their GPS devices with them, whether it’s an app or it’s the range finders, but there are still a lot of golfers that don’t have that technology with them. So whether you’re offering it through your golf cart or you can rent out a rangefinder for five bucks, I don’t see anybody doing that.
And like I said, the golf entertainment thing. Try to find space and place to build out a golf entertainment center. If it’s not under your roof, then look at the Toptracer range technology and use some of the real estate on your driving range, which can still double as a driving range. It’s not like you’re giving up the driving range, you’re just putting in really fun covered bays with amazing technology, some shot tracer stuff, that’s just fun to watch. I’d say that, to me, it is the most promising from a revenue standpoint.
There’s that on the operation side, but if you start looking at the agronomic side of things, we’re talking about robotics and automated mowers. There’s a whole world opening up there as well. I’m not the pro on that stuff, the superintendents are the ones that are really working hard on figuring that out. But 50 years from now, you might have superintendents that are managing robotics and automated equipment as much as they are managing people.
Are golf course owners in favor of the bartered tee time?
That is a loaded question! I’m of the opinion, and I represent golf course owners that have the opinion, that the barter method of compensation for technology and other services is the worst thing that’s happened to our industry in modern times. Honestly, economically, it’s not just barter. Barter itself is not a dirty word. It’s simply trading goods for other like-value goods or services. The awful part of this, which is the kryptonite of our industry, is the abdication of price, where I am not only giving you tee times that you can sell on your platform, but I’m giving you a lot of power to price it as you see fit. And that to me is the Achilles Heel of this whole thing. What they’ve done is built a marketing engine around selling the lowest-priced tee times, the “Hot Deals,” as they call them. Then they launched the GolfPass program that further monetizes access to the Hot Deals that aren’t getting booked. To me, that is the fatal flaw of this whole thing, that it creates this downward pressure on pricing in our industry. The current supply and demand realities create enough pressure. We don’t need an outside agency making it worse.
We call our industry’s Online Travel Agencies, “Online Tee Time Agencies”, so OTTAs. By nature, when you have thousands of properties duking it out online for attention and for booking, there’s going to be this downward price pressure in that kind of context. You add fuel to the fire when the platform itself is now able to sell golf at 80% off, and the property receives no income on those sales. Today, you’d never see the hotel industry bartering their rooms and giving up price control for online marketing services. They might have started doing some of this 30 years ago, but they quickly barred the practice.
Some owners that are on these platforms, if you ask them what they think of it, it’s a very mixed bag. There are some that are hook, line, and sinker for it. Then there are some owners that probably have figured out how to manipulate it to their advantage. What they’re not doing is they’re not saying, “Well, how much business would I have gotten without you? Just because this is how much business came through your portal doesn’t mean that the demand was generated by you.” Then there are those that don’t even pay attention, and those situations cause the most trouble because bartering doesn’t show up on the P&L. Those operators are not looking at what we call “barter opportunity cost.” What if you’d sold those all tee times yourself? What would the revenue have been? Compare that to what you could have paid for services instead. I guarantee the delta would be eye-opening.
Is there a way that golf course owners can leverage OTTAs to their advantage without falling into these traps that you mentioned?
I think the antidote to this is to give golf course owners and operators technology that allows them to better capture the customer relationship themselves. And do just bang-up marketing to your own customer base, and get that loyalty. Find ways to use technology to reach out and grow your customer base. If you need to be on these platforms because you’re in a high transient market, which a lot of resorts and a lot of courses are, find ways to minimally be involved in those to capture some customer data and quickly convert them to your system. That can make sense.
We have to recognize that consumers want aggregation. They want a one-stop-shop to visit and say, “I’m going to Atlanta, I have Saturday morning open and I want to play golf with a friend I’m visiting. Where can I shop and look for multiple options?” Aggregation is here, and there’s incredible value in it, so I’m not saying we should end aggregation. But if you’re going to participate, you have to recognize that the inventory is yours. Do not give pricing power to those tech partners. If they say, “Sorry, we can’t work with you if we cannot sell your rounds of golf for up to 80% off,” and if they insist on price control, then that’s a red flag. It’s not just a red flag, it’s a flag with a skull and crossbones on it.
Also, course operators should insist that you get the customer data from any OTTAs you work with. There have been times over the past 10 years where those OTTAs would not share golfer data and you’d have to get it at check-in yourself. So to me, if the OTTA did not freely share the customer data with you, that would be another deal-breaker. Insist that you should get the customer data at the time of booking. If they say, “We can do that for an extra tee time,” that’s inexcusable behavior. We’re in this together with our marketing partners. So there are these little nuances in these deals that you need to insist upon or don’t do business with them. We can help teach course owners and operators the kinds of things you should ask for.
Looking ahead, what is your vision for the future of golf courses?
It’s a perfect marriage of technology and no technology. You don’t want to envision a golf experience where technology has taken over everything; at least I don’t. The reason people go out to the golf course is to get away from technology that sometimes consumes our lives. The course is my refuge, I want to get out there and put all that behind me. At the same time, most people now are living with technology every second of the day, with wearable technology that they have on all day long, or they have to have their phone with them because it’s necessary for their work. So the perfect golf course down the road has found that sweet spot of bringing technology exactly where you want it and leaving it behind where you don’t want it. To me, that is where I think we’re all going to go, but it’s good to see the golf industry really experimenting with technology when it comes to the golfer experience. I think most golfers like it.
I would also say, if you’re a golf course owner-operator, look at what your younger players want. It has to do with what they’re doing in their lives, technology-wise. So if the 30-somethings are saying, “Hey, bring in these simulators, this is a hell of a lot of fun,” but the 75-year-old guy is saying, “Don’t believe them, don’t bring these simulators, this is a waste of time,” listen to the younger people when making a business decision on these things. Because in the end, the older folks will say, “Alright, I can do this, I’ll give it a try.” Whereas the younger folks will say, “Oh, they don’t have simulators there. I’m not going to go there.” So that’s why I always err on the habits of the younger generation when deciding on technology for a business.