The Big Benchmarking Argument (for Public Access Golf Courses)
After 18 months in the benchmarking and business intelligence world, I have met and talked with hundreds of golf course owners, operators and managers and had the opportunity to learn a great deal. Thanks to all of those who have put up with all of my questions…
One of the key discoveries for me was the different perspectives about benchmarking and business intelligence and what I am calling the Big Benchmarking Argument. What I have learned, is that in public golf segment, there are essentially two different camps or perspectives when it comes to benchmarking.Camp I: Benchmarking Is Local
Those in this camp feel that their #1 objective is to understand the pricing model for their market and their golf course(s). Golf demand is inelastic and market share growth comes at the expense of your local competitors and all factors are local (pricing, costs, course maintenance, and so on).
There is a focus on the tactical aspect of managing a golf course and a primary focus on driving revenue. One quote from someone I respect is as follows. “If I can generate the necessary revenue to run my business, I can take care of everything else.
Many operators in this camp believe they control costs, and there is no room to cut expenses or services. They are operating efficiently and effectively and therefore can dedicate their time to driving revenue (Tee-Times, F&B, Golf Shop) by driving more consumers to their golf courses, For this camp, benchmarking is narrow in scope and definition and they only need to compare the revenue and sales side of their business. Fair enough.
Camp II: Benchmarking Is Based On Business Profiles and Characteristics
Those in this camp feel that their #1 objective is to understand the business model of golf and how the various elements within the business can impact their overall performance.
The pricing strategy of tee-times is still important, but so too are elements like labor costs, gross margin by department, allocation of operating budget and so on. This group wants to compare and analyze 10 - 20 key performance indicators.
This group wants to benchmark their own course against another course that is roughly the same size in revenue, acreage, holes, type, and so on and that may or may not be available in the local market. They want to look at facilities in a holistic way.
Operators and managers in this camp seem to be focused on a longer-term strategic approach to the golf business and want to understand how the whole eco-system of golf works and how changing an element within the eco-system can have a positive or negative impact on the overall business.
I believe both views are correct and both have their place in the market. There are good owners, operators and managers that successfully implement each methodology and I can’t argue with success.
That said, there seems to be an emerging point of view from some owners, operators and managers that blend the two camps. Call them Hybrids - These hybrid managers see the world in a number of ways. They see the importance of the local market and the need to go outside of their market for additional information relevant to their business or a more accurate competitive set of courses.
A great example of this type of manager is Brad Williams, PGA General Manager at The PGA TOUR TPC of Scottsdale. I recently met with Brad and a number of his facilities to present some benchmarking data and have a general discussion about benchmarking and business intelligence.
Brad works with and oversees a number of golf facilities across the country. Comparing the PGA TOUR TPC network of facilities against each other (internal benchmarking) has yielded some very good business intelligence. Brad does internal benchmarking on an ongoing basis.
In addition, Brad wants to compare his facility to other facilities that are similar in profile and not in his own portfolio or in the local market. For example, it makes perfect sense for Brad to compare his course against a course like The Plantation Course at Kapalua or the Ocean Course at Kiawah. All three host PGA TOUR events or a Major Championship, are high end - bucket-list facilities, have high end hotel partners, are about the same size and so on.
Finally, Brad also encourages his managers to gather data on the local level allowing them to aggregate data from a variety of sources and to make fact based, well informed decisions. The end result is an approach that is right for his business, his resources, and his point of view.
While the business model of golf is consistent from course to course (more on that in an upcoming post), each individual business is unique and businesses need to make decisions based on their individual needs.
Regardless of your point of view, benchmarking and business intelligence can be an important element of your management tool box.
Which camp are you in?