How much should clubs charge for green fees?
By Dean Murphy
New Zealand Golf Chief Executive
For the past 10 years, one of the hottest topics of discussion at club forums has been the price of green fees.
While the crazy discounting of three years ago is no longer such a feature of the market, the price charged for green fees remains a major concern for many clubs.
The discussion generally focuses on the thought that green fees are far too low and undermine the value of traditional membership products.
While there are many clubs that have diverse revenue streams, and therefore less reliance on traditional membership income, this revenue line remains the critical focus area for most clubs in New Zealand. It’s easy therefore to understand why low green fee rates remain a concern for clubs as they contemplate the future.
More often than not, club forums will agree that green fee rates need to rise. Yet in most areas these become more affordable each year while traditional membership prices tend to slowly increase. I recently attended an excellent club forum in Canterbury where there was much enthusiasm for green fee rates to rise and several clubs made a pledge to increase their green fees. It will be interesting to see what happens in that market over the coming year.
New Zealand Golf has long recommended that green fee rates should roughly be related to the monthly golfer. Our thinking is that if a golfer is playing more than once a month, they should be better off joining the club as a member.
That would see green fee rates being roughly 1/12 of the membership fee – $40 green fee for a $500 club membership, $125 for a $1500 club membership. This rough method ensures a decent value proportion is offered for the member against the casual golfer.
Other sectors manage this value proposition well. Take for example the skiing industry, where it is far more advantageous to be a season pass holder rather than buy day lift passes.
The trouble with the simplistic thinking above (raise green fees and return more value to traditional membership) is that it has the potential to alienate our biggest growth market.
New Zealand’s golf participation rates are increasing (up two percent since 2014). However with traditional membership numbers flat at best, the growth we are seeing is all in the casual player market. There is further opportunity for golf to increase the number of participants as the population of New Zealand grows over the coming 20 years. But for now, our growth is all in casual players.
The fact is that demographic changes, busier lives and rising living costs are influencing the way people play golf. While clubs are increasingly seeking new ways to attract participants and to increase their long-term sustainability, today’s golfer is increasingly a casual player without a membership who prefers to participate in an unstructured and flexible way. Some have budget constraints, most have limits on their time. For the causal player, it has almost never been cheaper nor more accessible to play golf. Affordable green fees encourage them to play and this in turn drives business into golf clubs.
The challenge we have as a sector therefore is to deliver the entitlements that traditional club members pay for with the demands of the growing casual player market.
This, in my view, all comes down to good planning. The modern golf club in New Zealand needs to have a very clear picture of who their customers are and what mix of customers they are targeting. For some clubs it will be all about membership, for others the casual player might be the most important customer.
Careful thought needs to be placed into the membership value proposition and how this relates to the products offered to casual players. Having a clear strategy behind the positioning of all price points will help clubs know where they sit and how to balance the various customer needs. All golfers use the same facility – how the price points are managed is the piece that needs careful thought.
In the end, golf clubs are the same as all businesses who constantly need to be evolving to meet their customers’ needs. As our golfing market evolves, the casual player is becoming a more important – how we deal with their needs may well influence our future success.