The Swedish Rumor
It’s the inventory, stupid.
1987 I worked with payment systems for the hotel and travel industry. I read an article about Robert Crandall, the inventor of yield management and founder of Sabre, the global airline booking system.
Realising that the hotel industry in some years would be able to afford computers powerful enough to handle the extreme complexity that different prices based on when you book, when you want to stay, who you are and so on I could see the possibility to enhance income with at that time +50%.
Inventory business is simple. Since you cannot change your stock, a hotel with 100 room has an inventory of 36 500 room nights as their fixed inventory, you have to work with price.
Today, most golf courses still work the same way as hotels did in the eighties. Weekday and weekend fees and not more. Also annual membership fees are to fixed so they only are good for the players with +100 rounds that pay very little for their golf.
For Sweetspot, the Swedish IT start-up that developed a business system for golf courses the number of prices on a golf course is unlimited, for both membership fees and green fees. This is the only way to optimize the income for a golf course.
A golf course in Europe has depending on climate zone between 30 000 and 70 000 possible rounds and the objective is to optimize income from this inventory.
I have seen that golf courses that have increased occupancy as their main business goal always lower their average price and clubs trying to optimize average price loose in occupancy. My view is that golf needs to follow hotels and airlines and work with the keyfigure REVPAR/REVPAS. The abbreviation stands for Revenue Per available Room and Seat. It’s easy to calculate, take your income from the course and divide with the possible number of rounds, not only the played ones.
An empty tee time is an income lost forever. When Robert Crandall stated, “If I have 1 600 passengers and 400 prices, I lack 1 200 prices”. His idea was that every customer had an optimised price for the service.
Last season golf clubs in Sweden that used Sweetspot increased their income with approximately 20 % more than other clubs (the pandemic made it a record year for Swedish clubs since players could not travel abroad).
Most golf clubs use IT-systems that are made for administration, not business improvement. In a market where each tee times has a different demand our current way of business is wrong. Simple as that.
It’s time to change. And now we can change. A system for golf courses is as affordable for a golf club that a hotel system was for a hotel group back in the early nineties.
We must continue to improve income since our customers demand higher course quality. IT will help us to that.
Former Director for Business development at Swedish Golf Federation, business consultant for commercial sport industry.