The Pellucid Perspective - August 2011 - (Page 14)

MARKET FOCUS Miami/ Ft Lauderdale, FL Core Business Statistical Area (CBSA) T he Miami/Ft Lauderdale market is the thinnest, most concentrated stretch of Private Golf in the US. If you’re a value-oriented golfer, you’re going to have to look harder and drive further to find a variety of golf that suits your budget and frequency. The Miami CBSA ranks 7th of the Top 25 golf markets in the US by number of golfers. The moderate golfer base of roughly 446K (very similar to Minneapolis in last month’s issue) is served by 237 18-hole equivalent (EHE) facilities (much higher than Minneapolis’184) producing a ratio of just shy of 1,900 golfers per EHE which is only slightly higher than the national average. The supply mix skew vs. the national distribution across Pellucid’s five access/value/usage segments shows an incredible skew to Private at 56% of total supply. This is probably the intersection of wealth and a prevalent attitude toward exclusiveness among the sun and surf crowd. Within Public Regulation, there’s a clear skew to the Premium vs. the Price components (12% vs. 8%) with an under-representation in the Public-Value midrange as a byproduct of the significant level of Private supply. The change in supply since 2000 has been modest when compared to the US level (7% expansion vs. 14%) which has somewhat softened the blow of rounds declines which are slightly higher than the national average. This results in a cumulative dilution rate for existing facilities of 17%, which is slightly below the national oversupply situation of 22% since the turn of the century. This means that, compared to 2000, the average existing operator in Miami has suffered an estimated 17% revenue decline due to supply dilution through some combination of rounds loss and/or rate erosion. The average facility has throughput of roughly 37,000 rds/yr, above the national average but potentially driven by longer season length and more sunshine. The more accurate comparison is the Miami market’s 48% utilization which lags the national average by 5 points (compare to Minneapolis’ 64% utilization rate last month in the high north). This means, after factoring in the longer season length and harsher climate, facilities in Miami are less efficient in generating rounds than the “average” golf facility nationally. One has to consider however that, given the significant presence of Private golf which doesn’t revolve around utilization, Miami’s not in as bad shape as it seems. Evidence of this is seen in the final ultimate revenue metric, Greens Fee Revenue per Available Round (RevpAR = Greens Fee Revenue/ Private PublicPremium PublicValue PublicPrice Learning & Practice Future Facility Golfer Base – Est. # of Golfers (Ks) – # of 18 Hole Equivalent Facilities – Golfers per 18-Hole Equiv. Supply Mix – Private – Pub-Prem – Pub-Val – Pub-Price – Learn & Prac Miami, FL CBSA Tot US Index vs. US 445.6 26,600 237 15,929 1,884 1,774 56% 12% 21% 8% 3% 29% 20% 33% 13% 4% 106 193 60 64 62 75 53 122 79 117 90 171 138 Supply/Demand Balance 7% 14% – ’00-’09 Cume Supply Growth/Decline –10% –8% – ’00-’09 Cume Rds Demand Growth/ Decline –17% –22% – ’00-’09 Cume Mkt Supply Dilution (-)/Absorption (+) Level* – Avg Ann Rds Velocity (18-hole Equiv.) 36,840 31,512 Rounds & GF Revenue Health – % Utilization Rate – Avg. Ann. Rev. per Public Regulation EHE ($Ks) – Revenue per Available Round (RevpAR) * Period % Chng in Rds vs. Period % Chng in Supply 48% $1,679 $22 53% $983 $16 Above average level vs. US (Index 105+) Average level vs. US (Index 95-104) Below average level vs. US (Index <95) Available (Capacity) Rounds), where Miami handily beats the national average with a $22 rate driven primarily by the higher than average Effective Green Fee rate achieved and offset slightly by the below average utilization. AugusT 2011 14 The Pellucid PersPecTive

Table of Contents for the Digital Edition of The Pellucid Perspective - August 2011

The Pellucid Perspective - August 2011
Contents
Why cost cutting doesn’t yield long-term prosperity
Get Golf Ready showing some traction
Danger, Will Robinson!
Golf holding up but heartland hammered by weather
U.S. golf course development dead, or just sleeping?
Whither the weather
Miami/Ft Lauderdale, FL Core Business Statistical Area (CBSA)
Comings & goings
A few changes of note in August’s dog days

The Pellucid Perspective - August 2011