NATIONAL GOLF FOUNDATION
SEPTEMBER 10 UPDATE
Churn: the Give and Take of Golf Demand
The big question in March and April was whether golf courses and retail would reopen and remain open. In May and June, we wondered how quickly and strongly the golf economy would bounce back from spring losses. Then, in July and August, our curiosity turned towards understanding how golfers were behaving differently in the new normal, and which consumer groups were contributing to the summer spikes in play and spend.
Now, the big unknown seems to be the extent to which we might retain new golfers and sustain increased levels of play when COVID is finally in the rearview. That’s of course a longer-term question, but we can certainly speculate based on past and current knowledge.
Let’s first recognize how we got to this point. There’s no question the leading driver of golf’s nationwide surge is less resource competition – fewer commitments, fewer trips, fewer available activities, and fewer ways to spend disposable income. There’ve been other transient factors too, like favorable weather, extended shutdowns at golf entertainment venues, and perhaps even a pandemic-induced need for mental and physical escape.
But nothing about the past few months seems structurally different for golf, whether with the product itself, the service that supports it, or the overall user experience … unless you count extended tee time intervals, which for a time seemed to produce faster, smoother and more enjoyable rounds. Either way, we weren’t suddenly marketing ourselves differently, onboarding new players differently, or managing customer relationships differently. (In fact, remote check-in procedures may have made it more impersonal.) Which is to say we should expect a similar churn rate as before, because nothing changes if nothing changes.
The ability to retain customers has been golf’s Achilles heel for some time now. In the past five years alone we’ve “welcomed” more than 12 million people to the traditional game, and yet our ‘sea level’ has risen by only 200,000, give or take. It’s almost inexplicable, and signals a serious issue with the experience and/or perceived value among new customers.
We can certainly hope that the pandemic reorients consumers – making them appreciate open space, fresh air and less crowded activities than before. But those are probably fleeting effects.
Perhaps the one thing that may be different these days, and should contribute positively to golf’s retention rate, is the fact that more and more beginners are coming in with off-course experiences under their belts – specifically golf entertainment – which means more competence and confidence. Our data shows that beginners who’ve played at a golf entertainment venue are 20% more likely to say they’ll stick around, barring health or financial setbacks.
This message isn’t meant to be a tub of ice water dumped over the hopes of those currently celebrating golf’s surge, but it is a ‘bucket challenge’ of sorts. If it motivates some to fight the natural tendency to relax and enjoy the extra business, and instead strive to identify our newcomers and make an extra-large effort to ensure that their experience is sticky … then it was worth the risk of dampening some of the enthusiasm out there right now. Encouragingly, we’ve had recent dialogues with operators about this very topic (experience and retention), and can sense a different level of determination.
Summer of Golf continues: July rounds up 20%
Rounds of golf were up 20% nationally in July, outpacing June’s 14% gain over last year. This two-month rebound has allowed the golf industry to climb from a 16% year-to-date deficit on April 30 to now a 3% lead over 2019.
It almost seems inconceivable given the loss of 20 million spring rounds from course shutdowns and virus-related anxieties. And the good news is likely to keep coming, at least from a play point-of-view. Indications from several golf course management companies, Troon, KemperSports and Billy Casper Golf Management among them, are that August was nearly as good.
To put the July jump in perspective, only three times in at least the past 151 months has the industry seen a monthly rounds-increase of 20% or more, per Golf Datatech's reports. All three were during a heatwave in late 2011/early 2012, yielding surges in play at courses in the north that were typically closed and at a time of year when percentage increases can be misleading. To have a jump this significant during a high-volume summer month is unprecedented and reflects approximately 10 million more July rounds versus a year ago.
Our latest year-end forecast has us up 2% to 6% year-over-year. Consider this – we haven’t seen more than a 5% Y.O.Y. increase since 2012 (during that surreal winter heatwave).
Beneath the surface of this macro-level data, NGF's ongoing national participation study shows that 35- to 49-year-old golfers have been especially engaged, with 1/4 of this cohort reporting an increase in their May-July rounds versus what they’d consider typical (by comparison, 16% of other golfers indicated the same).
And a similar proportion of 35-49 golfers also anticipate a higher volume in their rest-of-year play versus typical. In fact, they are the only age cohort with more golfers expecting an increase vs. decrease this fall.
A word of caution, though, about these ultra-engaged 35-49’s … most of them (more than 2 out of 3) credit their increased play, at least in part, to the lack of recreational alternatives. This underscores the importance of identifying and engaging customers before the rest of the leisure world comes back online.
All in all, the indicators are mostly positive for a continued swell in golf demand. There are five major championships remaining (three for the women and two for the men), plus the lack of other safe and healthy activities, favorable weather in the forecast, and remote work and school for many parts of the country – all create that additional space for golfers (and prospects) to hit the links.
The Emergency Nine
Have you gotten out to play nine holes in recent months? If so, you're not alone.
Golf course operators report that afternoon and evening tee times have been popular, which seems right given that Covid-19 has changed the contours of the work day for many. Sorting through recent golf participation and engagement research, the number of short loops (as a percentage of total loops) is up over 15% in 2020.
Core golfers report that 33% of their rounds this year have been of the nine-hole variety, while occasional golfers tell us that nearly half (48%) are playing nine holes. This will be seen as good news by many, especially the USGA given their PLAY9 initiative, and would indicate that the “time barrier” to golf is being overcome by more golfers.
We've talked about the increase in beginners and youth golfers (see below), so clearly the late-day tee times aren't just for the work-at-home crowd. With late summer days, those nine-hole twilight rounds present the perfect opportunity for families to get to the course after an early dinner, or newcomers to get more comfortable with the game.
Nine-Hole Golf in the U.S.
A Look at Nine-Hole Facilities as a Proportion of Total Supply
Did you know that up until 1974, there were more nine-hole golf facilities in the U.S. than those with 18 or more holes?
18 holes wasn't always the preferred layout. Indeed, many of today’s 18-hole courses were built in two stages -- nine holes at a time. Today, there are 3,777 nine-hole golf facilities in the U.S. that account for about 26% of the total supply.
The seven states with more nine-hole facilities than 18 or 27?
Iowa -- 248 vs 135
Kansas -- 137 vs 101
Nebraska -- 123 vs 90
North Dakota -- 88 vs 28
South Dakota -- 79 vs 40
Maine -- 72 vs 60
Alaska -- 14 vs 6
And yes, Iowa has more nine-hole golf facilities than any other state in the nation. The only other state with more than 200 nine-holers is Texas, with 202.
New faces on the course: Projecting significant jumps in junior (and overall beginner) participation
Based on NGF research at the midway point of the year, there’s evidence the number of junior golfers (ages 6-17) could swell by as much as 20% this year. With approximately 2.5 million kids having teed it up on a golf course last year, that’s a potential Covid-related bump of half a million junior golfers by year's end.
If we had used the first quarter of 2020 (January, February and March) as any indication, we’d have seen no real change in the junior ranks, as the numbers were relatively normal. But in Q2, the rise has been significant from a directional standpoint.
It makes sense, with golf celebrated as a safe and healthy outdoor activity for all ages as the coronavirus rages on. With many youth sports on hold or slowly coming back, and families seeking activities they can do together, especially as schools were out, golf has emerged as a terrific alternative. Our data also suggests that these newbies may actually be a little bit younger than usual, with an increase in the number of girls and about the same racial/ethnic diversity (~25% non-Caucasian) that we’re now accustomed to seeing among the junior set.
The number of overall beginning and returning golfers during the Q2 stretch appears equally significant – both about 20% higher than in recent years.
The question, as always, is whether the industry will be able to convert these golfers into committed customers. That will depend on the experience they have at the golf course, which can no doubt be managed in a way that enhances satisfaction, fosters loyalty and improves retention.
Bear in mind, this inflow of new golfers will be offset, to some extent, by a natural churn that occurs every year. This may end up even more pronounced in 2020 due to Covid, as some golfers will elect not to play this year because of financial hardship or health and safety concerns.
Golf travel - What's the impact?
While equipment sales and play have been staging a strong comeback, the same can't be said for golf travel. NGF consumer research is signaling that overall trip volume could be down 35% to 40% this year.
Consider this: TSA airport checkpoint data is showing the number of air travelers in the U.S. is off about 75% versus last year and recent norms, having stalled a bit in the past few weeks. And most airlines are now projecting limited Q3 recovery.
Changes in Travel Intent
The following map shows how intent to travel to various locations (by core golfers living east of the Mississippi) has changed since the beginning of the year. Trips out west by “Easterners” appear to be drastically fewer, while southeast golf destinations may suffer the least, owing to the very large number of golfers living within driving distance. Core golfers are defined as those who played 8-or-more rounds over the past 12 months.
What Are Golf Consumers Searching For?
As another measure of increased play and demand, Google data shows that searches including the terms ‘golf balls’ and ‘golf clubs’ are both about 20% more popular right now versus their previous 5-year high marks. To an extent this could reflect a shift – whether fleeting or lasting – towards buying online (given recent store closures and/or golfers not wanting to visit physical retail), but given intel from equipment manufacturers and retailers we suspect that this lift in search popularity is largely a sign of increased purchase interest and behavior.
• Currently open
• Not yet open or operations suspended temporarily
• Non-sampled golf facilities
The map above represents a sample of approximately 10% of all golf courses in the U.S., and is intended to provide perspective as to the geography of courses that are either open or have temporarily suspended golf operations.
While not representative of a complete view of golf course availability, it is the most nationally representative sample of courses available in the industry -- one that includes daily fee, private, municipal, resort and residential communities.
Trend in Course Openings
Less than 50% of golf courses were open to play for more than a month during the height of the coronavirus pandemic -- a combination of governmental efforts (state and local) to reduce the spread of the virus as well as seasonality (wintry weather in the northernmost parts of the country).
The percentage steadily increased from the last week of April through mid-May as more than a dozen states lifted bans on golf while others -- most notably California and Florida -- eased significant local restrictions. By early June, no states had restrictions on play.
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