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January 2020

No Crying Over Spoiled Milk

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By Jay Karen
CEO
NGCOA

I’m going to throw a question out there that might seem counterintuitive to many of our readers. Should golf course operators learn to get comfortable with seeing holes on the tee sheet? My reason for asking the question is not due to some pessimistic outlook on the demand for golf. I’m far from Chicken Little when it comes to the possibilities for golf. Rather – and this is no surprise due to the recent merger of GOLFNOW and EZLinks – I’ve been spending a lot of time thinking about the woes and dangers of the barter economy in golf.

In my attempt to understand why so many operators agree to cede pricing control to OTTAs through their barter agreements, I keep going back to the fact that the dramatic rise in the bartered inventory happened simultaneously with the onset of the Great Recession. If 40 percent or more of tee times weren’t being sold, while the weather forecast in our industry at the time was getting bleaker by the month, it’s easy to see how course operators felt they could spare a tee time or two in exchange for some promised, robust services. A nagging discomfort with so much occupancy can underpin the decision to spare a bit of inventory that might spoil anyway. Discomfort with seeing empty spots on a tee sheet also causes many managers to look at price as the first lever to pull.

Even before the recession, the typical course always had tee times that spoiled. I would imagine one percent of one percent of golf courses sell out nearly 100 percent of their available inventory. Highly rare, nay, I would say nearly mythical, is the restaurant that sells all tables, all the time, or the hotel that sells all rooms on all nights, or the airline that sells all seats on all flights on all days. And our natural instincts as business operators tell us to fill those empty tee times...fill those tables...fill those rooms...fill those seats...sometimes by any means necessary. In the name of filling soft times, we often sacrifice brand and price integrity. 

I learned recently that a grocery store will trash or return to the producers the gallons and gallons of milk that reach their expiration dates on the shelf. Instead of lowering the price of milk that is about to expire in the next 48-72 hours, a grocer will let the milk “die.” Grocers have gotten comfortable with letting some inventory simply expire, all in the name of price integrity. It’s not even price “integrity” per se, but simply a pricing strategy that has proven to support a better bottom line for the grocers. They would rather let inventory go unsold than discount it and break the pricing model that works for them. We should take a lesson from this. 

Should course operators get more comfortable with holes on the tee sheet? What do you think?

 

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