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April 2024

This Discussion is Getting Old

55 is a Speed Limit, Not An Age Deserving Of Discounts

By Harvey Silverman

It pops up every couple of years on Accelerate – a discussion about senior discounts. The questions include: Should I or shouldn’t I? What age is appropriate? Should senior rates be limited to certain days and times? What about if my competitors have them? How much should I discount?

First, whoever the first golf course operator was to set the senior age at 55 should be forever banned from running a golf facility. This singular, uncalled-for, moronic, ridiculous act of horrible business management led others off the cliff of intelligent rate setting. It helped to set into motion a period of profitability struggle and deterioration of conditions and service.
Personally, I was insulted by a label hung on me of “senior” at the vibrant age of 55.

A recent Accelerate post asked for the appropriate age to set senior discounts. So, let’s talk about age for a minute. The consensus of those offering senior discounts seems to be 60. That’s too young!

The chart below is from Statista and shows the average income by age group in 2022. It displays a pattern we’ve seen year after year – peak earning years are age 35-64. Social Security benefits can be received as early as 62, but the full retirement age is now 67 for people born in 1960 or later. And the fact that people 65-74 have average incomes slightly higher than people 25-34 indicates that people work longer and need less discount “help” than 18-34 year-old golfers.  

However, I think “What’s the right age?” is the wrong question. The question should be, should there be senior rates at all?

From the Federal Reserve’s Survey of Consumer Finances, Oct. 2023, we see how Americans’ median net worth has ballooned from 2019 to 2022. And look which age group ballooned the most – the 65-74 cohort, followed by the 55-64 age group.

And golf courses think these are the age groups to be entitled to discounts?

And then there are those whose excuse is, “Everyone does it.” But Apparation Golf’s Internet Golf Database (IGDB) says otherwise, at least for 18-hole (plus) public facilities. Based on a survey of golf course websites in the country, only about 40% publish senior discounted rates. Some could be unpublished, but at best guess, at most, 50% of these courses entitle seniors to discounts. The other half…don’t.

I asked ChatGPT, my AI buddy, “Evaluate the merits of senior rates for golf.” In about five seconds, it spit back some of the typical arguments, pros, and cons. I was disappointed that it recognized 55 as the age when senior discounts begin, but it reinforced my contention that golf courses went far too young when pegging 55 as the age when golfers would need financial incentives to play golf.

However, it made a curious point I had not heard before. Critics, (none cited) it wrote, “argue that age-based discounts perpetuate stereotypes and ageism by assuming that older individuals are inherently less affluent or capable of paying full price for recreational activities. Proponents of equity advocate for need-based assistance programs that consider individual financial circumstances rather than age alone.”

Staff member: Hi, this is Otto at Grass is Green and So Is Your Money Golf Course. How can I help you?

Caller: Do you have senior rates?

Staff member: We do, but you need to prove you qualify.

Caller: Okay, I’m 68 years old.

Staff member: Sorry, we don’t go by age. We go by need. We need to see your IRA, 401k, pension, bank, credit card, social security, and stock portfolio statements. Oh, and how much equity you have in your home. Then, we’ll determine your need for a senior discount.

Caller: Damn, I’ll just go to Top Golf.

Jim Koppenhaver’s February “Outside the Ropes” newsletter points out that 2024 might be a pivotal and possibly difficult year for pricing power. He notes how greens fees lagged inflation in 2021 and 2022 and caught up to it in 2023. But the national figures on inflation continue to drop, so raising rates above the projected 2.4% year-end inflation rate might stain all the good things golf has provided during and after COVID-19. We lagged inflation as people flocked to our first tees, helping to polish our reputation as an affordable recreation. We don’t want to be like what skiing has become.

The U.S. once set 55 as the national speed limit, hoping gas consumption would fall by 2.2%. It didn’t work - the drop was less than 1%. Golf courses set 55 as an age for discounts, hoping that increased volume would make up for a loss in gross margin. That didn’t work either and never will.
So there are a few directions to go on this. The first is to not have senior discounts at all.
After all, airlines don’t have senior fares because the seat they sit in costs just as much to get from point A to point B as the one next to them with the 20-year-old. Likewise, the cost to produce a round of golf (you do know what that is, right?) is the same no matter who tees off on the first hole.

The second is to acquiesce, but in a way that limits exposure. If you have senior discounts now, elevate the age to at least 65, and maybe 67, citing the current full retirement age of Social Security. The age jump can happen in one fell swoop, or, as colleague Stuart Lindsay has advised (and I’ve used with clients), edge it up one year at a time. Also, severely limit the days, times, and discount amounts.

A third option is to adopt and deploy dynamic pricing and market it to seniors (and all of your customers) to find rates and times that fit their budget, availability, or both. If the demand for golf remains strong, tee sheets will be filled with happy and satisfied customers.


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