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Discount tee times divide industry

By Shane Sharp, Contributor

At first blush, the recent deluge of "last-minute" and "next-day" discount tee-time services available on the market today seem to offer a win-win scenario. Golfers get price breaks, courses fill low-demand slots on their tee sheets, and third-party discounters make a little profit, to boot.

A closer look reveals an industry divided.

Discount tee-time services claim to provide consumers with a valuable service and golf courses with much-needed, off-peak rounds. They are typically found on the Internet under a variety of clever domain names, and their numbers have increased almost exponentially over the past two years.

But a growing faction of golf course owners and golf tour operators contend these discount services are eroding rate integrity and training the consumer to devalue a product that is extremely costly to design, build, and maintain. Left unchecked, they argue, third-party, discount tee time providers eventually will cause irreversible harm to the industry.

Meanwhile, golfers are laughing all the way to the first tee.

"These services are great for the consumer, but none of them are good for the industry," says Alex Isaac, president of Las Vegas Golf, a golf package provider. "The golf courses have just dropped their shorts, and the rate integrity goes to pot. Once demand is back, those companies will go out of business."

Or will they? A handful of companies profess to offer value added services such as Internet marketing, Web site design, and press release posting, making them viable should the demand curve shift back in favor of golf courses. Others limit their services to filling empty slots on tee sheets, and as one discounter put it, to "fly below the radar." All, however, claim to save golfers anywhere between 20 and 50 percent off the "rack" or walk-in rate.

How do they do it?

Tee time discounters utilize a model almost identical to hotel and airline deep discounting service like priceline.com and hotwire.com. They gobble up unsold inventory (tee times) at a negotiated rate, mark it up a percentage, and resell it to the consumer at a discount. Golfers typically purchase the bargain round via the discount tee-time service's Web site. Many services require customers to print a voucher, while others are linked directly to the course's electronic tee sheet.

Either way, some industry insiders say courses are selling their souls to the devil.

"The last-minute, deep discounting to the general public is a big mistake," says Rob Larsen, president of Teebone Golf, an a la carte tee time and golf vacation service based in Orlando, Fla. "If you have a loyal group of local golfers, giving them a discount is good policy. So is discounting members who bought into something up front. But if Joe Blow knows he can get a discount at any course on any given day, we are training the public to fly by the seat of their pants."

Larsen says there always will be a market for advance tee times. Extended stay golf vacations and large groups have to book well ahead of time to guarantee availability. But by using discount tee-time providers to meet their short-term needs, Larsen says courses are headed down a slippery slope.

"When the entire public gets trained that discount tee times are available, tee sheets are going to be empty until 48 hours before," he says.

Discount tee-time companies don't dispute this prediction, nor do they claim to be stewards of the industry. Many say they are simply matching unutilized supply with latent demand.

"In the early '90s, golf was huge and so many new courses were built around the country," says Robert Browning, a sales manager with ClickitGolf.com, a discount tee time provider based in Fort Mill, S.C. "What happened was that supply and demand shifted. The courses couldn't stay full."

Staying full has been a challenge at the Warrior Golf Club in China Grove since it opened in 1999. The Stan Gentry designed layout has a reputation as a well-conditioned course with above average service. But its location 40 minutes north of Charlotte has made attracting throngs of full-paying golfers a challenge. Brian Lee, Warrior's director of golf, contracted with ClickitGolf.com two years ago to stimulate business.

"In this business you have to come up with some innovative ways to do business," Lee says. "I would rather have a full golf course of people paying $35 than a half empty course of people paying $40."

Lee views discount tee-time clients as potential, long-term customers.

"We only use the discounts to bring us golfers who would otherwise not make it out here," he says. "Once they get out here, we hope to win them over as regular customers who will pay the regular rate or bring in group sales."

It remains to bee seen, however, if golfers will forego the discount service for rack rates simply out of loyalty. Similar to discount hotel and airline service, discount tee times services were meant to attract low-end, bargain golfers who can't afford to pay full rates.

Mission not necessarily accomplished.

Because it is virtually impossible for discount tee-time services to gauge accurately the income of customers, Joe Millionaire and Joe Six Pack are equally as likely to use the service. Some discounters do attempt to weed out high-end golfers through screening processes.

"Essentially, it boils down to making the price sensitive golfer jump through enough hoops," says Mike Last, founder and president of Lastminutegolfer.com, a four-year-old golf marketing firm and discount tee time provider based in the Atlanta area.

Those hoops include prepaid, nonrefundable rounds and requiring membership (almost always free) to utilize the service. Last also says Lastminutegolfer.com supplies its member courses with a set of guidelines to educate them about the pros and cons of deep discounting and what type of golfer they should target.

"If golf courses overdo it, and make too much available, they will condition the golfer to think he/she should pay a lower rate." Last says. "A good service encourages a golf course to think otherwise. We encourage the courses to manage their tee sheet so that doesn't happen."

From where Jay Karen is sitting, there is no such thing as a good discount service. That seat happens to be in the headquarters of the National Golf Course Owners Association in Charleston, S.C. Karen and the NGCOA recently conducted a study on various discounting methods, from the ubiquitous books and coupons that permeate major markets to the myriad of online discount tee-time services that have flooded the Internet.

"We found that discounting golf is not having the effect on the bottom line we thought it would have," Karen says. "Time is a more important currency than money when it comes to golf. The fallacy in the thinking was that discounted golf would lead to an increase in rounds. But the price elasticity of demand for golf is such that people don't play more golf when the rate goes down because a round of golf takes four to five hours."

The NGCOA has determined that if a course discounts its rate by 20 percent, it will require a 25 percent increase in rounds of golf just to break even on cost. Bolstering rounds by 25 percent in an over supplied marketplace with a static number of golfers is a tenuous proposition, says Karen.

"There's a big debate in our industry as to what is more important, the rounds or the revenue," he says. "The owners who have been around awhile focus on revenue and the bottom line and they are the ones resisting the deep discounters. The others are willing to give it a try. But it is an addicting thing. Once these owners get on it, it is hard to get off."

Neither golf course owners nor discount tee-time services are sure what the future holds. In the meantime, Karen says golf courses would be wise to focus on revenue enhancing techniques that provide value, enhance niche development, and enable courses to maintain control of their inventory.

As examples, he cites promotion of practice facilities and teaching professionals, "Beginner Friendly" certifications for attracting new players, and frequent player cards to stimulate rounds among regular customers. He admits, though, that golf courses have their work cut out for them when it comes to limiting the impact discount tee time services will have on their average rate.

"With the airline industry, you only have 10 major players, so they can get in a room and control things better than the golf industry," Karen says. "Golf course owners have not had the ability to control discounting like the airlines."

Shane SharpShane Sharp, Contributor

Shane Sharp is vice president of Buffalo Communications, a golf and lifestyle media agency. He was a writer, senior writer and managing editor of TravelGolf.com from 1997 to 2003.

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