Ian Duffy FGS Partner, Corporate Turnaround

Report
Overview: Current market research on
the Irish golf industry
Ian Duffy, FGS Partner,
Corporate Turnaround & Change Management
Background to research
 Research undertaken during the summer of 2010.
 FGS and Carr Golf Services, in conjunction with the
GUI and the ILGU.
 On-line survey to Ireland’s 433 golf courses.
Background to research
 A total of 151 actual responses were received (or
an effective response rate of approximately 35%).
 All survey respondents details were confidential
and broken down into regions for the purpose of
analysis.
Introduction
 Significant growth and investment in the industry
over the last 15 years.
 Excellent courses, facilities and standards with a
wide range of availability and choice
 Strong international reputation as desirable golfing
destination
Introduction
 However, the industry does face major challenges
given:
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Decline in golfing tourists
Debt levels
Falling memberships
Excess capacity
Increased costs
Fragmented industry
Golf industry in Ireland overview
 One in every 25 people a golf club member and
these figures (excludes casual golfers).
 Golf industry in Ireland gives rise to the
employment of approximately 8,000 persons (both
full and part-time)
 433 courses throughout the 32 counties (increase
of c. 100 clubs over the last 15 years).
Trends in the Number of Golf Clubs
1995-2009
Golf industry in Ireland overview
 Golf club membership growth over the last 10 years
was driven by increased;
» Population
» Disposable income
» Profile of the sport.
 Tax reliefs for hotel developments (and the
expansion in the number of hotels and resorts in
recent years) indirectly drove the number of golf
courses.
Golf industry in Ireland overview
 ‘Our golf product is among the best in the world
and it is up to us to ensure that all is being done to
fully promote what is on offer’.*
 Major operation, structural and marketing issues
that need to be resolved.
» *Chair of Failte Ireland
Research findings
 The report can be broken down into the key areas
of:
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Running efficient golf club operations;
Under-utilisation in the Irish golfing industry;
Sustainability;
Representing the Industry and;
Marketing
Running efficient golf club operations
Table 3.2: Overall Membership Trends, 2007-2010
Members Increasing
Members Decreasing
(23.1%)
(55.4%)
Members Stayed the
same
(21.5%)
Scale
%
Scale
%
Increased between 10% and 20%
41.8
Decreased between 10% and 20%
28.6
Increased by less than 10%
47.8
Decreased by less than 10%
57.1
Increased by more than 20%
10.4
Decreased by more than 20%
14.3
100.0
N = 121 cases
Note: discrepancies may arise due to rounding
Analysis: FGS Consulting
100.0
-
Running efficient golf club operations
Table 3.1: Membership Trends (disaggregated by region)
Increasing
Decreasing
Stayed the same
Province
%
%
%
Connacht
14.3
78.6
7.1
Dublin
9.5
57.1
33.3
Leinster
23.3
50.0
26.7
Munster
34.6
46.2
19.2
Ulster
26.7
56.7
16.7
National
23.1
55.4
21.5
N = 121 cases
Note: discrepancies may arise due to rounding
Analysis: FGS Consulting
Running efficient golf club operations
 Higher number of clubs are serving the same prorata number of people/members.
 The number of members per club in 2002 was 661
and in 2009 was 590. Significant fall there.
 Number of Persons (1,000 of population) per Golf
Club dropped from 14.87 in 1996 to 14.38 in 2009.
Trends in the Number of Golf
Memberships (‘000), 1995-2009
55
250
50
200
45
150
40
100
35
50
30
0
1995
1996
1997
1998
1999
2000
2001
Female Members (LHS)
2002
2003
2004
2005
Male Members (RHS)
2006
2007
2008
2009
Running efficient golf club operations
 Based upon the data received, the estimated
average cost of operating a golf club in 2009 was
€990,000.
 The equivalent figure in 1999 was €266,000 (in
2009 prices) which indicates that costs have risen
by 270% in just over a decade.
Running efficient golf club operations
 Course maintenance is 40% of operating costs is
largest cost centre.
 Administration costs are 18% of operating costs.
 Clubhouse operations are16% of operating Costs
Running efficient golf club operations
Table 5.1: Composition of Operating Costs (disaggregated by region)
Course
maintenance
Food and
Beverage
Clubhouse
operations
Any other
costs
Total
Administration
%
%
%
%
%
%
Connacht
34.2
17.9
2.4
20.8
24.7
100.0
Dublin
48.2
14.5
12.5
13.3
11.5
100.0
Leinster
48.6
19.3
7.7
12.5
11.9
100.0
Munster
30.1
22.7
18.1
17.2
11.9
100.0
Ulster
37.5
11.7
16.4
20.9
13.6
100.0
National
40.1
17.8
13.2
16.0
12.9
100.0
Province
N = 81 cases
Note: discrepancies may arise due to rounding
Analysis: FGS Consulting
Running efficient golf club operations
Table 5.3: Operating Cost Trends (disaggregated by region)
Increasing
Decreasing
Stayed the same
Province
%
%
%
Connacht
25.0
66.7
8.3
Dublin
33.3
53.3
13.3
Leinster
25.0
60.0
15.0
Munster
12.5
75.0
12.5
Ulster
34.8
43.5
21.7
National
26.7
58.1
15.1
N = 86 cases
Analysis: FGS Consulting
Under-utilisation in the Irish golfing
industry
 The Irish golfing industry has the capacity to
support up to 23m rounds of golf in a given year.
 Analysis shows that a maximum of 13.3m rounds
were actually played in 2009 suggesting that the
level of under-utilisation is close to 42%.
Under-utilisation in the Irish golfing
industry
 Oversupply of golf clubs range from 35% in Dublin
to 53% in Leinster.
 Industry needs to consider new and innovative
approaches and solutions, including a programme
of consolidation.
Under-utilisation in the Irish golfing
industry
Table 3.10: Estimated under-utilisation (disaggregated by region)
Projected Total
Rounds Played
Estimated
Maximum
Capacity
Underutilisation
Connacht
1,346,454
2,242,619
40.0
Dublin
2,084,378
3,203,741
34.9
Leinster
2,935,688
6,140,504
52.2
Munster
3,065,392
4,859,007
36.9
Ulster
3,883,594
6,567,669
40.9
National
13,315,507
23,013,540
42.1
Province
Analysis: FGS Consulting
Under-utilisation in the Irish golfing
industry
 C. 50% of all respondents reported rounds played
had decreased over the last 3 years.
 This downward trend was most pronounced in
Connacht (71%) and Dublin (50%).
 However, 40% of respondents in Munster reported
that the number of rounds played had actually
increased.
Under-utilisation in the Irish golfing
industry
Table 3.6: Rounds Played Trends (disaggregated by region)
Increasing
Decreasing
Stayed the same
Province
%
%
%
Connacht
7.1
71.4
21.4
Dublin
27.3
50.0
22.7
Leinster
31.0
48.3
20.7
Munster
40.0
40.0
20.0
Ulster
37.0
37.0
25.9
National
30.8
47.0
22.2
N = 117 cases
Note: discrepancies may arise due to rounding
Analysis: FGS Consulting
Sustainability
 Almost 27% of respondents reported that revenues
had increased since 2007.
 A further 17% reported that revenues remained
unchanged.
 Almost 57% of respondents reported that revenues
had decreased.
Sustainability
 Green Fees account for 17% of all revenues
nationwide.
 Local authority-owned golf clubs Green Fees
account for nearly 50% of revenues.
 By contrast, Green Fees account for just 15% and
20% of all revenues in the case of member-owned
and proprietor-owned golf clubs, respectively.
Sustainability
 ‘Membership’ fees (i.e. subscription and joining)
account for less than 20% of total revenues for
local authority-owned golf clubs.
 Such fees contribute 65% and 27% of all revenues
in the case of member-owned and proprietorowned golf clubs, respectively.
Sustainability
 Food and Beverage and, to a lesser extent, the Pro
Shop accounted for 35% of the revenues of
proprietor-owned golf clubs.
 In comparison with member-owned golf clubs
(15%).
 Suggest that proprietor-owned golf clubs have a
greater focus on multiple sources of revenue.
Sustainability
 Significant amount of debt in the Irish golf industry
especially amongst newer clubs who would have
made large capital investments in the last 10-15
years.
 The level of debt as a % of revenue in 2009 was
greater than 100% for 1 in 5 respondents with the
highest number of cases in Connacht at 31%.
 This represents a clear challenge for industry not
renowned for making profits.
Sustainability
 3 out of 4 golf clubs in Ireland made capital
investments over the past 3 years.
 The highest number of these was in Dublin, where
almost 93% of all golf clubs incurred capital
expenditure.
 The vast majority of this (70%) was targeted at golf
courses whereas 17% was applied to clubhouses.
Marketing
 Less than 2 in every 3 golf clubs had a strategic
plan in place for 2009
 40% of respondents did not have a Strategic Plan
in place for 2009 whilst 80% did not have a Yield
Management Strategy.
 Sales and marketing accounts for just 1% of
operating costs nationwide.
Marketing
 There is clearly a need for strategic planning in
the golf industry.
 Many golf clubs need help in developing a business
turnaround plan that will addresses strategic
deficiencies and operational ineffectiveness.
 Of those golf clubs that did have a strategic plan,
64% of them saw their membership numbers
increase.
Marketing
 Golf clubs with increasing revenues in 2009 were
more than twice as likely to employ a yield
management strategy compared to golf clubs with
decreasing revenues
 Almost 31% of golf clubs with increasing revenues
employ such a strategy
 New approach to neighbours – Friend or Foe
Representing the Industry
 Fragmented representation of the industry
 Should we look at an umbrella body that could play
a constructive role in presenting the industry’s view
with regard to issues such as;
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Bench-marking
Training
Co op and buying Power
Labour costs negotiations
Liaising with State agencies
Capacity and yield management
Conclusions
» Running efficient golf club operations;
» Marty Carr of Carr Golf Services & Mark Nolan, the
Dromoland Collection
» Under-utilisation in the Irish golfing industry;
» Buddy Darby (Kiawah Partners), Marty Carr
» Sustainability;
» Declan Taite (FGS) particular emphasis on debt restructuring
and management
» Representing the Industry and;
» Marty Carr, Frank Bowen (GUI), Sinead Heraty (ILGU) and
Keith McCormack (Failte Ireland)
» Marketing/New Media/Online Sales
» Buddy Darby (Kiawah Partners), Keith McCormack (Failte
Ireland) and Mike Lasoulat (Golf Channel Solutions)
FGS team here today
Ian Duffy
FGS Partner, Corporate Turnaround
& Change Management
[email protected]
Dublin Office T: 01 418 2021
Declan Taite
FGS Partner, Corporate
Restructuring & Insolvency
[email protected]
Dublin Office T: 01 418 2000
For further information about FGS visit
our website:
www.fgspartnership.com
Thank you
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