The economic impact of the War in Ukraine continues to be felt around the world, and the golf industry is no exception. Electricity and gas, fuel, food, travel, logistics and labour are just some of the areas being heavily hit through the cost of living crisis, and by consequence, golf clubs have been forced to adapt to mounting pressures.
Clubs are faced with a choice; continue to spend money to maintain standards and support staff, or cut-back to the detriment of the golf product.
For Carr Golf, the golf services and maintenance experts whose growing portfolio of clients now extends to 21 golf courses across the island, the advice is simple: continue to invest and improve, even if that means increasing prices in line with inflation.
“Golf’s in a pretty good place but to maintain standards of previous levels, we have to increase prices, and that’s the position Carr Golf has taken,” says Alex Saul, Carr Golf’s Chief Commercial Officer.
“We enter 2023 in quite an advantageous position. Our total membership numbers across the golf courses is up 50—55% on where they were in 2019.
“We made the difficult decision to increase membership prices across our venues by an average 8% to help combat inflationary pressures. I would say almost universally it’s been reasonably well accepted. The golf consumer understands that these are real pressures and therefore, although we’re reluctant to pass them on, it’s needs must.
“We will continue to invest and maintain our facilities to a high standard because we don’t want to see the return to the flash and burn approach of 2009 through 2012. It takes such a long time to recover from the damage done by that race to the bottom discounting and the industry must learn from past mistakes.”
Thankfully an appetite still rumbles for golf in post-pandemic Ireland but there are signs of the industry stabilising since the unprecedented Covid boom. From the dizzying influx of new members, with member rounds in general increasing from 28 per year in 2019 to 32 on average in 2021 (despite courses being open only for 249 days), Carr has seen like-for-like average rounds drop 28% in the last year.
Whilst golfers are still playing more than in 2019, the emerging real estate on tee-sheets to sell green fees could prove crucial for profit and loss balance sheets in 2023, should clubs get their pricing right.
“As member rounds stabilise across the industry, it’s going to create additional green fee inventory, and therefore pricing is going to be critical,” says Saul.
“The industry needs to reflect on the product we provide. We’re maintaining 100 acre sites with huge investment and maintenance in presentation standards. It’s a four hour entertainment product and the industry deserves to underpin that with a good price.”
The war in Ukraine has been a game-changer for the golf industry, and incoming EU restrictions could have even greater consequences, too.
The production of fertiliser has been particularly affected. Not only have gas prices soared – gas being fundamental in the production of fertiliser – but Germany has placed a restriction on gas use, significantly shortening the supply of fertiliser as production costs continue to skyrocket.
“It’s been this perfect storm whereby virtually every product is up significantly,” says Ed Pettit, Managing Director of Carr Golf’s Maintenance Division.
“The price of urea is over 300% higher than it was during the pandemic. Fuel had gone up by about 58%, which was already a fair lift in the price per litre of agricultural diesel, but then when the war started, it jumped to about 206% higher. While it has come back a bit, it’s still nothing like where it was.”
“We also have EU restrictions on the use of microplastics which are traditionally used to coat fertilisers. Under the circular economy action plan, these can’t be used beyond 2024 so companies have to come up with new technologies and ways of doing it, and that’s going to add cost.
“Sustainable Use Regulations around pesticides will have a significant inflationary impact as well so we now have a scenario whereby the supply of fertiliser and the availability of chemicals, just like everything else, is restricted.
“Supply is a challenge and the costs are a challenge, driving up overall maintenance costs significantly.”
With no respite on the horizon, it’s up to golf clubs to ensure revenue meets the demand of inflated prices. A particularly harsh December and January with course closures due to frost was untimely to say the least, and while it’s too soon to predict how the domestic market will respond to necessary green fee hikes, internationally they have been met with little price resistance, especially from a galvanised U.S. market.
Just ten years ago, the inbound golf tourism from North America commanded less than 20% of the market share but that figure has since risen to around 50%, good news for Ireland’s renowned trophy links courses but also encouraging for the next tier of clubs sure to capitalise on a trickle-down effect due to increased demand.
“We’re looking at a very robust year in golf tourism,” says Carr Golf Chairman, Marty Carr. “People are valuing experiences a lot more and despite the turmoil in the financial markets, there’s a lot of people out there who have made a lot of money over the last number of years and they’re spending it on experiences, something they’ve been deprived of for several years.
“2023 is extremely busy, demand exceeds supply in terms of tee-times and hotel rooms, particularly at the top end of the market.”
Fáilte Ireland statistics from 2019 reported 200,000 overseas visitors entered Ireland annually to play golf, contributing almost €270 million to the Irish economy and accounting for over 1.7 million bed nights. While Covid was disruptive, the industry has wasted little time in returning to pre-pandemic levels. Consumers are looking to make up for lost time with Ireland’s premier courses already fully booked up for 2023 while sales for 2024 are way ahead of the norm.
With the return of the KPMG Women’s Irish Open to Dromoland Castle, as well as the K Club’s investment in the Horizon Irish Open, the Irish Legends at Seapoint, the Irish Challenge, The Open’s return to Royal Portrush in 2025 and the Ryder Cup coming to Adare in 2027, Ireland sits front and centre of the global golf map for the foreseeable future, presenting clubs with an incredible opportunity to tap into new revenue streams.
“The opportunities are plenty but the challenges are significant,” warns Carr. “The high-end member clubs that were respectful and understanding in facilitating a huge amount of visitor golf in 2022 will expect more opportunities to play this year.
“In some cases, you’re actually going to see a reduction in supply – golf courses with fewer tee-times available for sale listed at a higher price, in order to accommodate members.
“That’s going to compound the supply/demand situation. You’d hope clubs like Dooks, Ardglass, places in the North-West like Narin and Portnoo, or hidden gems like Arklow and Corballis Links are suddenly placed in the spotlight. A rising tide carries all boats so hopefully some of these other courses will benefit.”
That was certainly the thinking behind Carr Golf’s acquisition of Seapoint Golf Links in October 2021. An often overlooked gem on Ireland’s east coast, significant investment in the course and facilities has been rubber-stamped with news that the venue will host this year’s Irish Legends tournament in June.
“It’s very much one of the reasons we had the ambition to acquire Seapoint,” says Saul. “The dollar is particularly strong right now and there’s an opportunity for courses on that next tier down to position themselves to win a share of the lucrative international visitor market.
“We see a great opportunity there to bring more people to Seapoint and put it back on the map. It’s a €100 green fee versus €300 at Portmarnock or Doonbeg.
“There’s space there to make yourself known to the international tour operators and travel partners and to tap into an extremely healthy market.”
Planning will prove key to accessing these new opportunities and Carr Golf is better placed than most to meet the challenges ahead.
“At this stage we’ve purchased all of our course maintenance material requirements out to April 2024,” says Pettit.
“We have everything we need and that security of supply is critical for us. Our aeration schedules are confirmed with clubs through 2023 so there’s a huge amount of advanced planning making sure we have these windows in the diaries booked, then it’s really about getting it done as efficiently as possible so disruption is minimised.”
In good news for the domestic consumer, many clubs offer special rates to Golf Ireland members. The days of the €20 green fee may be long gone but there’s still incredible value for money to be had in Irish golf, ensuring customers are kept happy at a sustainable price point that also protects clubs in the long run.
“It’s a balancing act now,” says Saul. “We’re in a really good place going into 2023 and we’ve got a really good roadmap in front of us with all the visibility on golf with the Women’s Irish Open, the Irish Open, Irish Legends, The Open at Portrush and the Ryder Cup.
“At the same time, we have these wider inflationary challenges so we have to walk that tightrope and put structures in place to overcome them, and ultimately deliver a product that guarantees a price and a commitment from the consumer.”
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