|Smaller Properties Share in Golf Windfall|
|High Development Costs Par for the Course|
|By Jeff Higley H&MM Managing Editor / September 1998
Golf is more than just a game when it comes to the resort hotel industry. Destination resorts are all trying to grab a piece of the $15.1 billion pie - that's what U.S. golfers annually spend, nearly $8 billion of which is for playing fees alone.
"Golf is the engine that drives most resort destinations," said Douglas Geoga, president of Hyatt Hotels Corp., which has 14 resorts that feature golf courses in the United States and the Caribbean. Group golf outings are important from a meeting planner's perspective, Geoga said. He added that golf is critical for Hyatt because guests expect to be able to hit the links at a Hyatt resort.
"Golf puts you into a different category in terms of putting you in
front of different audiences," said Sam Haigh, c.o.o. of Benchmark Hospitality,
a management company based in The Woodlands, Texas that operates 10 conference
center resorts-including three with golf courses-among the 17 properties
it manages. "A resort setting with a golf course sets a different tone
than one without a golf course."
"Golf is very, very important in the positioning of a property," said David Richard, director of marketing at The Orchid at Mauna Lani resort in Hawaii. "It's one of the mandatory things groups look for 95 percent of the time." That's the case at the Sheraton El Conquistador Resort & Country Club in Tucson, Ariz. The property features an on-site 9-hole golf course and two 18-hole courses nearby.
Kim Guggino, director of sales and marketing at the El Conquistador, said golf represents 95 percent of the property's group business. Group business comprises 70 percent of all business at the El Conquistador. She said 15 percent of the hotel's revenue is generated by golf.
"It's an invaluable opportunity to recreate, do business and get to know one another," said Guggino, whose property offers four golf packages during peak season at its own country club. "It provides a tremendous value to a customer who is pinched for time."
Marriott International's philosophy is that golf courses have to stand alone as a profit center from the rest of the resort, according to Kevin Hammock, director of brand management for Marriott Golf. The company operates 25 Marriott golf locations in the United States and 10 in the United Kingdom, in addition to managing some independent courses that don't fly the Marriott flag.
"As we develop golf resorts, we develop them with that in mind," he said. "Golf drives room rates and occupancy, but the bottom line is that it has to be self- sufficient."
Bob Crawford, president of Hospitality Resolutions, a Natick, Mass.-based consulting company, said it takes great discipline to operate a golf course that is self-sufficient.
"I wouldn't think you'd build a resort today without a golf-course component, unless you are seriously restricted by climate," Crawford said. "In many cases, golf courses are profit contributors-as they should be. It's a balancing act to make sure guests enjoy themselves, [and] yet you have to meet the bottom line." Golf can play a big role in the bottom line, according to Haigh. He said Benchmark has discovered that if its properties with golf decided to not have a golf course any more, the bottom line would drop 20 percent. Similarly, if the company outsourced the golfing operations at those properties, the bottom line would drop 10 percent.
Properties with golf courses have a much easier time attracting groups
interested in playing golf than those without courses because they can
offer exclusive tee times.
"To be able to offer a signature [Jack] Nicklaus course and to be able to have access to tee times is critical," Geoga said. "Nothing would be more frustrating than showing a guest a beautiful golf course at your property and not allowing the guest to have access to it." The El Conquistador's country club is five miles from the property, but allows the resort to offer 45 holes for golfers. Guggino said having that type of access is a big hit with guests.
"Having accessible tee times has a strong value to our customers," she said. "It makes a difference when planners are putting together a meeting." That's why the hotel, built in 1982, purchased a nearby private country club in 1989.
"We were already buying and allocating tee times at the country club," Guggino said. "Purchasing the country club allowed us to be much more flexible." Even resorts without golf courses try to get into the act by buying tee times at area courses, according to Dave Elmendorf, director of golf for Montvale, N.J.- based Dolce International, which operates 11 conference centers worldwide-six of which have their own golf courses.
"Just about every hotel that doesn't have a golf course tries to make arrangements with one," Elmendorf said. "The courses oblige because if you're in the daily fee golf business, you don't care how you fill the tee times as long as you fill them." That type of arrangement leads most resort hotel operators to think about building their own course, according to Patrick Elsmie, g.m. at the Old Course Hotel in St. Andrews, Scotland.
That property is located near one of the most famous golf courses in the world, yet its guests could not consistently get tee times because there is a daily, early-morning balloting process that determines tee times. Since about 42 percent of the guests at the Old Course Hotel play golf when visiting, the property's operators decided to build their own course-the Duke's Course opened in 1995-to handle the demand for tee times.
"Guests could play [at St. Andrews], but we didn't have any special right of access to the most famous golf course in the world," Elsmie said. "We decided to build our own course to give those not making the morning ballot a chance to play a championship course. What we can safely say is that with the addition of the Duke's Course, the Old Course Hotel became a true resort. It makes it much easier to sell [rooms] when a property has its own course." Elsmie said the property's rate structure was altered dramatically when the new course opened, and travelers gladly will pay whatever is necessary to stay in the cradle of golf.
"Golf has been played here for 600 years," he said. "People come to "the home of golf" because of golf. They aren't going to turn back because of the hotel's rate."
Making a profit is the reason most hotels exist, and the golf resort property is no different - regardless of whether the sport is treated as an amenity.
"Our philosophy is that we're not in the golf business, we're in the business of selling rooms," Elmendorf said. "Golf is an amenity to that.
"We have a profit motive in everything we do," he added. "Generally speaking, a golf course will pay for itself."
"We really look at it as an amenity," Richard said of The Orchid at Mauna Lani, which shares two golf courses with The Mauna Lani Bay Hotel-including the South Course, which hosted the 1998 Seniors Skins Game and has some breathtaking ocean views from its fairways and greens. "We wouldn't be able to get group business without it, yet the honeymooners and vacationers who aren't interested in golf have plenty of other things to do."
Hammock said Marriott doesn't think of golf as an amenity. "We maintain
the focus on making sure that golf is profitable," he said. "If it's not
[profitable], it would be like a pool-it would be an amenity. Even all-inclusive
resorts in the Caribbean-which traditionally have steered
"Some all-inclusive resorts are developing basic courses to have it as an amenity," she said. "They tend to cater to European clients, so there has been an economic roadblock to overcome. They're trying to cater to more upscale U.S. guests and golf is one way to attract that segment. [Determining the] point of origin market is a key component to deciding whether to build a golf course."
Building the bottom line leads many golf resorts to allow memberships and open play, when tee times permit. Hammock said Marriott's two Scottsdale, Ariz., properties-the Camelback Inn Resort Golf Club & Spa and the Mountain Shadows Resort & Golf Club-host a lot of players from other resort hotels in the area.
"It's just another way to increase the bottom line without hurting the
product," he said.