7 golf industry predictions for 2012

Rating: 
Average: 3.2 (9 votes)

There have been good years and bad years for the golf industry over the past two decades. But rarely does a banner year follow a dismal year, or vice versa. Our industry tends to follow the larger trends in the world, and move at a slow and deliberate pace.

So, in prognosticating the next year, it is primarily a task of reading the winds, and then using the past to help foretell the future.

In doing so, the signs for 2012 do not tell a glowing tale of financial bliss for the golf industry. The past year was filled with challenge, and 2012 will bring even more – testing the mettle of businessmen and forcing golf courses and developers to further adapt or die.

1. U.S. rounds are flat. But flat is the new up. The golf industry has seen a steady decline in rounds in recent years that can’t be attributed solely to weather. Demographic and economic trends have led to a slow bleeding of about a 2 percent decline each year. But the U.S. economy will experience a modest boost in 2012, and that should be enough to keep rounds flat. Savvy operators make moves to increase their play. But that will mean a decline in play and revenue for courses that have neglected maintenance or other investment needs. This will force more distressed properties to take action — either selling for giving up. Overall, U.S. golf supply will shrink by a modest one percent or less.

2. Sales and acquisitions. Golf courses in distress continue to work their way through the process. Banks that have held off on foreclosures or that have held off on selling foreclosed on properties will move forward — increasing the sales volume. But the process has been slow and will continue to move at a speed slower than most would prefer. Look for a few larger portfolios to sell before the end of the year.

3. Private equity. At least three private equity groups have announced intentions and made some deals. While these, and other groups, are reviewing potential sales, there is still a disconnect between buyers and sellers. These groups will close more deals in 2012, but not at the pace they announced when they got started.

4. European rounds slow. Golf will take a dip in 2012, as the European Union struggles with its currency and recession. Britain, which produces the majority of golfers for the region, will export fewer golfers on holiday, and that will lead to a challenging year for some resorts.

5. New construction in the U.S. almost came to a complete halt in late 2008, and only a handful of projects continued forward — most of them beyond the line of no return. A few developers placed their projects on hold, but have since finished them. But they tend to be unique circumstances, developed by visionaries with cash. We will continue to see a small number of development projects in the U.S. move forward. Most will be supported by seasoned developers with strong business plans, and a bank account that can handle risk. While more projects will get the green light in 2012, compared to the prior three years, the numbers will still be dismally small.

More importantly, however, developers will start to plan more projects for the future, which will lead to an increase in new developments in two to five years from now.

6. New Construction in Europe, Africa and the Middle East. The Euro crisis, combined with a recession in Britain, will bring a near halt to development in the region. With fewer travelers and a tightening on cash, most developers will keep or place their plans on hold. It is unclear how long the European financial crisis will continue, but it will definitely not abate in 2012.

7. New Construction in Asia. It may be near impossible to predict development activity in China, given the government’s secrecy. But it appears it is already in a slowdown and internal struggles and a coming leadership change do not bode well for 2012. Still, expect more projects in China than the U.S. and perhaps even Europe. Other parts of Asia, including Vietnam, are dangerously close to seeing their golf bubbles burst. Developers have built courses with the hope of attracting resort travelers. Expect caution as some now realize those hopes don’t seem as bright. 

Overall, my predictions may not appear to be very hopeful. But, when read in the context of developments over the past four years, there is a glimmer of hope. The U.S. economy is getting better and that will mean modest improvement for the golf industry. It’s just that it will take more than a year to clean out the backlog of struggling properties before sales return to decent prices and development can be considered. Europe is in for more of a challenging year, and while Asia will continue to roll along, the warning signs are on the horizon.

Now I know there will be readers who disagree with my predictions. So tell me what you think.

-Jack Crittenden, Editor In Chief, Golf Inc.

Comments

I would like to add a detail to the growth of the economy. thou you might see growth, that does not mean people will have the money to spend. jobs are not paying what they once use to. so ones salary is less. golf course owners will have to do some demographics and change with the area around them. " you are only worth what someone is willing to pay" and right now people are looking at value. so the once 70 to 100 dollar rate might not fit the area or the people around it that play.

I see many clubs that have been sitting idle for the last three years planning improvements that have been put on hold. Members and owners are restless and most are tired of dealing with same problems that have been facing and needed to fix in 2008. renovations will continue to be the "active sector" for us in the design and construction end of the business. Jerry Lemons ASGCA

+1 sid. USA courses will have to decide if 2 $40 rounds is better than 0 $100 rounds. locally, free cart with round fees has been driving business (like internet shopping with free shipping). more recently, buy 3 get 1 free has pumped foursomes.

I have been lucky enough to be a member of a private club the past 5 years. But we are dropping our membership. I will miss a lot of things, but mostly that I can walk 18 in 4 hours or less. In the future i will be faced with public course where i can walk, but it takes 5 hours or resort courses wher ou have to ride in a cart.

I think the thought that rounds being flat is the new up is kind of a sad thought and lacks ambition to improve and grow. By all means it's an up hill battle but creative out of the box thinking and managing a budget effectively can turn things around. If we sit all sit idle and wait for things to get better then golf will continue to decline. As a course manager I'm not waiting for things to get better, I'm going to make them better.

The golf industry is growing. Each day people looking for practice and learn more about.

I lived in China from 2007-2013 and saw more and more golfers every year.

Add new comment

By submitting this form, you accept the Mollom privacy policy.
If you enjoyed this article and would like to sign up for a FREE digital subscription, click here!