State of the Industry 2009: Part I

Owners’ and developers’ optimism dims as economy hits hard

The economic realities of the current global business climate have left both golf facility owners and managers and builder/developers significantly less optimistic about the golf industry than they were a year ago, according to responses to the second annual Golf Inc. State of the Industry survey.

Golf Inc. received over 300 responses from industry professionals divided into four categories: facility owners or managers; developers or builders; management company executives; and product providers, vendors and others. Responses from each group will be posted over the next two weeks.

This week, we begin our series with responses from facility owners and operators and developers/builders.

Last year, more than 55 percent of owners expected either significant or slight revenue increases during 2009, however, just over 28 percent are counting on a better gross this year.

Four times as many owners forecast a “significant” drop in revenues this year as last. And their forecasts for next year are only slightly more hopeful — 68.5 percent of those surveyed last year expected a “good” to “excellent” year in 2009, while only 44 percent of current owners feel that way about 2010.

Other revenue and expense forecasts were equally dim. Nearly twice as many owners and operators as last year anticipated a decline in staff size in the coming year.

Approximately one third as many owners as last year expect even a slight increase in greens fees in the next year. Similarly, forecasts are slightly lower for capital expenditures.

The only sliver of optimism came from a few more owners who anticipate “excellent” or “good” business prospects in the coming year.

Among golf course developers and builders who responded, roughly the same 13-14 percent of optimists characterized their business prospects for the next year as “very good.” But not a single respondent felt prospects were “good,” compared to more than 50 percent of “good” predictions the previous year.

The vast majority of those “good” predictions turned into “fair” and “poor” forecasts for next year. The developers and builders who responded didn’t see any brighter picture for the industry at large, either — more than 85 percent of respondents forecasted a “fair” to “poor” coming year for golf as a whole.

Possibly in part because less than a third as many developers or builders anticipate projects costing $8 million or more, more than twice as many respondents as last year are figuring on reducing staff levels in the coming year.

On the bright side, those projects that do get off the ground figure to cost less to build — not a single respondent foresaw even a slight increase in construction costs next year, while over 80 percent last year felt that costs would increase this year.

Here are the results of the survey, with comparisons to the 2008 survey results:

Owners and operators

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Developers and builders