European course owners struggle through economic slump

Amid the uncertainty of the spreading global financial crisis, European golf industry leaders are taking steps to change the way they do business.

Delegates to the November European Golf Course Owners' Association (EGCOA) "Big Change" conference in Berlin voiced worries about the economic recession now impacting Europe. They also expressed concern that course supply in many developed and mature golf markets has exceeded demand.

Sweden and Denmark have already seen a slowdown in growth. And operators who have been having difficulty arranging financing are demanding more support and flexibility from national federations whose combined revenues total €140 million. 

"I think one challenge is the cost of finance and insurance going up, but I don't quite see how income is going up at the same time," said Alexander Baron Von Spoercken, president of the German Golf Course Owners' Association (BVGA) and vice president of the EGCOA. "As for the ultimate effect of this current situation, it's probably too early to assess."

Peter Walton, chief executive of the International Association of Golf Tour Operators (IAGTO), told the conference that global uncertainty could lead to a reduction in airline flight access and a drop in tourism, but recent drops in oil prices and interest rates, along with a reassessment of spending patterns, is a positive sign.

With financing for large projects harder to obtain, golf course architect Howard Swan said there will be a slowdown but believes this will result in better quality projects. He said emerging markets like the Middle East will have to drive the business.

"We're going to have to weather the storm for at least two years," he said. "It is going to make people think a bit more realistically and we're going to have more sensible, well-structured, well-thought-through, well-designed and well-implemented projects."

In Eastern Europe and the Middle East, the domestic market has been slow to grow, but new money business people, expatriates and tourists have been attracted to golf course real estate.

According to research by KPMG and Oxford Economics, three times as many units were sold in the Middle East in 2006 than were developed. The PGA European Tour's Race to Dubai season-long competition is expected to focus more attention and finances on the region.

Despite the turbulent outlook, delegates heard a positive note from Andrea Sartori, head of KPMG Advisory Service's Real Estate, Leisure & Tourism Group, who urged operators to start planning for a turnaround.

"In the next 12 to 18 months the economy will move upwards," Sartori said. "Now is a good time to prepare projects for the upturn."

Comments

Based on the Golf Inc. Conference in Scottsdale, AZ this fall, I feel the Golf Industry Leaders are working quickly to react to a very long list of challenges facing our business. I am keeping in contact with these leaders; providing new ideas on how to improve golf's environmental and business operation adjustments to improve their bottom line. Please feel free to contact me regarding the insights expressed by the Golf Industry Leaders relating to your business. I am happy to share these ideas & discuss what you are doing to make adjustments at your golf course during this time of change. Thomas Hart RA LEED AP~ Scottsdale, AZ 480-970-0428

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!