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Golf Facilities in the U.S.: Market Correction Continues; Golfers Benefit from Changes in Supply

There were 14,437 18-hole equivalent golf courses operating in the U.S. at the end of 2014, a reduction in total inventory of 128 (18-HEQs) golf courses compared to the end of the previous year, according to the newly released NGF’s 2015 Golf Facilities in the U.S. report. With supply still outweighing demand, this anticipated reduction in the total number of courses is part of a supply correction that has been ongoing for much of the past decade.

Why does NGF use 18-HEQs in reporting total supply?

How does NGF verify Openings and Closures?

While it might seem relatively simple, determining the yearly changes to overall supply is a bit more complicated than meets the eye. So how did we get there? At the end of 2013 there were 14,565 (18-HEQs) golf courses operating in the U.S. NGF, through its verification process, identified 174 courses that permanently closed in 2014, and another 71 that closed for renovation (any course that is closed for business for at least six months for improvements).

Meanwhile, NGF verified 11 brand new courses that opened last year, and 91 that reopened following renovation. An additional 15 courses came back following prolonged closures unrelated to a scheduled renovation. The end result is that 117 new or reopened courses that were not included in 2013’s year-end supply were added in 2014.

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Still, the golf course industry remains oversupplied and ultra-competitive. The majority of facilities that shuttered their doors last year were older, lower-end properties that could no longer compete. Yet the availability of public golf remains high with 10,479 (18-HEQs) courses, which accounts for nearly three-quarters of total supply. Interestingly, that public total includes an all-time high of 2,305 municipal (18-HEQs) courses, 30% more than existed 25 years ago.

For comparison, slightly more than 60% of courses were public in 1986. That number grew to 72% in 2005, the peak period of course supply in this country, and has hovered in the 73% to 75% range since that time. This increase in public golf, coupled with the improved quality of supply due to newer courses replacing older ones that have closed, has benefited daily-fee golfers. The highly-competitive nature of the industry has also been a boon to golfers by keeping prices stable, while increasing overall value.

While the number of private clubs has decreased during the past decade, many have decided to alter their business model to allow some degree of public play to avoid, or at least mitigate, dues increases or outright closure. These courses have not gone away, evidenced by the fact that only one in 10 closures since 2005 involved a private club. Rather, NGF reclassifies these converted clubs as daily-fee facilities (a privately owned golf facility that provides public access and may or may not offer memberships). Most owner/operators of these clubs would prefer to consider themselves “private” or “semi-private” depending on the actual amount of public play they allow.

The ongoing supply correction has alarmed some golf pundits and many in the mainstream media, especially at the local or regional level. However, the industry has seen less than a 5% decrease in total golf course supply since it peaked in the mid-2000s. In contrast, there was a 40%+ increase in the total number of courses between 1990 and 2005. So what we are witnessing is a much needed step toward a healthier balance between supply and demand.

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When were we last at optimal balance? It would depend, of course, on who you ask, but a look back at NGF’s supply/demand index (ratio of golfers per 18 holes) shows the most recent high was in the early 2000s. At that time, the index was at or near the benchmark of 100, which was first established during the peak years of the late 1980s. At the end of 2014, the index stood at 84, meaning there are about 16% fewer golfers per (18-HEQ) golf course than 25 years ago.

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Ultimately, there are two ways the industry can achieve that better supply/demand balance. The course correction can continue for several more years, or more golfers can be brought into the game. Most likely, a combination of the two will occur, thus expediting the movement to equilibrium. Until then, however, supply will remain heavily in golfers’ favor.

The 2015 Golf Facilities in the U.S. Report summarizes the nation’s total supply of daily fee, municipal, private and resort golf courses, as well as private clubs. The data is broken out by state and region. The report also includes detailed information on golf course openings and closures in 2014, as well as the number currently in planning and under construction.

For a complete look at U.S. facility supply, download the full copy of the 2015 Golf Facilities in the U.S. here (free for members), or call 866 275-4643.

Why does NGF use 18-HEQs in reporting total supply?
18-HEQs (the total number of holes divided by 18) is a derivative measure NGF uses to provide the most accurate account of total golf course supply in the U.S. For example, two stand-alone 9-hole courses (courses are defined as a tract of land containing at least 9, but not more than 18 holes of golf) are measured as one 18-HEQ even though they are a part of two different facilities (facility is defined as a business location where golf can be played on one or more golf courses). Likewise, a facility with 27 holes of golf would be measured in 1.5 18-HEQs courses. Therefore, the total number of facilities and 18-HEQs are not directly comparable. [Back to Top]

How does NGF verify Openings and Closures?
Each year, NGF takes exhaustive measures to track openings, closures and renovations to provide the most accurate account of golf facilities in the U.S. (as well as in 200 other countries around the world). Every golf course in the U.S. is contacted and their status is verified, including the total number of holes and whether they are or plan to be closed for renovation. Permanent closures found during these contacts or through other sources are then verified and documented. Through this process in 2014, NGF verified 174 permanent closures and 71 closures for renovation.

In identifying openings, NGF maintains contact with most golf course builders and architects. Additionally, NGF monitors additional sources, including media and industry publications that assist in identifying new openings. Courses previously reported as under renovation are contacted to verify the date of reopen. Additionally, NGF tracks the reopening of courses that were previously closed for reasons other than renovation. In 2014, NGF verified the addition of 117 (18-HEQ) courses among those three categories, including 91 that reopened following renovation. [Back to Top]

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