Healthy growth

Golf Course News, Jul 2005 by Walsh, John

BUILDERS, ARCHITECTS KEEP BUSY DESPITE A SLOWDOWN OF GOLF COURSE DEVELOPMENT

Despite a steady decline of golf course development during the past four years, builders and architects seem to be happy with the amount of work they're doing. Quality is overriding quantity, and supply is coming more in line with demand.

In 2000, about 400 new courses (18-hole equivalents) opened, according to the National Golf Foundation. There will be 150 to 160 golf courses (18-hole equivalents) opening this year, according to Jim Kass, director of research for NGE That range is expected to remain for the foreseeable future, but one variable that would increase the range would be if more of the 78 million baby boomers retired, Kass says.

"That could change the landscape 10 to 20 years out," he says.

Despite the decline of the number of openings, Kass says the golf course development market is healthy.

"Supply and demand is coming into parity," he says. "We need to fill existing supply before we increase it. In 2004, same-store rounds increased 0.7 percent more than 2003.

"The number of openings today is what it was back in the early to mid-1980s," he adds. "It's more appropriate."

"In the boom of the late 1990s, the number of golf courses being built was overstated, which made the contraction look bigger than it really is," says Tom Shapland, president-elect of the Golf Course Builders Association of America and president of the Midwest office of Wadsworth Golf Construction Co.

Kass says real-estate has been a big part of golf course development - 40 to 60 percent of openings during the past 10 years have been real-estate related, and 22 percent of total existing courses are real-estate related. Courses in planning and under construction still are significantly real-estate related and are in the 60-percent range of all courses in development.

Daily-fee courses also have been popular. In 2004, daily-fee courses were 58 percent of openings, and daily-fee courses consisted of 56 percent of the total supply. Many of the daily-fee courses are high-end and are more income driven than demand driven. In contrast, municipal courses were 10 percent of openings and were 5 percent of the total supply in 2004.

Courses continue to open in familiar areas. The states with the most course openings last year are: Florida, California, Texas, Arizona, New York, Georgia and Pennsylvania. One reason why Florida leads the way (with 13) is because of its increasing population. Even though these states lead, the number of course openings in each state declined compared with years past.

Additionally, rounds played and course closings, which are linked to the economy and 9/11, are two reasons for the development decline. Rounds played decreased 4.5 percent during 2002 and 2003, and there was an increase of closures during the past five years - 200 courses closed from 2001 to 2004. However, there still are a relatively high number of courses in the planning stage - 410 - but not all will come to fruition.

"Golf course development doesn't always relate to the statistical demand of golfers," Shapland says. "Most of our projects are an amenity to an overall development."

In the works

Even though development has slowed, it hasn't crimped the business of some builders and architects. Lee's Summit, Mo.-based Mid-America Golf & Landscape is working on four new construction and four renovation projects.

"The last nine months have been unbelievable for us," says president Rick Boylan. "We're not chasing every job. We're not trying to mass-produce courses. We bring value to the clients and pay attention to details. We keep overhead costs low and pass that on to the end-user."

Most of the courses being built are dailyfee and public-sector-types, Boylan says.

However, three of the new courses the company is building are private near residences. Four or five years ago, that type of course consisted of 80 percent of the courses that were built in the industry, he says.

Boylan isn't looking to grow the company significantly. He would like to maintain six to eight projects a year and earn 15 percent to 18 percent profit margins on those projects.

"Our goal is not so much to grow, but to manage better," he says. "But, there's a lot of work out there for fall and winter. There are still projects that people want finished in time to meet the grassing window to get play next season.

"Right now, most contractors are as busy as they want to be, but they could be busier, especially since the rules of the game have changed, i.e., some jobs taken in March need to be finished in October," he adds. "With those jobs, everything has to go right for you. But those jobs will fall off a bit. However, the industry will be strong, and the price for work will be reasonable. If the prices of fuel and building materials come down, it will help everyone."

Business also is going well for Waunakee, Wis.-based Oliphant Golf Construction, which has been in business since 1997. President Mike Oliphant says the company will work on 10 to 12 projects this year, six of which are new construction. Throughout the years, half the company's work has been new construction, and half has been renovation.