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October 4, 2017

The Golf Industry and Yield Management

Despite how little consideration has been given to the golf industry in terms of yield management issues, both practical and theoretical, it is surprisingly close in nature to several industries that already take full advantage of such tools and processes. In fact, upon disposing of perishable commodities and high variable demand, yield management can revolutionise the industry as it has many others. By factoring-in consumer behaviour many industries have achieved the maximum amount of profit from a perishable resource, examining these behaviours to best entice and target the consumer. The idea being to coordinate timing, price and consumer patterns to achieve the best return – all of which requires the right software in place.

We have enhanced Concept 2.9.8 R7 not only with new advanced new features like Group bookings for Spa – but also with Yield Management for Golf. The improved functionalities in the new version provide complete process integration and optimization…and demonstrate the needs in both industries to improve their capability and expedite booking processes. Yield management tools have already been used by forward-thinking industries to maximise their revenue, so let us now look at how this was done and, more importantly, how this relates to the golf industry – including the types of demand that should be considered when formulating a golf yield management matrix.

Perhaps our first consideration should be the hotel and airline industries. As stated by Kimes (2000), the golf industry is easily comparable to either industry, both of which have frequently applied yield management principles through software tools – facilitating analysis and, consequently, increasing revenue generation. It should be noted that the adoption of such successful systems considers the facility limited capacity, the analysis of predictable demand, perishable inventory, as well as the customer price sensitivity, costs and pricing variables, and demand which is variable and uncertain. (Kimes, 1989; Cross, 1997)

Applying these considerations to the golf industry begins to demonstrate the efficacy of yield management within it. Indeed, from an analytical point of view, the golf business disposes of limiting factors to their continuous operation. These factors include the type of capacity constraints that can be measured: these would include the size of the golf courses, the number of holes or the available hours of daylight operation. These constraints can then be somewhat reduced by various measures; filling up tee times to capacity, efficiently arranging the sequence of order that holes can be played, or, during the summer season, extending capacity due to the increasing daylight.

Again, in similarity to, say, the hotel industry, analysis of the golf industry identifies two types of predictable demand: customers that make bookings and those who arrive to play without making any type of arrangement. Although these demands may be predicted, golf course and yield managers should have at their disposal an effective and powerful software system that is able to track previous arrivals and trends to develop efficient and effective strategies. This is where Concept Golf Premium can prove invaluable, allowing a course or yield manager to determine which of these demands will be the most profitable – and so which to target and respond to.

As we have seen, the hotel and airline industries provide useful models for applying yield management to golf courses and businesses – but we can also use them to compare how yield management examines revenue. Other comparable industries using yield management calculate their revenue or contribution by time-based inventory unit, the airline industry, for example, determines revenue per available seat mile (RevPAS), hotels by available room night (RevPAR), restaurants by available seat hour (RevPASH)… in such a manner golf courses can calculate their revenue per available tee time (RevPATT). Continuing the model, as a unit of revenue calculation RevPATT’s availability is affected by both controllable and uncontrollable factors. Controllable factors would include, for example, the length of a round of golf, the dispatching rule, or the tee time interval, with uncontrollable factors including the number of hours of daylight exposure or weather conditions.

With so many comparable industries successfully employing yield management software, and looking at how well the golf industry fits into the model these industries present, it is little wonder that there is tremendous buzz within the golf industry about tee times pricing and yield management. Forward-thinking golf courses and managers are eager to employ yield management tools with an integrated software solution. Concept Golf Premium caters for all the software needs of a golf operation from tee time management to web bookings, with complete yield management tools to help your team employ the same processes that have worked so well for the world’s leading hotels, airlines and restaurants.

Ask us for a Demo of our Concept Golf Management Software and realize how you can you benefit from a true integrated demand management decision system software.

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