Golf And Resorts - Why Golf Is Still Relevant | By Darius Hatami

In order to understand these forces, it is necessary to understand who is developing golf courses and for what purpose. There are myriad of reasons for creating golf courses, but the commonality is that the primary motivations in the past decade had little to do with the long term profitability of the golf course, and even less to do with short term profitability.

The entities seeking to develop golf courses were diverse and included real estate developers, resort developers, municipal agencies, economic development, reclamation projects, as well as wealthy individuals. While the profit motive was in play, the vehicle that generates the profit has rarely been the golf course. It’s the real estate, the resort, as a service to citizens, to develop a property tax base, or even ideas further afield. Our involvement with projects includes motivation such as reclamation of a superfund site, a source to utilize gray water from an adjacent treatment plant, or the allure of golf to create a private playground, or to attain status among peers.

The addition of a golf course or club to a residential community, and the corresponding impact has been fairly well documented. The golf course or club ends up increasing the pricing of the for sale real estate, and provides for faster absorption rates for the for sale properties. At a time when golf courses were profit-making ventures, this was a win-win proposition.

As the supply of golf courses increased, market share declined, and the profit margins eroded to the point where there are now significant annual deficits at many of these properties. These deficits are causing golf course closures of more than a hundred courses a year. With the market turned on its head, the allure, motivations and intentions of building the golf courses are having the exact opposite of the intended impact.

HVS Golf Services, Boulder, Colorado Golf and Resorts, Why Golf is Still Relevant 2 There has, however, been little analysis on the financial impacts to hotel properties of having onsite golf available to guests. This article will review and analyze the current status of golf resort properties in the United States, and provide an understanding of the dynamics at play.

This article utilizes the extensive HVS hotel database, as well as independent data from STR Analytics to gain an understanding as to how resort hotels are impacted by having an onsite golf course. The first data analyzed includes the luxury and first-class hotels in the United States as well as internationally that are part of the HVS Database hotel operating statements and statistics which includes over 4,000 first-class and luxury properties and over 20,000 records. The second was gathered through STR Analytics. By in large, both databases produced similar conclusions, and the primary data presented is comes from STR analytics.

The first important aspect of resort golf properties is that although there is a limited number of mid level golf resorts, the majority of hotels with golf courses operate in the luxury end of the market and are full service hotels.

Golf And Resorts - Why Golf Is Still Relevant | By Darius Hatami, HVS Golf Services Golf development in the United States like other real estate asset classes, is cyclical, with booms occurring in the 1930's and the 1960's. The modern golf boom started in the 1990's and stretched in... Adobe PDF Document (Download Acrobat Reader) File Size: 321 Kb - Monday, 30 August 2010