Golf tourism in the rough
Research firm Euromonitor International provides an overview of the world’s established golf markets, which it claims have stagnated when it comes to attracting golf tourists
According to the International Association of Golf Tour Operators, the global golf tourism market is worth around US $30 billion annually, accounting for a total of 50 million golfers worldwide.
North America is by far the world’s leading market in terms of golf as a sport. In the US, golf is estimated to contribute more than $60 billion to the economy. Other well established golfing tourism regions with mature markets include Canada, the UK, Japan and Australia.
The 2008 KPMG’s golf study in EMEA, shows that Europe’s golf tourism market (revenue raised directly from golf courses) accounted for a total of $3.3 billion in 2006, of which $490 million was generated in the UK.
Golfing types
Golf attracts affluent tourists with above average tourist expenditure. The main market for the golf tourism industry is the regular golfer who plays at least eight to 12 times a year.
However, recently there has been a decline, particularly in the mature markets, in this type of players, while the number of occasional golfers who play golf as a second activity is increasing.
Currently, the typical golf tourist spends on average between four and seven days on a short-haul golf holiday and between seven and 14 days on a long-haul golf holiday, playing an average of four to six rounds of golf on three to five different courses during a week’s holiday.
This provides the travel and tourism players with a great opportunity to offer golf as an added, special feature to holiday tourists or to the corporate travel segment.
When choosing a destination, golf tourists’ priorities are mainly the climate and the quality of the golf course followed by price and accessibility.
Taking into account the increasing importance of climate for golf tourists some countries in Western Europe, such as Portugal, Spain and Turkey are considered by the industry to have good growth potential while some Asian countries such as Thailand, Malaysia and China are regarded as important emerging golf destination with huge future growth potential.
American demand weakens
Golf’s growth in America has been stagnant for years. The number of players and courses is static, which can be mainly attributed to the recent economic crisis, combined with shrinking disposable incomes and the increasing number of Americans who cannot afford to make golf into a family holiday.
In addition, observers have stated that increasingly, Americans are less able to dedicate the amount of time needed for golf than they used to.
This has been attributed to changing family dynamics in modern America.
With the onset of high unemployment, set to exceed 10% in 2010, this trend is set to continue in the midterm.
According to the National Golf Foundation, the number of new courses expected to open in the United States in 2009 is the smallest in 20 years, with 80 or so that are expected to open, compared to the 100 courses expected to close this year. This points to a shrinkage in supply in response to weakened domestic demand.
The American market is not likely to grow unless innovative ways of playing are developed, such as shorter courses for fun, family games. On the other hand, there is potential for an increase in the number of golf players as the first set of baby boomers have started to reach retirement.
With the economic crisis, combined with the high cost of the sport, which is currently affecting both the leisure and business golf market, a decline in the US market is expected in the short to medium term.
Celtic tigers
Due to golfing traditions and the quality of the courses, some traditional destinations such as Scotland and Ireland are not expected to lose market share, but the market will experience stagnation at best.
This is the result of a more competitive market with new emerging, cheaper destinations as well as the weakening of the US, as these two countries rely heavily on overseas visitors particularly from America.
Ireland is one of the worst affected countries by the global economic crisis with real GDP growth forecast to contract by 7.5% in 2009, with the negative trend continuing into 2010, but at a slower pace of -2.5%.
Following the recession, many golf clubs have been forced to consolidate and golf developments have been put on hold. In a saturated market, clubs are becoming highly price sensitive, reducing entrance fees in an effort to generate green fee revenues while ensuring membership retention.
Ireland had benefited greatly from hosting the Ryder Cup in Kildare in 2006, but it now faces direct competition from Scotland and Wales who are promoting themselves heavily in the run up to hosting the Ryder Cup at Celtic Manor in Wales in 2010 and Gleneagles in Scotland in 2014.
Scotland’s golf credentials
Scotland is marketed as “the home of golf” and golf tourism is estimated to be worth $195 million.
The country plays host to The Open Championship every second year or so, in addition to other major events including the Ryder Cup in Gleneagles in 2014 and the Walker Cup in 2011, which will be hosted at the Royal Aberdeen. There has been significant investment in golf tourism resorts.
In the Aberdeen City & Shire area alone, plans have been approved for three resorts, including the controversial $1 billion Trump golf course and resort development at Menie Estate.
Wales rides on Ryder Cup
As well as strengthening Wales’ reputation as a world-class golf destination, the 2010 Ryder Cup, to be held at Newport’s Celtic Manor Resort, is also expected to improve the number of overseas visitors before and after the event. According to the 2008 Golf Tourism Monitor Figures, the financial contribution of golf tourism in Wales has increased by 13% over 2007/2008 and despite a decrease in the number of European and North American golfing visitors in 2008, accounting for 5.2% of all staying golf visits, overall annual figures show a 19% increase in the total volume of golf visitors.
2016 Olympic Games opportunity
In October 2009 the International Olympic Committee approved golf to be included in the 2016 Summer Olympic Games, which will be held in Rio de Janeiro, Brazil. The sport’s inclusion will not only strengthen the image of the game but will help to accelerate the growth of the golf market globally.
It will also provide a significant economic incentive package to the sport, particularly in Asia, Eastern Europe and South America, where governments will spend significant amount of funds on the development of golf facilities.
A KPMG study in 2007 showed that 75% of all golf courses planned or under construction were outside of the US and UK.
China is currently experiencing a dramatic growth of approximately 50% in the number of players and it is estimated that by 2020 there will be around 26 million golfers in the country.
Middle East golf courses can steal a march
With established golf markets failing to grow their market share, there is a real opportunity for the Middle East to attract golf tourists old and new by offering innovative courses in destinations that boast warm year-round climates.
Al Hamra Golf Club general manager and PGA professional Simon Mees said it was generally more expensive to play golf in the UAE because of construction and maintenance costs, however, “the UAE is in a very strong position having been the real epicentre for the growth of the game in the region”.
Mees added that Al Hamra was unique due to its location on the shores of the Arabian Gulf and that the club was working with the Emirates Golf Federation to provide golfers with reasonably-priced rates and special offers.
Troon Golf Middle East area managing director Mark Chapleski said he did not believe golf in this region was expensive considering it was a high-end destination with prices comparing favourably to established destinations in the US, Ireland and Scotland.
“It is expensive compared to Australia, for example, but the level of service and amenities tends to be much higher at UAE clubs,” he said.