State of the Market Briefing

State of the Market Briefing
Golf Business Community interview: A commentary on the golf
tourism industry in August 2010 by IAGTO’s Chief Executive
A Commentary on the Golf Tourism
Industry by IAGTO’s Peter Walton
written for KPMG in August 2010 ©
The entire tourism industry has faced enormous challenges over the past two years and of course golf travel is not immune to global
events affecting the wider tourism industry, but it has proved to be remarkably resilient both in the immediate aftermath of 9/11 and
in the current economic crisis. In short, golf travel tends to recover quicker than general leisure tourism, with avid golfers refusing to be
denied their regular golf travel fix. However, their choice of destination and resorts can change quickly and dramatically which means
that not all golf tourism suppliers recover at the same rate from every downturn.
Like most industries golf tourism has its buyers, suppliers and consumers. The suppliers are the golf courses, golf resorts, hotels, car
rental companies and airlines, whilst the buyers are the golf tour operators or specialist travel agencies either packaging holidays for
golfers in their country or organising golf vacations locally for golfers travelling in from elsewhere. The consumers of course are the
golfers and the type of vacation they take divides cleanly into Golf Holidays and Holiday Golf. Golf Holidays are vacations taken where
the primary purpose travel is to play golf, whereas Holiday Golf describes a leisure vacation where 1 or 2 rounds of golf are played but
where the availability of golf impacts little on the choice of destination.
IAGTO’s 350 golf tour operators in 50 countries deal primarily with avid golfers taking Golf Holidays as these are the clients who most
needs the skills and knowledge that a specialist golf tour operator provides and it is these operators who can offer the best savings
when complex itineraries of 5 or 6 great rounds of golf need to be put together.
2007 was a very good year for just about everybody in the golf tourism industry, particularly for destinations and suppliers. 2008 was
more of a mixed bag but the downturn set in particularly in the second half of the year with business dropping perhaps 5-10% or more.
And of course 2009 was tough for everyone. In November 2008 we predicted that golf tourism would bounce back come the autumn
of 2009, significantly ahead of what at the time was projected to be a deep and long recession lasting at least two years. It was therefore
extremely encouraging when many of our tour operators, in Europe, the USA and elsewhere began reporting good year on year gains in
bookings taken in September and October 2009 and this trend continued throughout the remainder of last year. 2010 started off even
stronger with some dramatic year on year growths in January and February, many exceeding 20-30%.
But then, taking the Jaws analogy, ‘just when you thought it was safe to go back in the water’, the ash clouds attacked... Yes, a previously
unknown and unpredicted phenomenon, volcanic ash clouds, rained chaos throughout the tourism industry, stranding many travellers
and causing many more to take stock before rushing out to book their next holiday, be it with or without a set of golf clubs.
In fact, the ash cloud episode proved to be good PR for golf tour operators because the operators and their client suppliers dealt
superbly with the crisis and went above and beyond their contractual obligations to ensure that stranded passengers continued to enjoy
playing golf and enabled those unable to embark on a golf holiday to re-book at a later stage without penalty. Many holiday makers who
booked their travel arrangements directly, bi-passing the safe hands of a tour operator, did not fare so well.
The ash cloud disruption had a detrimental effect on two separate seasons – the end of the Northern Hemisphere’s winter-sun golfing season
and the beginning of the long-haul summer golfing season, particularly for example Americans travelling to Scotland, Ireland or Spain.
But the underlying early recovery of the golf tourism industry was still there to be seen and has continued since the ash clouds
abated. However, unlike in the past, this recovery is far from being consistent, reliable or predictable.
The recession still has the power to deliver some significant aftershocks, and these are likely to hit destinations which have not
positioned themselves correctly or individual companies who have not responded to the changing demands of the golf traveller. The
decision making process of the golf traveller has changed irreversibly. Golfers are no longer swayed by bland generic promises of
‘undiscovered golfing gems’ and require specific tailored messages that will convince them that the golf vacation they book offers not
only the best value for money but also delivers the type of golfing experience they are looking for.
It is much easier for golf tour operators to deliver these market-specific messages than it is for entire golf destinations or individual golf
resorts trying to market directly to golfers in perhaps 20 or 30 countries. Therefore although life has definitely become a lot tougher
for tour operators over the past decade, with decreasing margins meaning that higher sales volumes are required just to stand still,
tour operators can take heart from the fact there are now more reasons than ever for golfers to book through operators who know the
product, do the leg-work, protect their advanced payment and manage adversity!
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Perversely, whilst the avenues for direct online marketing increase a hundred-fold each year, the capacity, desire and time that golfers
have to spend searching the internet and taking on the responsibility of booking travel arrangements for their friends, decreases. There
are just too many other demands for time on our lives, and too much risk involved in taking financial responsibility for others.
The immediate winners as the recovery began to get a grip within our industry last year were the domestic and short-haul wintersun golf destinations. Northern Hemisphere ‘summer’ destinations can expect to get back on track in 2011 and long-haul winter-sun
destinations should see steady growth begin to take root in just over a year’s time.
However, whilst we believe all destinations and suppliers can reap the benefits of the recovery, not all suppliers will be swept along by
its tide. In fact we estimate that only half of all golf tourism suppliers will recover to previous levels over the next 18 months. The key
then is to be in the top half!
A number of factors will affect whether or not a supplier or destination will be successful. The fact that 70% of golfers are always
looking for new golf destinations is succour for undiscovered and emerging destinations as well as new golf courses in established
destinations. The very wet and extended winter experienced in many popular Mediterranean destinations this year might drive golfers
to search for places that can offer guaranteed sunshine in the coming winter. So destinations that can deliver sunshine and golf should
be shouting about it now!
When demand is low, it is the golf resorts – hotels with golf courses on site – that will fare best, and it is the hotels without the capacity to
package rooms and golf at great value prices that will suffer most. In good times poor relative pricing and inconsistent value for money
may not be an obstacle to growth, but for the foreseeable future any supplier unable to offer the correct relative price and great value
for money is unlikely to succeed.
If an entire destination suffers a bad reputation then this can drag down even the best individual golf resorts and courses or at least
make them have to work twice as hard to get results. So it is essential that all golf destinations position themselves in the best possible
way to attract the golfer and make it easy for the golf tour operator to sell the destination.
Sustainable growth achieved through the delivery of value for money and consistent pricing has to be the objective, and the golf
tourism industry must embrace it collectively. Realistic sales strategies should be implemented with longer term goals and suppliers
must maximise all revenue streams whilst harnessing the power of golf tour operators to deliver the brand message of the resort and
destination as well as the resultant sales. Collectively our goal should be to deliver the confidence to the golfer to book their next golf
holiday TODAY!
Peter Walton is President & Chief Executive of
IAGTO, the global trade organisation of the golf
tourism industry. Established in 1997 IAGTO
has 1450 member companies in 81 countries
including 350 golf tour operators in 50 countries.
IAGTO is the official partner of the International
Golf Travel Market, runs the annual Golf Tourism
Awards in partnership with Virgin Atlantic, and
administers the International Golf Travel Writers
Association. IAGTO helps golf destinations and
resorts worldwide position themselves in the best
possible way to generate sustainable growth from
golf tour operator sales. For more information see
www.iagto.com or contact [email protected].
© No part of this document may be reproduced without written permission from IAGTO (contact [email protected])
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