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Golf Resorts - Driving Into the 21st Century

Golfing with Kids

"GOLF RESORTS - DRIVING INTO THE 21st CENTURY" By Sarah Morse and Pamela Lanier

(Article reprinted, with permission, from "The Cornell Hotel and Restaurant Administration Quarterly," August 1992 (Volume 33, No. 4) pp.44-48.)

Golf continues to gain in popularity, especially among well-heeled travelers, and there are many ways to capture a share of that market.

While tourism and the hospitality industry appear to be caught in the traps of overexpansion and the recession's slump, golf-resort development remains robust and resort operators are eager to accommodate the demands of tomorrow's seasoned travelers. Golf is not only emerging as the sport of choice worldwide for the 1990's, it is also affecting the lodging industry's marketing and positioning by addressing the needs of conference planners, business travelers, and those who head to the links for their annual vacation.

TYPICAL GOLFER

To understand the golf resort's position within the lodging industry, let's first profile the traveling golfer. Jo Gosline, sales manager of the National Golf Foundation, tells us that traveling golfers are relatively affluent; almost one third have annual household incomes greater than $50,000. They're not only wealthier and older than both the general U.S. population and the nation's golfers, they also play considerably more rounds than the country's average golfer. Data show that in 1989, the average golfer-traveler took golf trips totaling 10.6 days per year (averaging 2.6 days per trip), and that the importance of golf increases with the golfer's age.

Although men took more trips than women, women stayed slightly longer and played more golf on each trip. Almost two thirds of all traveling golfers cited price of the entire trip as the major concern influencing their destination decision, followed by location, climate, and accommodations (lodging).

As airfares skyrocket and urban working couples find it more difficult to synchronize vacation schedules, a short drive to a destination resort is expected to gain in popularity. People want to leave the hassles of city life and escape to where they can relax, be pampered, and pursue outdoor recreation. Accessibility, then, is a selling point in the marketing of "getaway packages" targeting a metropolitan segment.

SUCCESS STORY

Ojai Valley Inn and Spa, a 90-minute drive from downtown Los Angeles, is a prime example of how an aggressive sales program can capture new demand sources during non-peak periods. As part of that resort's promotion, both beginning and experienced golfers may expect special considerations. Not to worry if your partner is a high handicapper or beginner, the inn's marketing department throws in a complimentary mid-week golf academy, in addition to two nights' lodging, breakfast, dinner, unlimited golf course play, and free range balls during your stay.

During the heavy season, golf packages account for 30 percent of weekend room sales at Ojai and 40 percent of midweek sales. Light-season (summer) figures show that golf packages are 40 to 50 percent of weekend and midweek sales.

A CHIP SHOT AWAY

David P. Howerton, who with his partner Robert Lamb Hart planned the Gainey Ranch in Scottsdale and who works with many of the leading golf real-estate developers worldwide, says:

"In the 1990's, the resort industry will focus on 'close-in' locations. These are within one to two hours of major employment and population centers for small to medium-size (150-200 rooms) conference resorts. Settings such as these that can combine specialized meeting and conference facilities with first-class golf, athletics, spa, and fine-dining facilities will attract the executive meeting groups that need to avoid the time and expense of lengthy travel. The availability of golf will mean that the visitor's stay will be extended one to two days, and increase the likelihood that he or she will bring a spouse and treat the stay in part as quality 'getaway' time. This is a clear market trend within some major metropolitan areas of the United States - Seattle, San Francisco, San Diego, Chicago, and Washington, D.C., to name a few."

Heavy competition may hurt the mega resorts that were so popular in the 1980s. Jonathan Tisch, president and CEO of Loews Hotels, in remarks to the Urban Land Institute's Resort Development Conference, predicted that the industry will see a decline in mega resorts. He said it's the mid-size resort capable of handling a group of 250 that's a meeting-planner's dream. Tisch stressed the marked increase in the number of corporate planners who use resorts: "They count on their bosses to underwrite their vacations either through incentive travel or through the annual meeting held at a resort where business and relaxation keep company. At Loews Ventana Canyon, in Tucson, occupancy is about 60-percent group business."

During the 1980s, spending on corporate and association meetings jumped from $23.4 billion to $455.7 billion, thereby contributing to the surge of development that has led to today's oversupply of rooms in virtually all categories. On the positive side, with so many distressed properties available, there are plenty of opportunities to put such properties on sound financial footing and to turn them around by re-marketing and re-positioning them, according to Tisch.

AN INVESTMENT

Good resort designers are busier than ever. Ventana Canyon's architect, John Hill, stressed that "a resort hotel plus a good golf course adds a great deal of residual value to the property's land value." His Hyatt in San Antonio will feature a hotel and golf course first, followed by a residential component. Another of Hill's projects, the Grand Biltmore at Ko-Olina will eventually include seven hotels comprising a total of 4,000 hotel rooms.

FOREIGN GREEN

Hill notes that Japanese investors in particular have been looking to invest in golf-related ventures. As far as "hot spots" go, he predicts that the Japanese traveler will be lured to resorts close to home: "Guam, where we're building two hotels, is the third most popular investment area behind California and Hawaii, and Saipan isn't far behind."

John Lisanti, president of American International Golf Resorts, is another golf-investment expert who agrees that the Japanese have recently been more inclined to invest in golf and resort properties than in most other types of U.S. real estate: "Golf courses are just plain good investments because the property is already an existing business and frequently has land that can be developed and will appreciate."

Golf-course properties are profit generators due to the overwhelming global popularity the game enjoys. Lisanti claims that, currently, there are many interested investors from Hong Kong, Taiwan, and Korea. He sees this trend as part of an ongoing cycle of foreign investment in U.S. land that has progressed from European to Arab to Asian money.

Lisanti's company is currently developing the Moscow Golf and Country Club, the first trophy-class course in that rapidly changing part of the world. The development will sport a course designed by Robert Trent Jones II, a sophisticated sports facility, indoor tennis courts, and a 175-room hotel that is already open for business (and seeking chain affiliation, according to Lisanti).

Despite analysts' predictions that Japan's global spending splurges are fading fast, acquisitions and development of golf resorts, and particularly trophy-class courses, will no doubt continue. Lenders are confident these properties will realize long-term appreciation despite the downturn in other U.S. real-estate markets, tight credit, and the difference in capital costs in Japan and the United States.

BOOMING BUSINESS

One of the more significant trends is the increase in the number of golfers expected by the year 2000-a figure estimated to be close to 50 million. Not only will there be more golfers, some predict that they'll have more time to spend pursuing their leisure interests. For example, the Japanese are moving from their traditional six-day work week to a five-day work week. Also, much of the rest of Europe sees French workers' current annual month's vacation as a possibility in the near future.

Ronald Fream, golf course architect and planning consultant with more than 50 jobs outside the United States, sees tremendous potential in transporting golfers from cold-weather cities such as Seoul, Tokyo, and Moscow to warmer climates. "Hotel operators should be looking at Indonesia, which in 10 years will be a major destination. With more than 13,000 islands and an infrastructure in place, it's a natural." Europeans have also "discovered" golf in Finland, where golfers can tee off as late as midnight during the summertime.

Fream, who is building a destination resort on Butang Island (near Singapore), stressed the fact that the industry is dealing with sophisticated travelers who want cultural authenticity and diversity in architecture. "It's important to let the site dictate the mood and to stress indigenous design motifs, using local materials in a hotel or clubhouse." Speaking of site-specific designs, Fream's Golfplan Design Group is responsible for the Euro-Disney project. He stated that golfers playing that 27-hole course can practice on a putting green groomed into the likeness of Mickey Mouse.

WORKERS' NEEDS

Affordable housing for staff members continues to plague resort operators in many areas, and often resorts have to get into the business of residential housing. Eventually such auxiliary expenses will be built into the total cost of doing business, as Sun Valley did years ago and as Disney has done in Paris. With some hotels understaffed by as much as 20 percent, savvy recruiters are addressing workers' needs such as day care, English as a Second Language courses, and assistance in obtaining visas under the Alien Rights Programs. One solution we endorse is that resorts close to large retirement populations should consider "seniors" as a viable source of additional workers. Many retired people, with years of skills and experience, like the seasonality of resort employment and frequently jump at the chance to work part-time.

BACKYARD FAIRWAYS

Resort hotels that are developed in conjunction with master-planned residential communities will continue to be strong in the 1990's. A well-run golf program attracts buyers while the quality of the resort sets the tone for the entire project. Scottsdale's Gainey Ranch typifies the surge in popularity of such developments, featuring a high-occupancy Hyatt Regency with a full spa, tennis facilities, ten swimming pools, and three separate, individually designed nine-hole golf course. Upscale contemporary single-family residences and condominiums surround the resort community, basking in Arizona's warm, dry climate. Old, well-established resorts are also following this trend. For example, The Homestead spa and resort (Hot Springs, Virginia) has for sale expansive, upscale residential properties, and some of those lots meld directly onto the playing areas of one of the resort's three 18-hole golf courses.

Such mixed-use operations must deal with potential conflict, however. "A major factor in planning a golf resort is how you resolve the conflict between hotel guests who should be able to have preferred tee times and the assumptions of property owners who expect to play whenever they want," says Phil Stukin of Lowe Enterprises. Stukin's resort on Washington State's Olympic peninsula will center around a small resort lodge supplemented by a group of detached cabins that will be sold to individuals who then have the option of renting their property to whomever they choose through the hotel's rental program. He adds that, ideally, there should be two types of courses in mixed-use projects: one for the resort's guests and one for the residents. Furthermore, if the hotel doesn't own the course, the hotel needs to receive some assurance regarding the number of rounds available to guests.

Stukin contends that there's still a strong demand for golf projects in the United States, driven in part by demographic trends that signal a significant increase in the over-50 population, a market that not only plays more golf but also spends more money. Stukin's firm is developing Sterling Forest, an 18,000-acre master-planned community 40 miles from New York City, in the Shawangunk Mountains of New Jersey, that will include a hotel with at least 3000 rooms, a conference center, a golf course, and residential units in all shapes and sizes.

Statements such as "People make hotel choices because of the quality of the golf course" was a sentiment echoed repeatedly as we queried investors, developers, and lenders in the golf-resort and lodging industries. Chuck Reeves, formerly of Nicklaus Development and now head of his own development firm, told us, "The better players want a good course, and if it's lacking, the hotel loses the business. Golfers are talkers and a lot of word-of-mouth hotel recommendations are based on the golf experience. We look for a strong affiliation with a good hotel operation-we can work in a number of ways, but the easiest is for the hotel to buy a number of tee times and release them to guests. This could be a great marketing tool for small hotels."

ATTRACTING GOLFERS

By the year 2000, hotel operators who are anxious to lure increasing numbers of golfers but whose properties lack a course have a couple of options. First, find a nearby course and introduce yourself to the owner or manager. With that person, investigate the possibilities of securing preferred tee times for your guests and reciprocal advertising. With any luck, you'll soon see an increase of golf bags in your lobby. You might also explore the possibility of installing a practice putting green for guests, and if weather is a factor, consider an enclosed space with plenty of skylights.

One small hotel that has hit a hole-in-one with its golfing guests is La Playa, in Carmel, California. Says General Manager Tom Glidden, "We realized many of our guests wanted to play golf, so we make it easy for them. We have a lot of repeat business because our concierge can arrange tee times at nearby courses, including Pebble Beach, Carmel Valley, and Spyglass. We store clubs, arrange for guests' transportation, and do just about everything except replace the divots."

Increasingly, corporations and associations prefer to hold group meetings at resort hotels, and the habits of corporate America have a decisive impact on the state of the lodging business. Charles Duff, president of Executive Conference Seminars, explained that "amenities at a conference are extremely important when we look at a prospective hotel. Since English is often not the first language of many delegates, we need to have available first-rate translation services and good projection equipment." Other questions considered by meeting planners include: Does the hotel's staff have experience with the particular needs of Asian guests?, and, What is the staff turnover at the hotel?

Duff says that, when he's running a major conference, he doesn't want a hotel that's in a training mode, and he doesn't want to be billed for novice employees' mistakes. "We're like a moving target and it's important that we have one person whom we can contact, so responsiveness of the hotel's staff members is critical. Also, it's important that the hotel have a good relationship with local service providers-people who will work to help us, especially on site...The real reason to have a golf course at your resort is that conference participants may accomplish much more business in one day on a golf course than they will in three days inside a conference center. Golf tends to break down cultural and personal barriers; it's a vehicle to facilitating the ever-so-important business relationship. You can have the most glorious conference with a cast of erudite speakers, but golf is what will close the deal."

RESPONSIBILITY

Speaking to developers at the Pacific Rim Japan-American Resort and Golf Executive Conference, Chuck Y. Gee, dean of the School of Travel Industry of Hawaii-Hilo, made the following remarks:

"Resorts must also contend with a world increasingly concerned with preserving the integrity of environments and cultures. No longer can we speak only of breathtaking architecture, but, rather, of how the shape and scale of the resort preserves and accentuates the native environment; no longer can we speak only of a 'five-star' standard but, rather, how the resort's employees provide unique and culturally sensitive hospitality to their guests...People want to structure their time creatively, and the resort that understands this desire and responds appropriately is already ahead of the game. The next generation of resort users - the 'value and vision' group - doesn't want it bigger; they want it better and more responsive to their needs in a personalized way."

Robert Lamb Hart, principal of the architectural planning firm that bears his name and which is responsible for the redevelopment plan for Waikiki Beach, spoke of the need to incorporate authenticity by keeping cultural traditions alive. "Hotel and resort developers will be addressing the recreational needs of more sophisticated, more affluent European travelers in addition to well-traveled American travelers, while creating cultural authenticity. We need more and better dining facilities, arts and entertainment, and more diverse activities to serve a more culturally sensitive clientele. As the more worldly breed of traveler emerges, we're designing destination resorts in which golf is a major element."

FORE!

With economic growth expected to continue to be slow in the near future, and the harsh realities of an industry already feeling the consequences of the credit crunch, there IS a bright side to this segment of the hospitality industry. The golf market is definitely ripe for worldwide growth. Roger Maxwell, Marriott's director of golf operations, summed it up when he said, "If you are going to build a resort, you better build it on the ocean; and if not on the ocean, you had better have golf; and if you have both, you have a winner."

SARAH MORSE is a member of the Golf Writers Association of America.

PAMELA LANIER is author of "Golf Resorts" and "Golf Resorts International."

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