05-28-2002 Council Packet - Laserfiche WebLink

Home Browse Search

Business Analysis Continued 1. Weather, Cool and wet weather during April, May, and June caused a later than nomial opening and an abnormal loss of operational days once the course did open. In addition, unusually hot and humid weather in August further inhOsited round volume. 2. National Events. The events of September 11th greatly inhibited consumer conridence and golf partic^ation in the fall months of the season. 3. Market Factors. The current condition of the M!. sota golf market is characterized by flat growth to gol participation, flattening demand for rounds, and an ever increasing supply of goK courses. Due to these factors, 2001 results are well outside of past trends and must be viewed as somewhat of an anomaly in the overall past business analysis. Therefore, results for the years 1997 through 2000 are more indicative of the facility's operational needs and will be the primary means of developing future operating strategies Each year during that period, operating revenues have remained level at around $220,000. Meanwhile, operating expenses have increased from the $140,000 range in 1997 to just over $172,000 in 2000. The end result has been an annual decrease to net operating incomes from the $65,000 level in 1997 to the $42,000 level in 2000. Net operating margins for the time period have correspondingly decreased from 30 percent in 1997 to 19 percent in 2000. Growth to revenue has not occurred due to a combination of minimal rate Increases artd a gradual down ward trend in round volume during that time period. Comparable nine hole golf facilities commonly achieve total round volume in the 22,000 to 25,000 range. Orono Golf Course has had difficulty breaking the 20,000 annual round barrier over the past 5 year time period with the best volume performance year being 1997 at 19,642 total annual rounds. Volume Performance The primary reason for this lower than normal volume performance is clearly in the short yardage of the course's opening two holes. Both are par four holes with the first hole playing to just 224 yards and the second hole playing to 231 yards. These holes were originally designed to function as two (2) shot holes. In practical terms however, players tend to wait until the greens are clear of the preceding group due to safety concerns, believing each green can be reached from the tee in one (1) shot. As a consequence, both holes in effect function as long par three holes requiring a significantly longer playing time per group than either a mid-length par 4 hole or a short par 3 hole. Further compounding the situation are the general characteristics of the greens. Green sizes are small on each hole and each green has some degree of slope. Larger, flatter greens generally permit players of all abilities to be putting sooner and more efficiently, ultimately minimizing the nurnbier of shots per player and the total time required for each player to complete the hole. In terms of tee time management, the length and design of these opening holes has forced management to operate with a ten (10) minute inten/al tee time system. This is uncommon for this profile of golf course and results in a sinnrficantly lower amount of overall tee times available for sale in a given year. The more commonly utilized system for this typo of golf course is an eight (8) minute interval tee time system. The difference in systems is dramatic. Assuming a 200 day season, the ten (10) minute interval system provides 11.888 tee times available for sale each year. The eight (8) minute interval system provides 15,102 tee times over the same 200 day season.