Local golf courses swing into new pricing system
JANESVILLE—Two local golf courses have opened their 2014 season without an industry standby: a set-in-stone rate card that fixes greens fees based on times of the year, days of the week and even hours in those days.
The new model, often called dynamic pricing, prices golf on real-time supply and demand.
Driven by online bookings, local operators said, the model moves prices lower when demand is low and higher for periods when more players are booking tee times.
“In the past, we would sit here on a beautifully Saturday in June and wonder why no one was playing our golf course,” said Rob Vega, general manager and managing partner of Glen Erin Golf Club on Janesville's south side. “We didn't understand why until after the fact, and we had no ability to change our rate card that at the time was charging some of the highest rates of the season.
“Customer pricing gives us that ability, and customers who want to take advantage of that low demand can do so with lower greens fees.”
Glen Erin and Prairie Woods Golf Course east of Janesville have adopted the concept that the former calls “customer pricing” and the latter calls “dynamic pricing.” The Oaks Golf Course near Cottage Grove also has switched to what it calls “intelligent pricing.”
“We're moving to the way we think golf will be priced in the future,” said Jon Turner, head pro and director of golf at Prairie Woods. “You decide what it's worth to you to play my golf course when you want to play.”
While new to the golf industry, the pricing concept is not new in other arenas. Airlines and hotels have used it for years, adjusting prices based on supply and demand.
“Get on any airplane and try to find two people who paid the same price for their seat,” Vega said.
Vega and Turner said the Janesville golf market, which also includes the city's Riverside and Blackhawk courses and the private Janesville Country Club, is still recovering from the economic downturn.
“In this market, supply still exceeds demand,” Vega said.
So how does the concept work?
Rates are constantly adjusted—higher or lower—based on a variety of factors, including demand that's typically affected by other community events and even the weather.
Those factors and more feed a complex computer algorithm that ultimately sets the prices, which can change by the minute.
For example, the computer program—Prairie Woods and Glen Erin are using the same vendor—knows that the Packers and the Bears are playing at noon on a particular Sunday. It understands that demand for tee times will likely be high before 8 a.m. for golfers who want to get off the course to see the game.
The computer program also recognizes that demand likely will fall as kickoff approaches and that the course could be wide open at noon.
The program sets prices accordingly, likely higher for the early tee times in the Packer-Bear example and lower later in the day. As game day approaches, golfers book the times they want to play, which then become a demand factor that bumps prices either higher or lower.
“No longer are we arbitrarily setting the cost and tying it to a rate card with absolutely no regard to external factors,” Vega said. “We're running a business, and we need the elasticity to change prices based on demand.
“We're asking customers to make one extra step and go online. By doing that, we're giving them a tool to save a little money if they're flexible when they want to play.”
Online booking is a critical component of the new model. Calls can still be made to pro shops to book tee times, but the prices quoted will be historical rack rates.
Vega and Turner said customers would always pay less booking online.
Golfers also can book times 30 days out, which gives them a wider window than in previous seasons.
When golfers book a time, the pros encourage them to check back periodically to see how the market is pricing neighboring tee times. If the prices are lower, they cancel the original and book a different time, they said.
The prices may be higher, and the golfers will be comforted that they got a better deal than the group ahead of or behind them.
Vega and Turner expect their average green fees for the season to be lower. They expect to make it up with more rounds played.
“We can advertise low rates and arbitrarily pick a number, but the question is what is the number that's gonna get my golf course full?” Turner said. “Doing it the other way, undercutting, is a race to zero for all of us.
“We really are trying to grow the game, and we need to give customers opportunities to play for the rate and at the time that makes sense for them. We make more money by having people enjoy their experience at our golf courses.”