Page 12 - GBC summer 2016

Hole #16, Nicklaus North
Photo courtesy of Golf BC
12
Golf Business Canada
Since then, a dozen or so multi- course operators (with portfolios of 5 courses or more) have emerged in Canada, consolidating clusters of golf courses within various geo- graphic regions or types of opera- tions. Although still lagging in market share compared to the American and European multi- course operators, Canada does appeartobefollowingasimilarpath towards further consolidation.
Stephen Johnston, Principal and Founding Partner of Global Golf Advisors, comments, “Third party management companies offer knowledge and purchasing power. They apply more sophisti- cated processes, such as perfor- mance benchmarking and yield management, which adds value.
“In addition, for courses with a union (higher payroll expenses), a management company may allow a club to outsource staff and significantly reduce labour costs. But, the potential downside of a management company can be their fees charged and a loss of control for the course owners. Your brand and customer service are impacted by the tactics they apply.
“Hopefully they are success- fully driving a higher net income and greater course value, but this is not guaranteed, so the decision is not easy.”
VArIOuS tyPeS OF mCO
Not all multi-course operators are based on the same business model. Golf BC, for example, entirely owns and operates its high-end public and resort courses in British Columbia.
Windmill Golf Group operates mostly in the Calgary area, focused on ownership but recently expanded into management contracts and leases. They are also building Mickelson National Golf Club, the new Phil Mickelson designed high-end private club.
In Saskatchewan and Manitoba, Lakeland Golf Management prefers ownership or leases, including some municipal clients. GolfNorth, now the second largest at 30 golf courses, includes 20 owned and 10 leased, with a variety of course profiles.
ClubLink’s model is primarily high-end private clubs that they own, with a few leases. Kaneff Golf owns all their courses from the GTA south and are now building another.
In Ottawa, TMSI operates 7 local mid-range courses, focused primarily on management contracts. In the Montreal region, Groupe Beaudet has some owned properties but has shifted to a focus on management contracts and leases, primarily operating in the mid- level market.
Each multi-course-operator defines their strategy. Harry Brotchie, President of Lakeland Golf explains, “Our preference is to ownership or long term lease. Under these models we can invest capital into the courses and a fair return can be achieved on that investment.
“Shorter management agree- mentscanworktoo,providingboth parties with more opportunities to evaluate performance but can limit upside returns and can pose challenges with frequent renewals. Regardless of the type or scope of the golf course, the most impor- tant element is the quality of the working relationship between the partners, unless of course we own the property.”
mOmentum In the uSA
In the USA, there is considerable momentum for the model of management companies providing third party contract services to a portfolio of golf courses. The largest golf management company in the world, Troon, is entirely based on this model.
Jim McLaughlin, Senior VP of Operations notes that, “Troon manages over 250 golf courses around the world but we don’t own any of them. The fastest growing sector for us is now private clubs looking to outsource. Seven out of ten inquiries we get