Residents of Prince George consider Pine Valley Golf Centre, a par-three course with a 2,446-yard fairway, a public amenity. Owned by the city since the 1960s but overseen by a private contractor, it doesn’t return much to municipal coffers. The driving range was sold for development in the late 1990s, delivering a significant hit to revenue, but the course continues to provide an in-town option for golfers. Its relatively flat fairway is especially attractive to senior players.
“We work closely with the contractor to keep the rates as low as possible,” Brad Beckett, manager of recreation and cultural services for Prince George, said. “It’s pretty close to breaking even.”
The other major course in town is the Prince George Golf and Curling Club property, which will be sold under plans to relocate the course to a new site north of the Nechako River in Harper Valley. The club’s old course will be redeveloped, including a portion of the adjacent Pine Valley course.
But the paths the two golf courses are taking highlight the challenges facing the overbuilt, tax-hit golf industry in B.C. While municipal courses offer a cheap alternative to clubs and private courses, market forces are requiring golf centres of all stripes to be business savvy.
The pressures facing course owners and operators are many, according to Kris Jonasson, executive director of the provincial sport association British Columbia Golf.
“Owning a golf course is a very difficult business to make a profit in,” Jonasson said.
Golf courses now have to charge HST on green fees, as well as food and beverage services, neither of which bore the old provincial sales tax. Meanwhile, the number of golfers in the province has declined, boosting competition for market share.
“The HST is just one part of a very complex puzzle,” Jonasson said.
The proliferation of golf courses in the province and resulting competition is the top reason he identifies for the challenges operators face.
“The fact that we may be overbuilt now in terms of the number of golf courses that we have given the number of golfers probably has a bigger impact than the HST does,” he said.
The one area of the province where competition is limited is the land-tight Lower Mainland. Here, private clubs grab the top end of the market while municipal courses fill a similar niche to Pine Valley in Prince George.
Yet the operating philosophy is significantly different in Metro Vancouver compared with Prince George.
Rather than being satisfied to charge rates low enough to break even, courses run by Vancouver, North Vancouver and Burnaby have adopted an entrepreneurial approach to the business. Vancouver, for example, spent $10.5 million repositioning its courses; Burnaby also adjusted its management approach.
This is in sharp contrast to some Canadian cities, which are selling off their golf courses, citing low income.
A recent audit in Winnipeg, for example, found that its three city-owned courses are more than $8 million in debt and losing about $1 million per year.
David O’Connor, assistant director of golf operations for Burnaby, believes that municipal courses can be profitable. Burnaby realized it couldn’t subsidize its courses; they would have to become user-pay and take an entrepreneurial approach to their operations, he explained.
As O’Connor said, “We’re competing against every other public golf course, and we have to be as good or better than our competition.”
The city recently opened a $6 million clubhouse at Riverway, one of two regulation-length courses Burnaby operates as well as two short courses and two driving ranges. The culmination of a decade of planning, the clubhouse adheres to a strict business plan that reflects the municipality’s commitment to operating the course – and its other properties – as a business.
Still, declining demand means golf courses risk getting hurt by falling fees. Courses across the Lower Mainland have been dropping prices to attract players in the face of declining demand.
While some peg the drop at as much as 25%, others are more conservative. The picture is complex, a reflection of the variety of influences discouraging players from teeing off.
Rita Rennie, corporate marketing manager for Golf BC, which operates courses across B.C. and in Hawaii, said the weather, exchange rates, passport requirements for U.S. travellers and other factors influencing the tourist trade have all hit the game. Courses at resorts have been hit particularly hard.
Prices dropped at Golf BC’s Okanagan courses, including the Okanagan Golf Club and Gallagher’s Canyon properties in Kelowna, because more courses are competing for fewer tourist dollars. Meanwhile, its courses in Whistler have seen fees decline and adjustments to the value proposition players enjoy.
Furry Creek, in contrast, cut peak-season rates to $99 from $109. Rennie said the course is becoming established again after taking a hit during Sea-to-Sky Highway construction. Players realize they can get from downtown Vancouver to Furry Creek in about 25 minutes – faster than a drive to UBC after work.