Golf course operators suffered through a cold and rainy spring and now fear that a new group discount website could spark a price war that will drive some businesses into bankruptcy.
Alan Alibhai, Dan Lorga and two silent partners have pumped more than $100,000 into creating DealsCaddie.com – a website that provides discounted deals much like Groupon and Living Social.
But Alibhai said all of DealsCaddie.com’s deals relate to golf.
Another difference is that, while Groupon requires buyers of its deals to pay the entire discounted rate up-front, DealsCaddie.com requires that buyers of its deals pay only a small deposit. They pay the balance at the golf course.
“We’re trying to make golf more accessible,” Alibhai told Business in Vancouver. “It’s one of the fastest growing sports, but it’s also very expensive.”
Alibhai said he plans to launch the website by mid-June and has spoken with managers at “several” local golf courses who are interested in taking part. But he declined to name the courses.
Alibhai believes golf course operators welcome the kind of golfer that DealsCaddie.com would deliver: people who have never been to the client’s golf course and who are willing to play at off-peak times.
He added that most DealsCaddie deals will have few restrictions on when they can be used. But all the golf course managers and industry insiders who spoke with BIV said they weren’t interested in Alibhai’s service because it would diminish the golf experience and result in steep losses.
Most estimate that revenue is down by about 15% so far this year.
“We have a business to run here, and we’re not into discounting,” said Morgan Creek Golf Course director of golf Wayne Vollmer.
“The cost of labour is going up and the cost of materials is going up. Government has increased the minimum wage 30% and put the harmonized sales tax on green fees. That’s a 7% tax hike. All of this doesn’t help our business.”
Vollmer believes that if he offered customers a Groupon-style discount so that they pay $0.25 on the dollar, the golf course would be busy every day from morning until night but its books would bleed red ink.
“We don’t discount green fees,” added UBC University Golf Club general manager Michael Mather. “It’s just something that we don’t believe in. You have set costs for maintenance practices, staff – all that kind of stuff.”
However, Mather does allow slight discounts in the summer for golfers who start their rounds in the evening.
Discounts at the three Vancouver Park Board-run golf courses (Fraserview Golf Course, McCleery Golf Course and Langara Golf Course) are also “doubtful,” according to Howard Normann, who is superintendent of golf course operations at those courses as well as three pitch-and-putts that the park board owns. He had not heard of DealsCaddie.com until BIV told him of the venture.
Despite hikes in operating costs, Normann was charging the winter golf rate until May 27. Last year, he started charging the regular summer rate on April 1.
Discounted golf green fees could force some local golf courses into receivership, according to Ross Marrington, who arranges golf vacations for larger groups through his BC Golf Guide.
“Courses can only fit so many rounds into a year and their operating costs are going up. If the average green fee rate goes down, then their bottom line will constantly be shrinking,” Marrington said.
“I suppose [the money-losing golf courses] will eventually be sold and someone will pick them up for pennies on the dollar. Then, the owners will be able to sell the golf cheaper because they don’t have a $10 million investment on the go. They’d have a $3 million one.”