Golf resort business model: a practical look at rooms, rounds and revenue

In this article +

The golf resort business model rarely earns its money where the brochure suggests. Golf fills the beds, sells the story and justifies the rate, but the profit usually arrives through rooms, food, beverage and events, with the course working as the reason anyone booked at all.

The national spending pattern makes the point. UK golfers spend around GBP 484m a year on accommodation and around GBP 526m on green fees, on Sheffield Hallam University research for The R&A. Those two lines sit close together, which tells you the bed is worth roughly as much to the golf economy as the round, and that any venue with keys is selling into both markets at once.

What follows is how the golf resort business model is assembled in practice, which parts carry the fixed costs, and where resort golf most often comes unstuck.

What the golf resort business model actually sells

A resort sells nights, not rounds. The golf resort business model treats the course as an acquisition channel: it brings groups of four to eight people who need beds, breakfast, dinner, a bar and often a second round before they leave. Take the golf away and the same property competes with every other hotel in the county on price alone.

There are usually five revenue lines: accommodation, golf, food and beverage, meetings and events, and retail. Some resorts add memberships or annual passes, which give the tee sheet a floor of local play on quiet mornings. The lines are not equal. They differ in margin, in how far ahead they book, and in how much they cost to service once volume climbs.

Rooms and rounds pull in different directions

Room revenue behaves well once the building exists. The incremental cost of selling an occupied night is small, so rate discipline drops almost straight to the bottom line. Golf behaves differently. The course costs broadly the same to maintain whether forty golfers play it or two hundred, which is why greenkeeping sits near the top of the fixed cost pile, as our piece on greenkeeping budget economics sets out.

That asymmetry sits at the centre of the golf resort business model. A green fee sold on its own has to cover a share of a large fixed cost. The same round sold inside a package covers less on paper, but it also sells a bed, two meals and a bar tab. Resorts that price golf as a standalone product tend to fight for a rate they cannot win. Resorts that price the stay, and let golf earn its keep inside the basket, usually hold both.

Food, beverage and events carry the middle of the week

Leisure golf breaks fill weekends and school holidays. The gap between them is filled by corporate golf, society bookings, weddings, conferences and away days. Published rates put corporate and society packages from around GBP 54 to GBP 55 per player at resort and members’ venues, which sounds modest until you count the coffee, the bacon rolls, the two-course meal and the bar afterwards, all of which sit at catering margins rather than green fee margins.

Events also book further out and pay deposits, which does more for cash flow than a run of last-minute tee times. Our guides to corporate golf day costs and food and beverage profit cover the pricing detail. The point for an operator is simpler: the days that look empty on the tee sheet are the days with the most room to sell something else.

Where the golf resort business model breaks

Three failures come up repeatedly. The first is discounting the room to protect the green fee, which trades the highest margin line for the lowest. The second is handing too much of the calendar to third parties at net rates, so peak weeks fill early at prices the resort would never publish itself. The third is spending capital on the course without moving the rate, which produces a better product and the same profit.

A fourth failure is quieter. Many resorts never separate the golf profit and loss from the hotel, so nobody can say what the course earns, what it costs, or what a bunker programme is meant to return. Without that split, the golf resort business model becomes a matter of opinion, and opinion loses arguments with a bank.

The revenue mix that tends to hold

The resilient pattern is repeatable rather than clever: weekday corporate and society business, weekend leisure packages, shoulder-season stay and play at a lower published rate, and a local membership or pass scheme that keeps the course busy when nobody is staying. No single line dominates, and no single market can take the year down with it.

Measure it properly. Revenue per available room night is standard practice in hotels, and the equivalent discipline for the tee sheet is set out in our guide to tee sheet yield management. Track spend per staying golfer rather than occupancy alone, and watch what a package guest spends beyond the package. Two resorts with identical occupancy can be a long way apart on profit, and the difference is almost always the mix.

Watch the seasonal shape as well. A resort that earns most of its money in twelve weeks is a different business from one trading steadily for nine months, even on the same annual turnover, because the second can keep its staff, hold its standards and plan capital work properly. Spreading demand into the shoulder months is usually worth more to a golf resort business model than another point of margin on the summer rate.

Frequently asked questions

---

Sources: Sheffield Hallam University for The R&A; Macdonald Hotels and Burford Golf Club published rates.