Is golf booming or going bust in Vietnam?
October 10, 2017
Robert Bicknell puts Vietnam’s golf industry under the microscope and asks some hard questions.
When is enough too much?
If you believe what you read, golf is dying in most parts of the world. Pundits like to point blame at millennials, who have basically turned the retail sales world upside down by shunning physical establishments and purchasing almost everything through their smart phones and quacking about almost everything.
Naturally, they have zero patience for an activity such as golf, which takes four hours of their precious time (five hours here in Vietnam).
The truth of the matter is we can blame Tiger Woods.
Yes, I know Tiger is a convenient target for blame as he seems to have gone belly up since his scandal and only makes the news when something else has gone wrong. So why not blame him for this as well as Hurricane Harvey, the Titanic and Charlottesville?
All joking aside, the biggest problem facing golf in the US is the over-abundance of new courses which sprung up like mushrooms following a spring rain thanks to Tiger Woods.
Tiger was a phenomenon who inspired many new people to pick up the game and this triggered the “greed gene” in developers who built golf courses everywhere without thought of where business would come from.
Hey, since Tiger made golf cool again, why not jump on the bandwagon and cash-in?
Unlike other fads where the manufacturer can retool and change from yo-yos to fidget spinners in less than a week, once you build a golf course you’re pretty much stuck with it for a while.
So, golf courses sprung up overnight, owners dreamed of striking it rich due to the amount of new players from previously unthinkable markets – but they never considered the two most important words in business.
Without careful study of the best location and formulation of a successful business plan that outlines marketing studies and identifies revenue streams, there is a very good chance the project will fail. This does not only apply to golf, but for 99% of all industries.
Okay, maybe not the ice cream business. You can put up a good ice cream parlor almost anywhere and succeed. Yes, even in Alaska. Who the hell doesn’t like ice cream!?
But, golf doesn’t work that way.
Golf is expensive from start to finish and everywhere in-between. For a great club you are looking at investment between $50-$150 million bucks and with competition coming out of every corner, selling a million $50 green fees just to break even in 25 years is not for the faint of heart. You’d better know what the hell you are doing.
Now, let’s look at Vietnam where everyone says golf is “booming.”
More and more golf courses springing up is not what causes a “boom,” because unless the amount of new players is increasing five-fold the amount of new courses opening, it isn’t a “boom” and could actually be the beginning of a long and tragic fall.
Many of these “new” courses are not developing new markets and bringing in new players to the game, but rather just feeding off the current established pool of players and to draw them in, they rely on the only tool they know – ”discounts.”
So, before, where there were 10 courses earning $100 per player, soon it was 20 clubs earning $75 per player, then 30 clubs earning $50 per player. Eventually, we will see $10 green fees.
Yes, this is great news for the players who don’t want to spend a lot of money and, frankly, don’t have much loyalty to any particular club, but it is death for golf clubs that need to earn a minimum amount of revenue just to keep the doors open.
Players need to remember that it costs anywhere from $300,000 to $1,000,000 just to maintain the grass each year.
A quick glance at the driving ranges would make someone think golf is indeed booming, but if you look closely, it’s usually the same players almost every day and at some ranges, the amount of teachers exceeds players.
If golf is to continue growing in Vietnam, clubs need to “grow the business” by bringing in new players to the game and establishing their own markets. Simply relying on stealing rounds from other clubs isn’t a “boom.”