Transcript The State of The Game

JAPAN GOLF MARKET
THE STATE OF THE GAME
JAPAN: The Market
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Japan has 2,437 golf courses and 2,700 driving ranges that accommodate
a total population of 127.6 million people.
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The golf population is estimated at just over 10 million (2008).
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Furthermore the combined total of core and non-core golfers amassed an
incredible 89 million rounds of golf in 2008 up from 85 million rounds in
2005.
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Noting the largest single factor attributing to rounds increase was a
decrease in rate by 29% (2003 vs. 2008) from 13,500 yen or $120 USD in
2003 to 9,400 yen or $89 USD in (2008).
JAPAN: The Core Golfer
Japan currently has a core golf market of 4.7 million golfers.
A core market that can be defined more specifically as follows:
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A core Golfer plays golf at a golf course at least 10-14 times per year.
(average spend 9,800 yen)
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Practices at a range 8-10 times per year. (average spend 2,700 yen/$35
USD)
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60% are aged over 50 years of age.
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Spend 290,000 yen ($3220 USD) per year on golf play (includes green
fees, practice and retail)
JAPAN: The Operation Numbers
Numbers… How they stack up
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A good performing golf course in Japan
is as follows:
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Open on average 360 days of the year
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Consists of 18 holes
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40,000 rounds (80,000 being capacity)
played annually,
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Average spend of $100 (includes green
fees, cart fees, food and beverage, retail
and miscellaneous).
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65% on play fees, 20% on food and
beverage, 10% on Retail and 5% on
miscellaneous.
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On average 1,200 members each paying
a one-time $10,000 initiation/joining
fee and annual dues of $400 USD (Note:
A member will always pay a green fee at
a discount rate, on average $50).
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This in total equates to $4.5M USD in
total revenue.
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The highest fixed cost is Human
Resources ($1.5M USD)
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Cost of Sales ($600,000 USD)
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Agronomy ($500,000 USD)
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Cost of Operating ($400,000 USD)
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Leasing $300,000
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Miscellaneous ($300,000)
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This in total equates to $3.6M USD in
total expenses.
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A $900,000 profit or approx 20% NOI
(Net Operating Income)
JAPAN: Leverage
Leverage: Golf as business “settai” that is becoming a game.
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In 2008 it was estimated that $15-$17 billion USD was spent on golf
directly and indirectly through associated spends in Japan. Retail (Soft &
Hard goods) accounted for $4.5B USD while Play (Green Fees etc,)
accounted for $7.6B USD in 2008. In addition more than $2.0 B USD in
additional spends in the key areas of travel, business and investment
associated with the game of golf both domestically and internationally by
the Japanese Golfer.
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Clearly such spending attracts the attention of other potential and crossmarkets. With it comes additional business opportunities. The obvious Bto-B opportunities through global partners are beginning to be explored.
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As a result B to C opportunities have been further explored as many
companies non golf related realize and understand the significance of the
golfing market.
JAPAN: Development of the game
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On Course - 93% of the Japanese Golfers are male and 7% female.
However the most compelling number is that only 0.8% of the total golf
population are Junior Golfers.
Off Course - Driving ranges (off course facilities) have decreased from
3,600 (2003) to 2,000 (2009). The main reason being the discount in play
fees , resulting in less usage coupled with the property boom during the
same period.
The Off Course providers are very important stepping stone to promotion
and learning of the game and to becoming and active golfer. However
Japan as is the case in most of Asia has adopted an elite
marketing/branding approach that prevents true development..
Professionally - Japan has two tours and total prize money available of
$80M USD. The JGTO (Men’s) at $42M USD & JLPGA (Ladies) at $38M
USD
In recent years the Tours has become more actively involved in developing
both role models and key figures for both new and current golfers to
associate with and in turn raise the profile of golf and participation.
JAPAN: Marketing & Sales
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Creating a point of difference
The game of golf globally has always been marketed as an elite and
wealthy activity. No place more so than Japan. At one point in the early
90`s some memberships were over $1 M USD and on average $275,000
USD (1993) and a game of golf cost on average $250 USD (1992)
throughout Japan.
Beginning in 2003 the foreign owners (Goldman Sachs and Lone Star) and
managers (Accordia and Pacific) have helped encouraged domestic
owners and operators of golf courses to follow suit in the restructuring of
facilities along with new marketing, sales and operational initiatives that
have lead to better performance at these facilities.
Segmentation and classification of golf courses also needs to occur, the
Internet and on line reservations and blogs have helped expedite this
process but there is still a lot of classification ahead.
Facilities are now developing new styles of play, targeting new markets,
adopting more creative revenue management/pricing models, reducing
head count, improving training, education and professional development
and ultimately making the game more accessible through key campaigns.
JAPAN: The Outlook & Opportunities
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The opportunity for 3rd parties to manage golf course facilities correctly is
very good.
Owners (Private and Institutional) are required to employ sound business
practices in order to give confidence to both lenders and users.
The industry has begun to engage a business development (Mkt/Sales)
strategy e.g 2020 that will provide a sustainable business model.
The game of golf in Japan has had a huge image change the past 3 years.
(Miyazoto, Ishikawa, Internet, Travel and Fashion)
Procurement and Sourcing via Japan is an opportunity for the rest of the
world to take advantage of this key business practice.
The use of technology in both back and front of house.
Education, Training, Professional Development and Systems in Japan and
greater Asia are in demand.
Real Estate “Green Living” has just begun.