Golf Course Revenue Management: A Study Of Tee Time Intervals
Kimes, Sheryl E.; Schruben, Lee W.
Golf courses have two strategic levers, round duration control and demand-based pricing that they can deploy in a revenue management programme. Before embarking on a revenue management programme, golf courses must first clearly define their capacity. This study uses simulation to study the most controllable factor of capacity: the tee time interval. Intuitively, reducing the interval between parties will lead to an increase in revenue; however, this paper shows that interval reductions may actually lead to decreased revenue. Research in revenue management (RM) has previously addressed the theoretical and practical problems facing airlines and hotels, among other industries, but has given little attention to the golf course industry (Kimes, 1989; Weatherford and Bodily, 1992). The golf course business is similar enough to hotel and airline operations that golf courses should be able to apply RM principles (Kimes, 2000). Industries using RM generally measure their performance by calculating their revenue (or contribution) per available time-based inventory unit. For example, hotels calculate their revenue per available room-night (RevPAR), airlines determine their revenue per available seat-mile (RevPAS), and restaurants rely on revenue per available seat-hour (RevPASH). Based on this logic, golf courses should measure their revenue per available tee-time (RevPATT), but the definition of availability is not as precise as in other industries. The number of available tee times is affected by both controllable and uncontrollable factors. Controllable factors include the length of a round of golf, the dispatching rule used, maintenance and the tee time interval. Uncontrollable factors include the number of hours of daylight and weather. Unless golf course operators have a clear definition of their capacity, they will not be able to measure the performance of their RM systems. This paper focuses on the most easily controllable factor affecting course capacity: the tee time interval. A dynamic simulation model was developed, which can be used to quantify the trade-offs in determining an appropriate tee time interval. Intuitively, reducing the time interval between parties might lead to an increase in throughput and revenue; however, tee time interval reductions may amplify the effects of the variations in pace of play and result in a reduced RevPATT.
revenue management; golf; simulation
Required Publisher Statement: © Palgrave Macmillan. Final version published as: Kimes, S. E., & Schruben, L. W. (2002). Golf course revenue management: A study of tee time intervals. Journal of Revenue & Pricing Management, 1, 111-120. doi:10.1057/palgrave.rpm.5170014 Reprinted with permission. All rights reserved.