Competitive Pricing in the Golf Industry
Enz, Cathy A.; Canina, Linda
In this paper, we estimate the price elasticities of golf course demand, and then examine how pricing relative to competitors further shapes demand (course utilization) and revenue per available tee time round (RevPATR). Using a set of data for an entire destination golf market of 80 golf courses between 2012 and 2014, we examined price elasticity by course quality tier, customer segments (i.e., player types), month of the year, and day of the week. The sample used to calculate elasticities consisted of 140,567 daily rounds of golf. The average daily rates were aggregated from transaction data based on over 2 million rounds of golf booked annually in the market for the 3-year period. We find that during the entire sampling period the demand for golf was primarily price inelastic, suggesting that a drop in price will not have a significant positive impact on demand and revenue will decrease. Our examination of relative price position using a sub-sample from 2013 revealed that courses that priced above their competition not only reaped higher RevPATR, but also experienced higher daily course utilization. These finds suggest that given price inelasticity in the golf market studied, higher priced golf courses are able to extract both a revenue and a course utilization premium. Nevertheless, the full opportunity for maximizing revenue in the market using revenue management techniques has yet to be exploited.
price elasticity; golf demand; pricing in the service industry
Required Publisher Statement: © Springer. Final version published as: Enz, C. A., & Canina, L. (2016). Competitive pricing in the golf industry. Journal of Revenue and Pricing Management, 16(2), 139-153. Reprinted with permission. All rights reserved.