Golf course operators will need to be proactive and put more emphasis on marketing when it comes to 2010 challenges like the Harmonized Sales Tax (HST) being implemented in British Columbia and Ontario, according to Jeff Calderwood, executive director of the National Golf Course Owners Association.
The HST is a significant concern as we inch closer to its implementation.
“It’s a complicated situation. There are a whole bunch of transitional rules being phased in. It’s complicated when they sell multi-packs and memberships, the time you sell it and the time it applies and things like that,” said Calderwood.
“Unfortunately, the truth of it is for Ontario and B.C., almost the total amount of it is passed through to the customer. It means an increased price and that has to mean a softening of demand unfortunately,” said Calderwood, who believes other provinces, with the possible exception of Alberta, will have the HST soon.
That means golf courses will need to do everything that is within their control to deal with the new tax.
“Golf courses need to be proactive to take advantage of what they can do in the early part, leading up to July, including marketing strategies to pre-sell certain things where they can avoid the tax for now,” he said.
“Creative marketing through the transition period, I think, is necessary to minimize it for this year and then, once it’s in place from July 1 on, I really think there needs to be some aggressive marketing to overcome the tendency for a softened demand due to the price increase,” added Calderwood.
One possible way to avoid any consumer backlash is to lower the price of green fees and memberships to accommodate the new tax. It’s not an ideal solution for most and Calderwood doesn’t see it happening.
“I don’t think so, in and of itself, but demand dictates price when you’re in a yield management industry. They may react to it if the demand is soft,” he said.
“One thing I’m hoping many of them do, the ones that have had tax-in pricing, will pull the tax out. It might actually allow them to present it as a lower price. Then, the taxes on the outside added on will send it up,” said Calderwood.
“At least, that will have people recognizing that it’s not the golf courses that are putting the prices up.”
Of course, getting that message to consumers is top priority, which emphasizes Calderwood’s point about marketing and communications.
“That’s an important part of the marketing, I think, is to make sure that it’s understood by the customer. Probably, the high end clubs or the more expensive courses, they’re at more risk – eight per cent is a bigger amount,” said Calderwood.
“I think it’s probably going to lead to some redistribution of the spending, so it may push certain golfers down a notch from that level of club. I’m talking more about the public player than the memberships, but it would apply there as well,” he said.
“In that sense, it won’t necessarily hurt every golf course and I do bring all that back to their marketing. How effectively they’re able to market themselves in all sectors will influence that,” said Calderwood, whose concerns this year go beyond the HST.
Calderwood was among several leaders of groups within the National Allied Golf Association who unveiled the golf economic impact study, which painted a rosy picture for the industry. Certainly, a big component of that study is the lobbying of various levels of government on behalf of the industry.
One plan is to hold a National Golf Day on Parliament Hill in Ottawa.
“The decision hasn’t been made yet and I don’t think it’s just about Ottawa, but I’m working on details as we speak to pull together a combination of provincial and federal lobby days, industry-wide,” he said.
“There are so many issues that the golf industry is fighting with government – HST is one,” said Calderwood, adding that the study will be a helpful tool when it comes to subjects such as taxation.
“It puts facts to the words, so that we can get governments recognizing at all levels that this is an industry. It’s not just an idle game,” said Calderwood, adding that the lobbying effort won’t begin until this fall at the earliest.
While there are definitely challenges facing golf course owners, and everybody in the game for that matter, he says there is some sunshine on the horizon.
“I do think the economic forecast is an interesting one, It feels more optimistic. We’re out of that recession. It wasn’t as deep a recession as the last two. It wasn’t as deep and it didn’t last as long,” said Calderwood, who believes that optimism may mean a more positive outlook for consumers.
“My hope is that those economic factors are indeed good forecasters and that will overcome the challenges of things like the HST, the concerns about the cost of golf, the amount of supply – so many golf courses splitting the pie so thin. I do think there’s a chance that’s going to happen this year,” he said.
“The other big one beyond the economy is the weather. We are due for a rebound to normal weather. We’ve been hit hard the last few seasons,” said Calderwood.
“If that happens to any sort of average trend and if the economy does what it’s supposed to do, I think golf courses with some creative marketing are going to get through the HST issues okay and our industry will be back on track.
“There are not going to be any home runs. I’ve got cautious optimism.”