Changing The Price Of Golf, One Tee Time At A Time

Changing The Price Of Golf, One Tee Time At A Time

Ottawa Citizen March 22, 2014.

Would you pay more for a tee time at 10 a.m. on a Saturday than for another at 1:15 p.m.?

Jeff Calderwood thinks you would, and he maintains it will be good for you.

Calderwood is the executive director of the Ottawa-based National Golf Course Owners Association, which has signed a partnership/marketing agreement with the U.S. company Quantival to market and deliver its “dynamic pricing” service to golf courses across the Great White North.

“It’s good for the golf courses, and it’s good for the golfers, too,” Calderwood says.

Call me skeptical, but I’ll reserve judgment until the process plays out over the next couple of Canadian golf seasons.

Here’s a brief summary: Using historical data about such factors as tee time bookings, time of day and time of season and weather and pricing algorithms based on the research of Quantival chairman Nile Hatch, “dynamic” or variable prices are assigned to each slot on the tee time grid.

Variable pricing already exists in the golf world, Calderwood says, citing twilight and weekend rates as just two examples. The change will be in altering the pricing process to the level of those used for hotel rooms, car rentals and airline tickets.

The goal is to enhance revenue for course operators by allowing them to get something for tee times that currently go unused or to lessen the often negative impact of cut-rate and cut-throat competition from online re-sellers of tee times.

Calderwood argues that consumers can and will be benefit in a couple of ways.

First, he says, golf courses that can maintain and build their revenue bases will be better equipped to provide the level of service that customers expect.

Second, while the Gord Holders of the world might be willing to pay full or enhanced prices for peak times, other consumers wouldn’t mind playing a couple of hours earlier or later or maybe on another day if they can do so at a lesser cost.

We’ll see about that. It will be a new thing for Canadian golfers, much different from the more basic rack-rate system, and their response is going to be whatever it is.

According to Calderwood, golf is just playing catchup.

“Our industry has been slow to change the way we price our product. We are using a model that is close to what they have done for the last 100 years.”

Based on what he has been told about “dynamic pricing” at golf courses in the U.S., Calderwood says there has been no blowback from golfers in that country. Part of the reason is that many of them are getting better prices for their off-peak tee times, and that has led to increased sales of tee times that weren’t being used previously.

Spreading the concept and use of dynamic pricing in Canada is going to take some time. Data must be collected and dumped in, and golf course staffers must be trained, which would be hard to do in the short time between the signing of the NGCOA-Quantival agreement in late January and the start of the Canadian golf season.

As of early March, about 80 courses had expressed interest in the system and wanted to have it customized for them, with a big push by NGCOA coming in April.

More likely, for most Canadian courses, would be a 2015 launch.

“There’s different levels of demand,” Calderwood says. “They all have to make their decision on how does this fit or not fit my current circumstances.”

Quantival is not the only variable or dynamic pricing model on the market, not even in Canada, but Calderwood says it’s the best. Keep in mind, though, that his organization has a significant interest in promoting that service.

Tim Forstrom, executive director of Quantival, from Provo, Utah, says the value of any tee time is proportional to the interest of the individual and the particular tee time involved. For example, a retiree who has free time in the afternoon might place more value on a mid-week, mid-day tee time than a businessperson who still works 9-to-5.

Forstrom maintains that time-based pricing puts both the golfer and the course owner in the driver’s seat. “You tell me the time, and we’ll tell you the cost, and vice versa.”

The algorithms developed by Hatch, who has a PhD in economics, are much too complex to be regurgitated here by a mere sports writer, but Forstrom says what Quantival does is cross-examine what happens on those days when nobody plays golf at a given course. Calculate the overall utilization and, in each case, then say, “This is what can be done to drive people into those times.”