[Mike Bodo]

Does anyone outside of me feel we are close to reaching a point of diminishing returns with the amount of destination resort properties having been buit the past decade in addition to new courses coming online the next several years? I can see a collapse ensuing in the near future given the shrinking finite number golfers that can annually afford to play places like Bandon, Pinehurst, Streamsong, Whistling Straits, Sand Valley, Reynlolds Plantation and any of the Cabot properties, not to mention the escalating costs to cross the pond to play at any number of great GB&I destinations.


In short, I see a massive bubble forming where the build-up of destination golf resort properties is going to implode and leave a lot of owners/operators in finanical dire straits. At some point supply is going to outpace demand and there will be an overcapacity problem within this segment of the industry - especially with all the new resort courses set to come online in the next several years. Thoughts?

[DFarron]

I think the saddest part of all this I are the rising prices.


When Bandon started it was fun because of the ambiance and the reasonable cost. It is no longer that way and many like Streamsong are vastly overpriced and defeat the original purpose of Bandon.


A good example….I’m a short car ride from Gamble Sands and was considering a weekend trip. Looked at the rooms and they were $500/night.


I understand that market forces are in play but for me the trill is not worth the price.

[John Handley]

In short, the answer to your question is no.  No I don't see anything changing in the short term.  The demand for travel and great golf is at an all-time high. Can it be sustained, we'll see.  I'd imagine that has more to do with the economy that anything else.


I book golf trips for people on the side and in my circles, guys are making multiple trips per year.  Guys are booking GB&I trips, Australia/New Zealand trips and more.


What I would be more concerned about that if people want to go play Muirfield or Royal County Down, is the high end property being sold at crazy amounts in far off destinations.  Are people really going to buy $4M places in the Dominican Republic or St. Lucia or Hawaii going forward?


If you have tried to book trips to Bandon, Sand Valley, Scotland or Ireland you would know that it's not stopping in the next couple of years unless some drastic occurs (ie. war/recession/pandemic).

[Mike Bodo]

If you have tried to book trips to Bandon, Sand Valley, Scotland or Ireland you would know that it's not stopping in the next couple of years unless some drastic occurs (ie. war/recession/pandemic).

At some point if rates and fees at the prime golf resort properties continue increasing annually by the percentages they are people struggling to afford going there now will drop out, skip a year and or decide to go somewhere more affordable. I don't see an endless pool of high-end retail golfers that have the financial wherewhithal to continue spending tens of thousands annually on buddy golf trips, unless they're doing it on credit. At some point they're going to have to pay the piper for that luxury. You're already seeing this materialize in the ski industry, with skiier visits down this past winter - mostly due to ever increasing costs.


And as you said, it will take little more than a downtown in the economy, i.e. circa 2008/2009 to bring reality home. With all the new resort courses slated on come online the next several years supply will undoubtedly outstrip demand.

[David_Tepper]

Having worked in the investment business for the past 45 years, I know human nature often cycles between greed and fear over time. But, unless there is a significant global economic/geopolitical event that triggers a worldwide recession/depression, I can't see the current trend changing any time soon. My understanding is visitor tee times at the best known GB&I clubs are already close to fully booked for 2025.

This century we have experienced the burst of the tech/internet/.com bubble in 2000, the Global Financial Crisis of 2008-09 and the Covid pandemic of 2020. Each time the recovery has been strong and faster than many would have expected.

As far as golf is concerned, in some cases supply has actually stimulated demand. Bandon is a prime example of that. More courses encourage more people to visit more often.

 

[Mike Bodo]

Human nature often cycles between greed and fear over time. But, unless there is a significant global economic/geopolitical event that triggers a worldwide recession/depression, I can't see the current trend changing any time soon. My understanding is visitor tee times at the best known GB&I clubs are already close to fully booked for 2025.

This century we have experienced the burst of the tech/internet/.com bubble in 2000, the Global Financial Crisis of 2008-09 and the Covid pandemic of 2020. Each time the recovery has been strong and faster than many would have expected.

As far as golf is concerned, in some cases supply has actually stimulated demand. Bandon is a prime example of that. More courses encourage more people to visit more often.

These are all good and valid points, but I recall post global rececssion golfing rounds in general declining year over year and course closures being announced seemingly weekly despite the economy having improved. The trend was ominous until the pandemic hit, which ushered in a reversal of fortunes for the entire industry. How long can this last and will there be enough new high-end retail golfers entering the pool to not only replace those who are aging out and or going on to their eternal reward, but support the plethora of new resort courses set to come online the next few years? I don't see it.

[Jeff_Brauer]

Dating back to my first year in the field, I saw regional resorts stayed steady when national resorts with longer trips got expensive.


Similarly, in times of economic stress, I saw many public golfers retreat from >$150 courses down to $75 courses that were almost as good in design or maintenance (and there are plenty of those.)


Only in the worst recessions does play taper off, although with a growing population, you might expect everything to keep growing.


Just my take.  Perhaps not a wide enough sample size to be conclusive.

[PCCraig]

100% Yes

[Chris Hughes]

Does anyone outside of me feel we are close to reaching a point of diminishing returns with the amount of destination resort properties having been buit the past decade in addition to new courses coming online the next several years?

Agreed.



In short, I see a massive bubble forming where the build-up of destination golf resort properties...


I wouldn't limit it to "destination" golf -- seeing a lot of private clubs take on a inadvisable amounts of debt for "nice to have" vs. "have to have" projects.



Thoughts?


My Dad always said "son, everything in life is cyclical".  Another smart friend who is President of a great golf club in the Northeast said "this golf boom reminds me of SPAC's and crypto"...

[Mike Bodo]

Chris, love your takes. I was going to include private clubs in with this, as there already is reckoning taking place there in the form of fewer golfing rounds and clubs no longer having waiting lists. Yet, as with resort courses, there's nearly as many private courses in some phass of development. Where are all these people going to come from to fill these places? Even amongst the millionaire class there's a limit to how many private club memberships are practical.

[Jeff Schley]

Chris, love your takes. I was going to include private clubs in with this, as there already is reckoning taking place there in the form of fewer golfing rounds and clubs no longer having waiting lists. Yet, as with resort courses, there's nearly as many private courses in some phass of development. Where are all these people going to come from to fill these places? Even amongst the millionaire class there's a limit to how many private club memberships are practical.

Mike,
I'm curious where is this taking place?  I think it is the opposite still with a strong demand for private clubs.

Supply demand is a balance, with imperfect projections and business plans. Most people won't know it typically until it happens, absent a black swan event.

[Matt Schoolfield]

I think many folks here mistake the customer base for these resorts. It's basically me. I'm a member at a muni club. I play regularly. I'd like to play nicer courses occasionally, but it's not important. I also have plenty of money for regional golf. If I can drive there, it's easy for me. The general public wants to be able to play high-end golf once or twice a year, and there are 100 people like me for every club golfer who is simultaneously playing the private-access game.

Bandon is close enough to the Bay Area and Seattle to draw from both markets. Rodeo Dunes targets Denver. Sand Valley has Chicago. Wild Spring Dunes will capture the Texas Triangle. I not only do not see this as a bubble, until there is a resort within a half-day drive of every major metro region, I see this trend accelerating.

The only reason I haven't been to Bandon is that it's literally just too difficult to book, and I'm looking for something I can book a month out with friends.

[Jim Tang]

There are only so many golfers that are interested in taking a destination golf trip to walking only places like Bandon, Sand Valley and Streamsong. You'd think at some point we'd reach a saturation point and these resorts would struggle to fill out their tee sheets. Of course, to this point, that hasn't happened.


In terms of economics, if things get too pricey at these resorts, I could see people opting to visit their regional resort rather than flying across country to visit a far flung resort. I live outside of Chicago and Sand Valley is a much easier place for me to access than Bandon. SV isn't quite Bandon (nothing is) but it's in the ballpark. I don't have to buy flights, get myself to the airport and rent a car to visit SV. That's a significant savings and perhaps a half measure if people feel some of these destination resorts are becoming too expensive. It would be interesting to see Sand Valley's data on where their guests are coming from.


Finally, there are a ton of new destination private courses that have come online recently, with more on the horizon. As guys join these clubs what impact does that have, if any, on the public resort courses we're discussing here? I joined a private destination course about five years ago and that has curtailed my travel somewhat to other places because obviously, when I travel for golf, I want to be at my club, a place that I love.

[Tim Martin]

Having worked in the investment business for the past 45 years, I know human nature often cycles between greed and fear over time. But, unless there is a significant global economic/geopolitical event that triggers a worldwide recession/depression, I can't see the current trend changing any time soon. My understanding is visitor tee times at the best known GB&I clubs are already close to fully booked for 2025.

This century we have experienced the burst of the tech/internet/.com bubble in 2000, the Global Financial Crisis of 2008-09 and the Covid pandemic of 2020. Each time the recovery has been strong and faster than many would have expected.

As far as golf is concerned, in some cases supply has actually stimulated demand. Bandon is a prime example of that. More courses encourage more people to visit more often.

David-Subsequent to the 2008-09 financial crisis and before covid was “the recovery strong  and faster than many would have expected?” It seems that Covid was the white knight that resurrected the golf business.

[Wayne_Kozun]

Chris, love your takes. I was going to include private clubs in with this, as there already is reckoning taking place there in the form of fewer golfing rounds and clubs no longer having waiting lists. Yet, as with resort courses, there's nearly as many private courses in some phass of development. Where are all these people going to come from to fill these places? Even amongst the millionaire class there's a limit to how many private club memberships are practical.

Mike,
I'm curious where is this taking place?  I think it is the opposite still with a strong demand for private clubs.

Supply demand is a balance, with imperfect projections and business plans. Most people won't know it typically until it happens, absent a black swan event.

I agree with Jeff - this is NOT my experience.  My club in Toronto struggled to attract members from about 2008-2020.  Toward the end of that period the supply of private clubs dropped in this area as some clubs were sold to real estate developers.  Since Covid hit our membership filled up and we have a large waiting list that continues to grow.  And the initiation fee has more than doubled over the last five years.  No signs of slowing here, despite the fact that the Canadian economy has been much weaker than the US economy in the last couple of years.

[Wayne_Kozun]

David-Subsequent to the 2008-09 financial crisis and before covid was “the recovery strong  and faster than many would have expected?” It seems that Covid was the white knight that resurrected the golf business.

I think that golf in general struggled from 2008-2020, but not the destination golf resort business.  This is when Cabot Links, Streamsong and Sand Valley opened, and Bandon really expanded in that era.  The far-flung golf destination resort started with Bandon in 1999 but it really exploded in the 2008-2020 period.

[Mike Bodo]

Chris, love your takes. I was going to include private clubs in with this, as there already is reckoning taking place there in the form of fewer golfing rounds and clubs no longer having waiting lists. Yet, as with resort courses, there's nearly as many private courses in some phass of development. Where are all these people going to come from to fill these places? Even amongst the millionaire class there's a limit to how many private club memberships are practical.

Mike,
I'm curious where is this taking place?  I think it is the opposite still with a strong demand for private clubs.

Jeff, speaking in purely microeconomic terms, there are a number of private clubs in the metro-Detroit and Northern Ohio areas that were at full membership and had waiting lists to boot the past two - three years. This no longer the case. The clubs in question are still doing well, but numbers have trended down slightly. Not sure if this is anything more than a temporary correction or a sign of further membership erosion in this part of the vineyard.

[Michael Moore]

I live in Portland, Maine and the hotels continue to go up like the late stages of a Monopoly game. I have friends who are involved and when I ask about it they just say "demand".
 
I don't know enough to know what to think about the division of wealth in the United States. We do not appear to be headed towards a South American second-world scenario. If a person can work hard and live with dignity, I am satisfied. If in this scenario the plutocrats need to erect more playgrounds, that's fine too.

[Steve_Roths]

Retiring Baby Boomers are also a big factor.  They are filling their days with travel as they have the money and medicine is keeping them going.  So, not a big deal to hit all of these each year.  March we go here, April we go here, etc. etc.


You have to fill up your days post work.

[Tim Martin]

David-Subsequent to the 2008-09 financial crisis and before covid was “the recovery strong  and faster than many would have expected?” It seems that Covid was the white knight that resurrected the golf business.

I think that golf in general struggled from 2008-2020, but not the destination golf resort business.  This is when Cabot Links, Streamsong and Sand Valley opened, and Bandon really expanded in that era.  The far-flung golf destination resort started with Bandon in 1999 but it really exploded in the 2008-2020 period.

Wayne-You said it better than I as the golf business in general ran counter to the destination golf resort business.

[John Handley]

People will start making choices that work better for them.


For example, I went to Bandon for the 8th time last year with a group of 12 guys from my club.  I love the place.  But based on the effort to get there, the rising cost, and the time put into it, I decided to take that time and money and invest into places in England that I have not played. I left Bandon a little sad thinking that may have been the last time I will go.  Nothing wrong with Bandon, but I want to play many great courses around the world.


Bandon probably isn't concerned about me as they have plenty of guys from all over the US, willing to fill my spot.

[Tim Martin]

People will start making choices that work better for them.


For example, I went to Bandon for the 8th time last year with a group of 12 guys from my club.  I love the place.  But based on the effort to get there, the rising cost, and the time put into it, I decided to take that time and money and invest into places in England that I have not played. I left Bandon a little sad thinking that may have been the last time I will go.  Nothing wrong with Bandon, but I want to play many great courses around the world.


Bandon probably isn't concerned about me as they have plenty of guys from all over the US, willing to fill my spot.

John-Do you have any data on the amount of foreign money spent at Bandon? Thanks.

[Tommy Williamsen]

In some ways, the supply increases the demand. I know guys who are going on golf trips because the quality is so good. Some of them have not been on golf trips before.

[John Handley]

People will start making choices that work better for them.


For example, I went to Bandon for the 8th time last year with a group of 12 guys from my club.  I love the place.  But based on the effort to get there, the rising cost, and the time put into it, I decided to take that time and money and invest into places in England that I have not played. I left Bandon a little sad thinking that may have been the last time I will go.  Nothing wrong with Bandon, but I want to play many great courses around the world.

Bandon probably isn't concerned about me as they have plenty of guys from all over the US, willing to fill my spot.

John-Do you have any data on the amount of foreign money spent at Bandon? Thanks.

Tim- I don't have that data from Bandon and I think they'd be the only to have that info.  In my visits there, I have seen some international travelers but not much.  If I had to guess, and this is just a guess, I'd say 10%.  But I can say I have met people from NY, Fla, TX, IL, and basically all over the US.  It's not just a regional destination.

[cary lichtenstein]

Close by me in Jupiter, Fl., I see way too many courses being developed

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