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The Debate Over Third-Party Tee- Time Services: Companies like GolfNow are worrying some in the industry
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WSJ

The Debate Over Third-Party Tee- Time Services: Companies like GolfNow are worrying some in the industry

WSJ

 

If you browse through the tee-time listings at GolfNow.com, in most markets you’ll likely find some sensational bargains. At the Tanglewood Resort north of Dallas you could have booked an 18-hole round for your foursome at 1:28 p.m. Friday for $10 per person. The tee times immediately before and after 1:28 p.m. were offered at $36. At the Silverthorn Country Club north of Tampa, you could have booked an 8 a.m. tee time Friday for $15. The standard rate for that time is $35. Occasional single-digit green fees for 18 holes are not uncommon around the country.

The business model that allows GolfNow to offer such cut-rate golf is freaking out some in the industry. Critics contend that openly offering tee times at a fraction of standard rates damages golf courses’ “price integrity” and commoditizes a product that traditionally sells more on the basis of service, quality, convenience and personal connection.

“GolfNow basically encourages customer disloyalty,” said Stuart Lindsay, a longtime consultant to golf courses through his Edgehill Golf Advisors and an outspoken GolfNow skeptic.

GolfNow isn’t the only third-party tee-time-selling business. Part of the industry’s anxiety has to do with simply adjusting to the market disruptions wrought by online technology. But GolfNow, affiliated with NBCUniversal’s Golf Channel, has quickly become the big dog. A series of major acquisitions since the summer of 2013 has increased its reach. Lindsay estimates that up to half of all the online tee times available in the U.S. are now available through GolfNow. (The company disputes that percentage but acknowledged that about a third of courses selling tee times online now use GolfNow.) In any industry, growth like that makes people nervous—not just competitors, but also clients and partners.

The aspect of GolfNow’s business that most concerns critics are the so-called bartered tee times. The standard arrangement most golf courses make with GolfNow is to barter one or two tee times a day in exchange for a listing on GolfNow’s website. Golf Channel, through relentless on-air promotion—“Go Play!” urges the charming Old Tom Morris character—drives hundreds of thousands of golfers to GolfNow. There they can shop for golf the way they do for everything else online, comparing offers from a range of courses in a given area and making their decision based on price, location, time of day and reviews by other golfers.

“The service they provide is certainly worth two tee times a day,” said Margaret Giles, who runs the shop at the River Ridge Golf Club near Tampa, Fla. “We get people in here all the time who booked online and tell us, ‘I’ve lived around here for many years and never knew about this place.’ GolfNow has brought us a lot of extra business.”

That’s the business proposition in a nutshell. The potential downside for courses is more subtle. “GolfNow’s pitch is they have the eyeballs of the golf consumer, but that’s just one dimension,” said Hughes of the NGCOA, which has empaneled a task force, its report expected in February, to study the issues raised by third-party tee-time purveyors. Hughes said golf operators were hotly debating the topic: “Price integrity is part of it. Losing control of their relationship with customers is another.”

When GolfNow or other enterprises, such as www.teeoff.com, are paid with bartered tee times, they have every incentive to unload them at any price they can get. Buyers make direct payments to GolfNow, not the course. Most of the biggest bargains one finds on the GolfNow website, often highlighted with banners or other special designations such as “60% off,” are bartered tee times. GolfNow even operates a subsidiary site, www.lastminutegolfer.com, which aggregates many of its unsold tee times for rounds within 48 hours. That site is nothing but bargains.

Viewed one way, bartered tee times are fair recompense for the services and exposure GolfNow provides. Most bartered slots, each for a foursome, are at off-peak times—midmorning instead of early morning, say, or in the early afternoon. Half of a typical U.S. golf course’s tee times go unsold anyway. But the market effect can be disruptive.

A similar dynamic took place in the early days of Expedia and Orbitz, online-booking services that were able to sell hotel rooms at prices so low the hotels cringed. “It destroyed the pricing model for hotels because consumers quickly become trained to expect bargains,” said Peter Hill, chief executive of Billy Casper Golf, which owns or operates more than 150 golf properties in 28 states. Hill said it took the lodging industry seven to 10 years to correct itself. In the end, hotels learned to guarantee consumers the lowest prices on their own websites and to provide only limited inventory to third-party providers. But golf isn’t there yet.

Another risk for courses is the customer data that third-party purveyors collect. “They may promise not to use customer info to sell against a course, but how do courses know for sure?” Lindsay said. In theory, a third-party purveyor could sell golfers their tee time and follow up with special offers for balls and apparel that undercut the pro shop at the course where they are headed.

When asked about such practices, a GolfNow spokesman said: “Never have, never will. That flies in the face of our relationship with courses.”

Much of the controversy in the third-party golf business can be understood as the natural friction of an industry in transition. “Our ambition, simply put, is to get more people to play more golf by using technology to present them with more options,” said Mike McCarley, the president of Golf Channel. “The more people who play golf, the more will watch Golf Channel, and the more people who watch Golf Channel, the more will want to play golf.”

For now, McCarley said, the bartered tee-time model works best for most courses, but he emphasized that the third-party tee-time business is rapidly evolving and that GolfNow’s business models will evolve, too. Even Lindsay, the skeptic, acknowledges that GolfNow’s current model has benefited some of his client courses.

“My feeling is that the industry is moving, very cooperatively, in the right direction,” said Hill of Billy Casper Golf. “The third-party resellers are adjusting to reality. Nobody wants to drive prices so low they are unsustainable. That’s like eating your young.”

Meanwhile, you can still find some mighty fine bargains out there.

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