University of Applied Sciences Stralsund

APPLYING YIELD MANAGEMENT TO
THE GOLF – COURSE INUSTRY

by

Beate Pehlchen

Abstract  2

1. INTRODUCTION  2

2. A “4-C” STRATEGY FOR YIELD MANAGEMENT  3

3. YIELD MANAGEMENT FOR GOLF - COURSES  4
3.1. Problem Background  4
3.2. Typology of Yield Management  5
3.3. Concept for Golf- Courses  6

4. GOLF – COURSE DURATION MANAGEMENT 6

5. SUMMARY AND CONCLUSION  8

REFERENCES  9

Abstract

Yield management consists of two strategic levers: duration control and demand-based pricing¹. Golf courses have been willing to try managing duration but have been reluctant to apply demand-based pricing because of fears of possible customer dissatisfaction. While golf courses do us demand-based pricing when offering higher prices on weekends and promotions such as twilight specials and league play, they have been loathe to vary price by time of day, time of booking or condition of play. Golf courses operators may well have support for their fears in the fairness literature. Researches have found that customers will refuse to patronize companies perceived as unfair.² If demand-based pricing in courses is viewed as unfair by golfers, the golf course may suffer a loss of business.

1. INTRODUCTION

Yield or revenue management has developed into a powerful strategy for boosting revenues and improving the flow of customer demand. To accomplish those objectives, yield management uses the basic strategy of providing the right service at the right time to the right customer at the right price³. Yield management has been widely adopted in the airline, hotel and rental car industries⁴, but has only recently gained attention in the golf industry⁵. Companies using revenue management have reported revenue increases of 2 to 5 %⁶ and the potential revenue gain for the golf industry can be substantial. Each element of that strategy involves specific strategic levers that allow a manager to conduct an effective and profitable yield management strategy. The most important strategic levers connect price with timing. These article explain those strategic levers and give the step for applying them in a revenue management for golf courses.

The key concept underlying yield management’s strategic levers is to match the timing of service delivery with the customer’s willingness to pay for a service rendered at that time. The time element is a key to yield management, both in terms of when a service is ordered or reserved and when that service is performed. Most yield management strategies involve price related methods of shifting demand according to a consumer’s price sensitivity and the duration of the service involved⁷. To shift demand, a manager must be able to predict the peak and valleys, either by keeping track of past experiences or by watching reservation patterns.

2. A “4-C” STRATEGY FOR YIELD MANAGEMENT

The goal of a successful yield management strategy is to gain control of customer demand by using the time- and price-related strategic levers. Four factors enter into the tactics used to execute this strategy. These factors can be remembered as “4Cs”: calendar, clock, capacity and cost. The 4-C factors are inextricably bound together as yield management revenue levers. The calendar-related tactics involve controlling when the sale or reservation is made. Clock-related tactics revolve around the timing of the service delivery⁸.

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1 Kimes, S. E. & Chase, R. B. (1998)
2 Kimes, S. E. & Wirtz, J. (2002)
3 Kimes, S. E. (1997)
4 Carroll, W. J. & Grimes, R. C. (1995)
5 Kimes, S. E. (2000*)
6 Hanks, R. B., Norland, R. P. & Cross, R. G. (1992)
7 Kimes, S. E. & Chase, R. B. (1998)
8 Kimes, S. E. & Chase, R. B. (1998)