Dynamic Pricing & Yield Management - Which Approach Fits Your Golf Business?

-By AVGM

The topic of tee time pricing and yield management in the golf industry is gaining momentum. While golf clubs have long employed basic yield management strategies like early bird or twilight rates, they've yet to fully embrace the sophisticated techniques seen in other sectors such as airlines and hotels.

So, what exactly do we mean by "dynamic pricing" and "yield management"?

Both concepts revolve around the idea that the same product or service can be sold at varying prices depending on different factors. Yield management, in particular, aims to maximize revenue by adjusting prices based on demand and other variables over time.

While industries like hospitality and airlines have utilized technology and data analysis to implement yield management effectively, golf has been slower to adopt these strategies.

Dynamic pricing and yield management should not be mistaken for mere discounting. Instead, they involve setting prices based on factors such as time of day, day of the week, weather conditions, competition, and seasonal trends, among others. The goal is to optimize revenue by selling tee times at prices that reflect their true market value.

Golf clubs have traditionally employed pricing tactics like peak/off-peak rates, weekday/weekend differentials, and group discounts to drive sales and revenue. However, recent discussions indicate a growing interest in exploring more advanced pricing strategies.

Examples from the US and Ireland shed light on the potential of dynamic pricing in the golf industry. Walters Golf Management in St. Louis has implemented dynamic pricing across its properties, resulting in revenue increases of up to 17% compared to competitors. Factors like time of day, day of the week, weather, local events, and historical data influence pricing decisions, allowing for greater revenue optimization.

Similarly, Mount Juliet in Ireland has adopted a dynamic pricing model, adjusting rates based on factors like time of year, day of the week, and even specific hours. This approach enables them to cater to both time-sensitive and price-sensitive golfers, optimizing revenue and utilization of tee times.

While dynamic pricing may face resistance in golf due to perceptions about pricing consistency, it's worth noting that consumers already accept dynamic pricing in other industries like travel. Embracing dynamic pricing could empower golf clubs to move away from blanket discounting and take greater control over pricing, ultimately maximizing revenue and secondary spend.

While challenges may arise, particularly concerning third-party tour operators, the benefits of dynamic pricing could outweigh the drawbacks. As more golf clubs consider this approach, it's likely to reshape the future of pricing and booking in the industry. Stay tuned for further insights on this evolving topic.