A trip to the season's final major is always an opportunity to network with golf industry thought leaders and this year's 99th PGA Championship at the Quail Hollow Club in Charlotte was no different. Among the insights gained that week were:
- the move of the PGA Championship to May opens up opportunities for Middle Atlantic, Southern and Southwest clubs to host this championship which the PGA of America travels around the country. This also changes the schedule for the Players Championship and FedEx Playoffs which will now conclude by Labor Day weekend in the US -- and, more importantly for ratings, before the start of NFL and College Football.
- despite the concerns over Zika and security, the resounding success of last summer's Olympic Golf competition, which featured medalists from six different countries, ensured the sport would be renewed in the 2024-28 cycle of the Games. The upcoming host cities of Tokyo, Paris and Los Angeles are also great golf markets. This growing popularity of Olympic golf created scheduling challenges for golfing bodies and contributed to the PGA Championship's move to May. For leading golf resorts of the world the Olympics mean that more developing golf markets will produce more golfers including a globally travelling upscale segment which will seek the greatest golf experiences in the world. See the related note below on China.
- Nike's new global strategy of strengthening its direct contact with consumers through a combination of digital and real world experiences in 12 leading cities of the world; New York, London, Shanghai, Beijing, Los Angeles, Tokyo, Paris, Berlin, Mexico City, Barcelona, Seoul, and Milan. These key cities and countries are expected to represent over 80 percent of Nike’s projected growth through 2020. To better serve the customer at scale Nike is retooling its organization and product development, reducing global regions from 6 to 4, eliminating hundreds of SKUs to streamline innovation of core products, and creating a new digital community to speak directly to its customers. For leading brands in golf, the parallel questions are what are your top 12 customer cities, what are you doing to innovate experiences and how are you building your digital community to hear directly from your customers, be they corporate business or leisure visitors.
- Golf is finally converting latent demand. One big reason – the growing popularity of Topgolf, a high tech golf range and sports bar/restaurant which has an estimated 20 million customers, 40% of whom have never been on a golf course. Topgolf recently partnered with the PGA of America to hire PGA Pros as they anticipate rapid growth. This concept has also inspired competitors such as Driveshack, a TaylorMade branded retail experience financed by Fortress. In the US, this has helped fuel a record number -- 2.5 million -- of new golfers and prospective golfers -- 11 million -- who say they are "very interested" in taking up the sport.
- contrary to some of the negative headlines about the state of the golf industry there has been several billion dollars of M&A activity by some of the most savvy financial minds in the industry in the last two years. Leading these investments were the purchase of TaylorMade by KPS Capital, Apollo's acquisition of Club Corp, the Kohlberg & Co. majority stake in Troon and Marriott's M&A integration of Starwood. This suggests that these golf assets are no longer in decline and are seen as value investments with considerable upside.
- China is a growing market for global tourism. This was validated by a recent marketing alliance Marriott struck with Alibaba to promote its properties. With some 135 million Chinese travelers spending $261 billion overseas (bigger than the entire GDP of Greece or Portugal), China is the world’s largest outbound tourism market and the world’s biggest spender on overseas tourism, according to data from the United Nations World Tourism Organization. Just 5% of Chinese citizens hold passports but this is expected to grow to 12% within the next decade.