Rack Rate
When it comes to setting prices for tee times, establishing the highest rate is important. This rate is often called the Rack Rate and it is from this maximum price that all other rates take their lead from. But that is not to say that one Rack Rate will apply to every tee time at every golf course. Typically your Rack rate is your maximum rate at peak times, all other rates are adjusted and typically lower depending on a number of factors (early morning, daylight, slow periods etc.). We typically try to achieve an average net yield of 65-70% of the rack rate charged.This in general terms means that the rack rate is reasonable and not just ‘artificially’ set. More than 60% of rounds are being played at this rack rate.

When setting the rate for each player category and each time of day, a golf course will first consider availability of tee times (which should be easy with your POS/ on-line tee time system). With this information, you can then set an applicable rate based on time of day.

Static Pricing
Static Pricing is when a golf course keeps exactly the same selling rate for various time periods throughout each day (ie. early morning back 9, twilight, sunset etc.), regardless how busy you may or may not be. The rates typically never changes during the price block regardless of the occupancy of those tee times on various days. Static pricing is outdated and does not account for market or revenue shifts. It also does not allow for maximum REVPAR (revenue per available round).

Dynamic Pricing
Successful golf courses aim for maximum profitability at all times. One way to work towards this is to make Dynamic Pricing (sometimes called Yield Management) part of your overall strategy. Airlines and hotels have been doing this for years. When is the last time you sat beside someone on an airplane who paid the same price as you (on the same flight at the same time)? You have to be flexible and monitor your advance bookings on a daily basis to adjust your pricing ‘on the fly’.

“Changing your habits is not easy. But you’ve got to trust the data;” – Joe Strohm

 

Statically Dynamic Pricing
The golf industry has been slow to adopt to Dynamic Pricing but some shrewd industry people have adopted a term we have been calling ‘Statically Dynamic Pricing’. We often think of Statically Dynamic Pricing from the customers standpoint… ‘You pick the day and the time, we pick the price OR you pick the price, we pick the day and the time’. In Statically Dynamic Pricing not only are you setting rates based on the time of day, you are also setting them based on occupancy. In its simplest form you may have one price grid for a regular day and a different price grid that you change to once a day’s occupancy reaches a certain percent.

Whatever you do, you need to consider starting to look at your tee sheet occupancy and adjusting your rates. If you have a short booking window with advanced booking fees then look at occupancy the day in advance of your booking window. If you have a long booking window look at occupancy 7 days out, 3 days out, 1 day out.

Can you imagine a golf industry with no ‘rack rate’ and no minimum rate? One in which you simply adjust rates based on occupancy to fill your tee times. Demand = Price! Other industries have been doing this forever – literally forever.

There is not magic bullet but you can spread your message of rate changes using social channels, your mobile app and your newsletters. More on that later!

 

We, Jeff and Tara Ciecko of CK Golf write two blogs, one is our 19th Hole Blog where we share personal experiences and the other an Industry Blog where we comment on general business and internet marketing best practices, sales strategies and give golf industry related opinions. We have owned CK Golf  for 10 years and provide business services to the golf and other industries. As of August 2016 our life and our business is ‘location independent’. Our 19th Hole Blog is about the places we visit and the things we do. If you have any questions or comments, or happen to be in the same location as us please reach out and contact us anytime.

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