Review Of the Cocoa Beach Country Club in Cocoa Beach, Florida

Transcription

1 Review Of the Cocoa Beach Country Club in Cocoa Beach, Florida Prepared For: City of Cocoa Beach 2 S. Orlando Avenue Cocoa Beach, FL Prepared By: 501 N. Highway A1A Jupiter, FL (561) Final Report November 2015

2 Review of the Cocoa Beach Country Club in Cocoa Beach, Florida November 2015

3 Table of Contents INTRODUCTION AND PURPOSE... 1 SUMMARY STATEMENT... 2 COCOA BEACH COUNTRY CLUB... 3 Operating Structure... 3 CBCC Recent Activity and Financial Performance... 4 Golfer Survey... 7 Cocoa Beach CC Survey Scores All Customers... 8 Summary of Findings... 9 GOLF MARKET OVERVIEW...11 Golf Supply and Demand Indicators...11 National Trends in Golf Local Golf Demand Visitor Golf Demand Latent Demand (Interested Non-Golfers) Local Golf Supply Golf Course Market Supply / Demand Summary Market Factors That May Affect Golf Demand...14 Demographics Local Economic Factors Cocoa Beach GC Golf Market...16 Competitive Golf Facility Summaries Summary Findings - Competitive Golf Market COCOA BEACH C.C. SUMMARY OF KEY FINDINGS & RECOMMENDATIONS...21 Basic Oversight and Structure...21 Structure Options Physical Plant Improvements...23 Short-Term Improvement Needs Longer-Term Improvement Needs (Year 5+) Other Considerations Consideration of Clubhouse Upgrade Operational Recommendations...26 Fee Recommendations Marketing Plan Player Development Other Programming Customer Experience Food & Beverage Merchandising... 40

4 Pace of Play City Allocation of Overhead Other Recommendations FINANCIAL PROJECTIONS FOR COCOA BEACH COUNTRY CLUB...43 Assumptions Rounds and Revenues Assumptions Expenses Cash Flow Statement Results APPENDICES...47 Appendix A Golfer Survey...48 Appendix B Golfer Survey Origins...50 Appendix C Summary Demographics And Golf Metrics...52 Appendix D Summary Information for CBCC Competitive Set...54 Appendix E Cocoa Beach Country Club Fee Schedule...55 Appendix F USGA Golf Course Expected Life Cycle...56

5 Introduction and Purpose National Golf Foundation Consulting, Inc. ( NGF Consulting or NGF ) was retained by the City of Cocoa Beach ( City ) to perform an operations review of the City s Cocoa Beach Country Club ( CBCC ). The ultimate goal of this project is to create a plan for the Cocoa Beach Country Club that will put the facility on a path toward long-term economic stability and sustainability. The City has determined that this goal requires an independent golf industry expert to determine whether the operation could cover its ongoing operating expenses, capital needs, and fair share of City overhead costs. The primary objective of the study is to identify additional revenue opportunities through both potential fee increases and improvements in marketing and operations - that will allow the facility to maximize its revenue potential and pay its own way. It needs to be understood that in today s market environment, fee increases and potential improvements in facilities, marketing and operations, is no guarantee that golf facility operations will be self-sustainable on a year-toyear basis. As detailed in this report, golf faces significant headwinds in terms of participation, especially among young adults. Additionally, uncontrollable elements such as yearly weather variations, economic factors such as unemployment and discretionary spending, and sociocultural factors make budgeting far from an exact science. Public golf faces its own unique set of challenges, as evidenced by Brevard County s recent decision to attempt to lease its three golf facilities to meet a large unfunded capital improvement need. Additionally, many public sector courses struggle with the high cost of labor associated with fulltime staffs making them uncompetitive with privately owned daily fee courses and municipal courses that have transitioned to part time staffs or privatization. NGF Consulting s review included meetings and interviews with City and golf course staff, facility tour, review of operating data and fee structures, market research, and utilization of the NGF consultant s experience and knowledge of golf industry best practices. This NGF report summarizes our key findings and recommendations for Cocoa Beach Country Club, including: The physical condition of the golf course and key infrastructure Overall operations and recent financial performance The market environment in which CBCC operates Potential alternative operating structures Projected financial performance of the Cocoa Beach CC with recommended fee adjustments and implementation of other operational recommendations We expect the results of this NGF study to be used by the City as a guide for optimizing the future potential of the golf course by: 1) helping the City to convey to users that in today s environment the City will have little choice but to operate the golf facility in an efficient, business-like manner in order to sustain its operations going forward, and, 2) to help city policy makers to make informed decisions regarding the degree of economic support the city is willing to provide to the golf facility to maintain its financial stability. Due to the importance of this report expressed by city management, this consulting engagement was assigned to Ed Getherall, NGF s Director of Consulting Services. National Golf Foundation Consulting, Inc. Review of Cocoa Beach Country Club, Cocoa Beach, FL 1

6 Summary Statement NGF s review of the Cocoa Beach Country Club has revealed a fine facility that reflects well on the City of Cocoa Beach. We ve observed that there is much more right with the golf course than is wrong. Though our visit was brief, it is evident to us that CBCC benefits from a dedicated, knowledgeable and hard-working management team and staff, a highly scenic course, a strong and loyal core customer base, a good location proximate to area lodging properties, beaches, & tourist attractions, and perhaps the best public greens in Brevard County. The facility also benefits from the vast institutional knowledge that the Manager has accrued with over 30 years at CBCC. The club is the highest volume public facility in the regional market, and has maintained strong activity in a highly competitive market (especially for standard price point golf), and in the face of strong headwinds being experienced by the game of golf in general. (Brevard County can attest to this, as it has recently sent out an RFP seeking a private lessee in the face of economic difficulties of its golf system). In fact, CBCC has managed in FY 2013 and FY 2014 to average about $100,000 in positive cash flow after funding annual capital needs, but before direct city charges for services provided. While we observed a largely positive story at Cocoa Beach Country Club, there is room for improvement in operations, marketing, programming and customer service (as borne out by the results of the golfer survey). There are also some physical limitations with the golf courses and clubhouse property that make the facility less marketable and put constraints on revenue growth. Finally, NGF believes that CBCC has become a little bit too turnkey, serving the same customers in the same way, and with the same marketing tactics. While we are talking about a fine product that doesn t need to be turned on its head, the City imperative of running the facility as a business requires that it break away somewhat from the way things have always been done, while retaining the many things that are being done right. Given the stated goal of CBCC being self-sustainable and contributing money to the General Fund for services provided, both employees and patrons alike will be required to accept some level of change. Of course, this must be accomplished without alienating the loyal and active core customer base that is the facility s lifeblood. In the body of this report, NGF has provided a series of recommendations to improve the overall golfer experience, and install more of a marketing and programming focus to draw and engage new customer segments that will be necessary to sustain the golf course into the future. NGF hopes that this report can be an initial road map for improving an already fine facility and putting it into a stronger financial position. However, factors beyond the City s control such as weather variations, economic factors, and golf s participation headwinds, may make it very difficult for Cocoa Beach Country Club at least in some years - to fund its own operations, capital improvements, and city overhead charges, making the public policy decision of how to finance and account for golf operations a complicated one, even after recommended facility and operational improvements contained in this report are implemented. National Golf Foundation Consulting, Inc. Review of Cocoa Beach Country Club, Cocoa Beach, FL 2

7 Cocoa Beach Country Club Cocoa Beach Country Club is a good quality 27-hole facility that is one of the most active (70,000 to 80,000 rounds annually), aesthetically pleasing and highly regarded public access golf courses in the Brevard County market. The facility, originally constructed in the late 1960s, was redesigned (Charles Ankrom) and expanded from 18 to 27 holes in the early 1990s, at which time the current clubhouse was added (a new aluminum roof added in the late 2000s). The three 9-hole courses include 100+ sand bunkers, and water hazards on 22 of 27 holes. After losing many of its greens in the period, the City re-grassed all 30 of its Bermuda grass greens (including practice greens) and collars with salt-resistant Paspalum. The $ 215K cost was funded by a General Fund loan, which has subsequently been written off. The courses are irrigated with reclaimed water from the adjacent treatment plant, and when the high salt-content water collects in low lying areas, patches of fairways (419 Bermuda) are heavily degraded. OPERATING STRUCTURE Cocoa Beach Country Club was accounted for within the City s general fund from 1968 to 1991; the golf operation became an enterprise fund in 1992 for the purpose of getting better bond terms for the re-construction. The debt was retired in FY 2013, at which time the golf operation was folded back into the general fund, within the Leisure Services Department. It is the City s desire for CBCC to be self-sustaining to the extent possible and accounted for as a Special Revenue Fund. Like enterprise funds, special revenue funds are intended to provide accountability. It also provides management with an enhanced tool for monitoring financial and operational performance of the facility, while increasing fiscal transparency to the public. For these reasons, enterprise and special revenue funds are very common for municipal golf systems in better managed public organizations both in the State of Florida and nationwide. Direct oversight of the golf program is the responsibility of the City s Director of Leisure Services, who reports to the City Manager. The City Manager answers to the elected City Council, which has ultimate authority over policies such as approving fee schedules at the golf facility. CBCC is managed under a full self-operation model, with all staff being employees of the City. On-site management is the responsibility of the General Manager. Other key personnel include the Superintendent and the Golf Professional. The total course staff consists of 53 employees annually (35 Part-Time, 18 Full-Time), broken down as follows: Pro Shop (inside admin.) 5 employees - (3 FT, 2 PT) Outside Services 22 employees (1FT - Custodian, 21 PT) Food & Beverage - 11 employees (2 FT, 9 PT) Golf Course Maintenance 15 employees (12 FT, 3 PT) National Golf Foundation Consulting, Inc. Review of Cocoa Beach Country Club, Cocoa Beach, FL 3

8 CBCC RECENT ACTIVITY AND FINANCIAL PERFORMANCE Utilizing data and information supplied by the City and the golf course General Manager, NGF has prepared the following summary of recent operating results for CBCC. Rounds Played CBCC has about 88% of its paid rounds come from daily fee players (including tourneys), with the balance accounted for by prepaid ticket holders. Non-revenue rounds (including GolfNow barter rounds) have totaled ±7,000 annual rounds. The table below shows total rounds between FY 2012 and FY After a strong year in FY 2013, rounds decreased by nearly 4% in FY The three-year average for total rounds (including comps ) was just over 76,000 rounds, or about 51,000 per 18-hole equivalent, making CBCC easily the most active in this market. Total average rounds per 18 holes in the U.S. now stands at 31,527 for public golf courses, down about 16% from a 37,000 rounds average recorded in FY Cocoa Beach Country Club Rounds Played (FY FY2014) Average Daily Fee Rounds N/A 62,568 60,528 61,548 Prepaid Rounds N/A 9,490 8,593 9,042 Total Paid Rounds 66,318 72,058 69,121 69,166 Non-Revenue Rounds 6,256 7,215 7,284 6,918 Total Rounds 72,574 79,273 76,405 76,084 Annual Change 9.23% -3.62% National Golf Foundation Consulting, Inc. Review of Cocoa Beach Country Club, Cocoa Beach, FL 4

9 Revenue Total revenues have shown an encouraging positive trend since FY 2010, increasing by $330,000 between FY 2010 and FY 2013, or nearly 17%. The primary contributors to this increase were green & cart fees, and food & beverage revenues, making up for declining prepaid ticket revenues. Overall, green + cart revenues (including prepaids and surcharges) account for more than 70% of the overall CBCC revenue. Revenues did take a step back of 3% in FY 2014, and 4.5% for FY 2015 projections, but the overall trend has bucked national industry trends observed by NGF over the last five years. Revenue Cocoa Beach Country Club Total Facility Revenue (FY FY2014) Average Daily Green Fees 732, , , , , ,902 Cart Fees 524, , , , , ,448 Prepaid Fees 101,065 89,539 79,156 70,382 64,141 80,857 Food & Beverage 313, , , , , ,424 Merchandise 159, , , , , ,846 Driving Range 35,908 36,408 43,393 41,573 40,633 39,583 Surcharge 71,864 61,987 60,472 49,294 44,854 57,694 Other Revenues + Misc. Revenues 42,050 22,278 35,051 35,215 32,225 27,564 Total Revenue $1,980,900 $2,105,876 $2,227,796 $2,310,357 $2,240,660 $2,173,118 Annual Change 6.3% 5.8% 3.7% -3.0% Less Cost of Sales: (COS) Merchandise 129, , , , , ,083 Food/Bev. 123, , , , , ,229 Total COS $252,380 $255,676 $256,254 $279,262 $263,340 $261,382 Adjusted Gross Revenue $1,728,520 $1,850,200 $1,971,542 2,031,095 $1,977,321 $1,911,736 National Golf Foundation Consulting, Inc. Review of Cocoa Beach Country Club, Cocoa Beach, FL 5

10 Average Revenue While total rounds and revenue have experienced some fluctuation over the last several years, average revenues per round across revenue centers have been remarkably consistent. The average for Standard public golf courses in the U.S. was $23.51 for total golf revenue per round (green, cart, membership), plus an additional $9.70 in ancillary spending or a total of $33.21 per round. For CBCC, golf revenue per round was $20 in FY 2014, and total revenue $ Cocoa Beach Country Club Average Revenue Metrics (FY FY2014) Average Daily green fees per round (paid DF round) N/A $14.94 $15.06 $15.00 Cart Fees per round (paid round) $9.02 $8.52 $8.67 $8.60 Revenue per Pre-paid ticket $ $ $ $ F&B Revenue per round $5.00 $4.84 $4.91 $4.92 Merchandise revenue per round $2.46 $2.29 $2.26 $2.34 Driving Range per round $.60 $0.52 $0.53 $0.55 Surcharge (per prepaid rd.) $5.19 $5.22 $5.21 Other & Misc. $0.48 $0.44 $0.43 $0.45 Total revenue per round $29.02 $28.10 $30.24 Average revenue per prepaid ticket $ $ Operating Expenses Expenses to operate the golf course (excluding interest, depreciation, capital items and direct cost of sales) have followed a bell curve pattern over the last 5 years, with a City effort to control expenses evident after they peaked at around $1.88 million in FY Total expenses in FY 2014 are actually lower than they were in FY 2010, consistent with cost cutting we have observed at many municipal golf courses in the face of budget constraints. In addition to the operating expenses illustrated below, average spending on capital items (e.g., carts and maintenance equipment) was about $135,000 between FY 2012 and FY Cocoa Beach Country Club Total Facility Expenses by Department (FY FY2014) Expenses Average Salaries and Wages 1,191,124 1,224,742 1,240,446 1,231,966 1,239,664 1,225,588 Other Operating Expenses 563, , , , , ,699 Total Expense $1,754,272 $1,880,133 $1,867,644 $1,790,618 1,743,769 $1,807,287 Annual Change 7.2% -0.7%% -4.1% -2.6% Overall decrease % The review of expenses for GCGC shows a golf facility operation with a relatively high proportion of labor expenses to total expenses about 64% in FY 2014, including capital expenditures. This is well above the industry standard of 50%, and is affected by the fact that the City self-operates the food and beverage service. Total golf course maintenance expenses were about $922,000 in 2014, which is comparable when adjusted for 27 holes - to the industry standard of $650,000 for a good-quality 18-hole course. National Golf Foundation Consulting, Inc. Review of Cocoa Beach Country Club, Cocoa Beach, FL 6

11 Performance Summary The summary of performance shows Cocoa Beach CC having a positive trend in income and operating margin, including a positive margin in both FY 2013 and FY 2014, even after capital expenses. However, considering City Overhead charges of averaging more than $ 330,000 over the last five years, total net income for the golf facility falls more than $ 200,000 into the red. The city overhead consists of three (3) components: insurance of all types (e.g., property/auto/ flood/general liability), professional services directly benefitting the Golf Course, and allocations to cover costs such as janitorial, finance etc. Cocoa Beach Country Club Summary of Operations (FY FY2014) Summary Average Total Facility Revenue $1,980,900 $2,105,876 $2,227,796 $2,310,357 $2,240,660 $2,173,118 Less: Direct Cost of Sales $252,380 $255,676 $256,254 $279,262 $263,340 $261,382 Operating Expenses $1,754,272 $1,880,133 $1,867,644 $1,790,618 $1,743,769 $1,695,877 Operating Margin ($25,752) ($29,933) $103,898 $240,477 $233,552 $104,448 Other Items: Capital Expenses $178,244 $59,884 $142,887 $106,022 $155,993 $128,606 Debt Service 184, , $72,455 City Overhead 380, , , , , ,690 Net Income after Other ($768,322) ($558,783) ($376,789) ($204,885) ($232,736) ($428,303) GOLFER SURVEY As part of this consulting engagement, NGF implemented its Golfer Survey Program to capture the opinions and measure the satisfaction of CBCC customers. A total of 188 surveys were collected by NGF, with 92.5% coming from self-described daily fee players. Of these daily fee players, 35% were Cocoa Beach residents, 39% Florida residents, and 26% non-florida residents. The survey was not intended to be a scientific study of Cocoa Beach CC golfers, although NGF believes that the relatively strong participation makes this a useful exercise. A copy of the survey instrument is displayed in Appendix A to this report. The general findings and a table showing the ratings follow below. As presented the average score is the score provided by persons responding to the survey utilizing a 0-10 point response option. The national percentage score compares the Cocoa Beach survey results with national survey results. For example, overall customer satisfaction scored 7.8 on the Cocoa Beach survey and 34% of golf course on the national survey. This means that on the national survey 34% of golf courses had a lower overall satisfaction rating than Cocoa Beach. National Golf Foundation Consulting, Inc. Review of Cocoa Beach Country Club, Cocoa Beach, FL 7

12 Cocoa Beach CC Survey Scores All Customers Factor Cocoa Beach Country Club - Satisfaction Measures All Responses Responses (9/8/2015 9/17/2015) Average Score (Scale 1-10) National Percentile* Overall Customer Satisfaction Satisfaction compared to expectations Satisfaction compared to other courses Likelihood to play more Likelihood to recommend * Measured on a scale of 0 to 100, this number represents the percent of golf facilities that received lower customer ratings on this measure than the subject facility compared to other golf courses in U.S. Factor Cocoa Beach Country Club - Satisfaction Factors All Responses Responses (9/8/2015 9/17/2015) Average Score (Scale 1-10) National Percentile* Overall Value Overall Course Conditions Pace of Play Friendliness/Helpfulness of Staff Golf Course Design / Layout Tee Time Availability Condition of Greens Amenities (clubhouse, pro shop, locker room) Food and Beverages Service Overall Experience Condition of Bunkers Condition of Fairways Overall Quality of Golf Shop Overall Quality of Golf Shop Apparel Overall Quality of Golf Shop Merchandise * Measured on a scale of 0 to 100, this number represents the percent of golf facilities that received lower customer ratings on this measure than the subject facility compared to other golf courses in U.S. National Golf Foundation Consulting, Inc. Review of Cocoa Beach Country Club, Cocoa Beach, FL 8

13 Summary of Findings 1. Cocoa Beach golfers that responded to the survey show an average level of overall customer satisfaction when compared to other golf facilities nationwide (of all price categories). 2. Still, 90.2% of all Cocoa Beach Resident golfers made a positive referral about the course and that the average Cocoa Beach Resident golfer referred 4.2 other golfers to the facility. By comparison, only 4% of Cocoa Beach Resident golfers made negative referrals, with an average of 0.1 negative referrals. Florida and Non-Resident golfers were slightly less enthusiastic about the facility with 79.3% making positive referrals to 3.0 others, and 2.9% making negative referrals, with an average of 0.2 negative referrals. 3. The profile of the Cocoa Beach golfer is mostly male (89%) and generally older (93% over 50) than the national benchmark (total U.S. is 85% male and 50% over 50). Only 29% of respondents indicated they played a total of over 25 rounds of golf at Cocoa Beach annually. More than half (55%) of the survey group originate from the top six local ZIP Codes: 32931, 32920, 32940, 32937, 32955, and The map displaying the origin of customers is displayed in Appendix B to this report. 4. Our surveys show that other golf facilities utilized by this survey group include (in order of importance all with more than 10%): Viera East GC (47%), Duran GC (45%), Savannahs GC (40%), Turtle Creek GC (36%), Baytree National Golf Links (32%), Manatee Cove GC (20%) Crane Creek Reserve GC (17%), Mallards Landing GC (12%) and Spessard Holland GC (12%). Note: Respondent choices were limited to public access (municipal + daily fee) facilities. 5. Based on a scale of 1 to 10: o The average score for overall food and beverage service at Cocoa Beach CC was 7.6, placing the golf course in the upper half of facilities nationwide. A total of 59% of respondents rated the F&B an 8 or higher, while only 17% rated a 5 or below 5. o o o The average score for overall satisfaction with the friendliness and helpfulness of the staff at Cocoa Beach CC was 8.2, a relatively high figure, but one that places the facility in the lower 30% nationally. A total of 75% of respondents rated the friendliness and helpfulness of the staff an 8 or higher, while only 11% rated a 5 or below. The average score for overall quality of the golf shop was 7.9. A total of 65% of respondents rated the golf Shop merchandise at an 8 or above, while 10% rated a 5 or below. The average score for overall course conditions was 7.5, placing Cocoa Beach CC in the lower 30% nationally. Condition of Bunkers and Condition of Fairways ranked lowest of all areas surveyed, and both benchmarked in the bottom 15% nationally. The Condition of Bunkers average score was 6.2 and only 31% of all responders gave them an 8 or higher rating. National Golf Foundation Consulting, Inc. Review of Cocoa Beach Country Club, Cocoa Beach, FL 9

14 6. n review of the general open-ended comments survey respondents made about what they like about Cocoa Beach CC, the NGF noted several key themes, including: Condition of greens Accessibility / ability to make tee times Location / convenience Scenery / aesthetics Good layout / 27 holes / variety Staff Value 7. In review of the general open-ended comments survey respondents made about what needed improvement at Cocoa Beach CC, the NGF noted comments covering a variety of topics; the most common included: Pace of play; lack of governance/enforcement by marshals Condition of bunkers Condition of some fairways & tees Food and beverage service not available when they want it Inconsistent beverage cart availability Clubhouse not inviting Some employees have bad attitudes GolfNow customers treated like second class citizens National Golf Foundation Consulting, Inc. Review of Cocoa Beach Country Club, Cocoa Beach, FL 10

15 Golf Market Overview Below we provide an overview of local and national trends with respect to golf, an overview of market factors that have the potential to affect golf demand, including the area s demographics, key golf market demand and supply indicators, and a summary of Cocoa Beach CC s competitive marketplace. There are many variables that have the potential to affect the activity of a golf course, including regional weather variations and unforeseen occurrences such as a severe downturn in the economy. GOLF SUPPLY AND DEMAND INDICATORS National Trends in Golf Participation Golf participation in the U.S. has grown from 3.5% of the population in the early 1960s to about 9% of the population in NGF estimates that the number of golfers fell in 2014 to 24.7 million, only slightly lower than While down from the 2005 peak of 30 million, the game s most committed customers continue to play at a substantial level. NGF s data indicates that the majority of those who have left the game were largely uncommitted and infrequent golfers, and with their departure, the average-rounds-played-per-golfer has been on an upward trend. All U.S. Golfers (millions) All golfers age National Golf Foundation. Golfer defined as a person 6 or older who plays at least 1 rounds in a given yr. National Profile (NGF end of 2014 data) Participation Rate Number of Golfers Average Rounds per Golfer Total Annual Rounds United States 9.0% 24,719, ,310,000 Considering the severity of the recession and its lingering effects on discretionary income and time, golf has held up rather well. Multiple NGF studies of golfers since 2008 would attribute the gradual decline in golfers and rounds primarily to the impact of lower job security and concern over personal finances, not waning appeal for the game. National Golf Foundation Consulting, Inc. Review of Cocoa Beach Country Club, Cocoa Beach, FL 11

16 Golf Industry Overview 2015 Golf continued its macro trend toward stabilization in FY 2014, in contrast to sensational negative perceptions of the game as portrayed by mainstream media. Socio-demographic, financial and cultural headwinds certainly persist for golf, and it remains highly competitive for golf-related businesses. Golf s pay-for-play green fee revenues and other spending on the sport will always be vulnerable to outside forces including weather and the economy, but the game remains popular and fortunate to have a deep well of interested prospects. Positive economic indicators, stabilization in participation and rounds played, an increase in weather-adjusted utilization, and the return of private equity funding to the industry are just a few of the under-reported developments in golf that tell the current story of the industry. Other findings: Participation Despite poor weather that suppressed first-quarter play in 2014, rounds played finished the year only 1.7% behind Average rounds per day open were up in 2014 despite a decrease in overall playable days. The golfer number (participation) appears to be continuing a stabilization trend, with 2014 as the fourth consecutive year at approximately 25 million golfers that played at least one round of golf in the past 12 months. Golf Course Supply The correction in golf course supply continued in 2014 at a level comparable with the previous three years. According to NGF data, since the market correction in golf course supply began in 2006, there has been a cumulative net reduction of 531 golf courses (18HEQ), which represents a drop of about 4% off the peak supply year of For perspective, golf supply grew by 40% in the previous 20 years ( ). This much-needed move toward supply/demand equilibrium is expected to continue for the next several years. Economic Indicators National Golf Foundation consumer research indicates that, aside from the weather, the U.S. economy and the state of consumers personal discretionary income has the strongest effect on golf. When golfers feel their financial situations are improved, golf will benefit and when financial confidence is low the sport tends to suffer. Consumer confidence and spending (two primary indicators) are at or near post-recession highs. Despite the presence of those positive indicators, golf hasn t recovered as quickly as some other industries due mainly to slow recovery in median household income. Historically, participation has closely tracked Real Adjusted Household Income, suggesting that if income increases, there s a likelihood that the golfer trajectory would increase with it. Looking Ahead Provided rounds played and participation remain stable, and there is no reason to forecast otherwise, golf is likely a good weather year away from seeing growth in According to Golf Datatech, rounds played YTD through July 2015 were up 0.4% nationally, but down 0.8% for the South Atlantic region, which includes Florida. Florida, however, was a strong performer, up 2.4% for the year. The Jacksonville/ Daytona market was up 5.8%, while the Orlando market was up 4.8%. Additional course closures will occur as the market correction continues. It s important to note that the quality and affordability of the remaining courses will provide golfers with plenty of reasons to play when the weather cooperates just as they did in The NGF data does not support widespread decline in golf, but golf business remains competitive, as is the case with many business categories in the U.S. economy. The smartest, best-managed and most innovative golf facilities will win market share and have the best opportunity for growth. National Golf Foundation Consulting, Inc. Review of Cocoa Beach Country Club, Cocoa Beach, FL 12

17 Local Golf Demand The following are some summary NGF observations regarding key golf demand measures for the local golf market, derived from the NGF Golf Demand Model. Please see the supporting tables in Appendix C. The golf demand indices for the local markets around Cocoa Beach GC indicate golf participation rates that are 10% to 15% higher than the U.S. benchmark, while rounds played per household are about 20% to 25% higher than the national benchmark. There are an estimated 12,411 golfing households within ten miles of CBCC, accounting for about 360,000 annual rounds of golf. In Brevard County, there are more than 37,000 golfing households, playing over 1 million rounds of golf annually. NGF projects Brevard County to add more than 2,500 golfing households by Visitor Golf Demand Visitors to Cocoa Beach and Brevard County have a significant impact on demand at area golf courses, particularly during the winter and early spring period. NGF research shows that roughly one-third of all golfers participate in the activity while traveling, playing about a round of golf for every two days of travel. Though Cocoa Beach CC would capture only a proportion of these incremental rounds from visiting golfers, it is nonetheless important for the City to maintain a strong marketing presence, especially through digital/website channels, as a couple of thousand visitor rounds could make a big difference in the bottom line. These visiting golfers, especially those staying in nearby hotels, should be targeted by Cocoa Beach management for stay-and-play packages, etc. Latent Demand (Interested Non-Golfers) People who express an interest in playing golf but have not yet started include former golfers and those who have never tried. The demographic profile of latent demand tends to be more female and younger than the population as a whole. Surveys show these golf-interested non-golfers cite several barriers to entry in golf, including the cost and social aspects (no one to play with). The latent demand population is comparable to the golfer population, and NGF estimates as many as 60,000 non-golfers in Brevard County interested in taking up the game, and 18,000 within the 10-mile market for CBCC. Given golf s tenuous participation situation, all golf courses should have active programming aimed at inviting and onboarding prospective new golfers. Local Golf Supply The following are some summary NGF observations regarding key golf supply measures for the local golf market. All measures are derived from the NGF U.S. Golf Facilities Database and the NGF Golf Demand Model. Please see the supporting tables in Appendix C. There are eight total golf facilities (subject included), totaling 171 holes, within ten miles of Cocoa Beach Country Club, including five that are public (99 holes). Brevard County is home to 25 golf facilities, including 20 that are public access. Golfing Household/Supply ratios are derived by dividing the number of golfing households by the number of 18-hole equivalent golf courses in a given market. This measure is used as a benchmark to establish the level of support (households) that is available for each 18 holes of golf in the market. A Household /Supply index is derived from these ratios (base national figure = 100). The 10-mile market around the Cocoa Beach CC has 19% more households per 18 holes of public golf than does the nation overall. However, the local market has 45% fewer golfing households per 18 holes of Standard price point public golf, where CBCC is positioned. National Golf Foundation Consulting, Inc. Review of Cocoa Beach Country Club, Cocoa Beach, FL 13

18 Golf Course Market Supply / Demand Summary The review of data for the Cocoa Beach / Brevard County area shows a balance of favorable and unfavorable factors, with relatively strong demand from resident households, significant supplemental demand from visiting golfers, projected growth in population, and no new golf courses on the horizon. However, the local and regional markets appear to still be relatively oversupplied with standard price point facilities. MARKET FACTORS THAT MAY AFFECT GOLF DEMAND Demographics In the following table, NGF Consulting summarizes the population, median age, and median household income trends for the local markets and Brevard County, for comparison to state and US figures. The source for this data is demographics provider Applied Geographic Solutions. NGF Consulting has made the following observations regarding the demographics of Cocoa Beach and surrounding areas: Cocoa Beach GC 5 mi 10 mi 15 mi Brevard County Florida U.S. Summary Demographics Population 1990 Census 33, , , ,962 12,936, ,584,652 Population 2000 Census 35, , , ,234 15,982, ,399,034 CAGR % 1.85% 1.82% 1.81% 2.14% 1.25% Population 2010 Census 35, , , ,376 18,801, ,745,538 CAGR % 1.02% 0.87% 1.33% 1.64% 0.93% Population Projected , , , ,216 19,948, ,190,947 Population 2019 Projected 40, , , ,578 21,309, ,562,705 CAGR % 1.42% 1.31% 1.36% 1.58% 0.82% Median HH Income (2013 Est.) $49,229 $50,900 $49,713 $46,913 $46,543 $55,040 Median Age (2013 Estimate) CAGR = Compound Annual Growth Rate There are about 176,000 people living within 10 miles of Cocoa Beach Country Club in 2014, and 286,000 within 15 miles. Population growth rates in the subject markets continue to be robust compared to the nation overall, and Brevard County is expected to add another 38,000 net new residents by The Median Household Income of Cocoa Beach GC s immediate trade area is about 10% to 15% lower than the national figure of $55,040. These moderately lower incomes are mitigated somewhat by the high percentage of retirees in the market. In general, higher income residents are more likely to participate in golf, and they play more frequently than lower income golfers. The Median Ages in the local trade area are among the highest in the U.S. In general, golf participation rates and frequency of play increase with age (though both decline among the elderly), making relatively older markets more attractive to golf facility operators, all other factors being equal. National Golf Foundation Consulting, Inc. Review of Cocoa Beach Country Club, Cocoa Beach, FL 14

19 Local Economic Factors Below is a summary of some economic and quality of life factors in the area: Brevard County is a medium-sized Florida county, with a relatively small base of industry. The key economic drivers of the county include a large tourism industry fueled by the Kennedy Space Center/NASA, Port Canaveral and area beaches. CBCC is proximate to, and in position to benefit from, all of these elements. According to Visit Space Coast, there are an estimated 40 hotel properties in Cocoa Beach, with upwards of 4,000 rooms. There are 18 hotel properties with more than 100 rooms and six with over 200 rooms, including the International Palms Resort with 500 rooms. In Brevard County, there are an estimated 10,000 total hotel rooms, plus additional condominium / apartment rentals, vacation homes, campgrounds and RV parks. The Cocoa Beach Hilton reported hosting over 130,000 guests per year. Some selected tourism-related figures as provided by the Canaveral Port Authority and local news sources show the scale of the local tourism industry: It is estimated that Cocoa Beach attracts 2.4 million day trippers annually. Port Canaveral had 4 million total cruise passengers in 2013 (up more than 40% since 2010), and with recent expansion (including the addition of new $100 MM Terminal 1) has become 2 nd busiest multi-day embarkation port in the world, and #1 in total cruises. Cruise business is expected to grow by 50% by In addition to cruise vacations originating from Port Canaveral, this port is becoming more active as a port of call for other cruises, with shore excursions becoming more prominent. Cocoa Beach is home to the East Coast Surfing Hall of Fame. Ron Jon's, a local surf shop, receives a reported 2.0 million visitors per year. The end of the Space Shuttle program in 2011 produced a significant downsizing of the Kennedy Space Center workforce. As many as 10,000 employees have lost their jobs at the Center. As the space center is in immediate proximity to CBCC, this downsizing had a direct impact on rounds and revenue. However, about 8,000 people continue to work there, and the growth of the private space industry promises some rebound in jobs. According to the U.S. Department of Labor Statistics, unemployment in Brevard County has been on a downward trend, peaking at 11.8% unemployment in January 2010 and falling to 7.8% in April 2013, 6.3% in April 2014, and less than 6% average in These figures are comparable to overall State and U.S. jobless rates. Auto Transportation Brevard County is a unique Florida county with a long north-south configuration. Interstate-95 is the key north-south connector, running the full 70 miles of the County. The County also has significant east-west connectors, the most significant of which is Highway 528, which functions as a four-lane controlled access freeway connecting I-95 with Port Canaveral and the beaches along A1A. CBCC is roughly 6.5 miles south (and west on Minutemen Causeway) of 528 s eastern terminus, and 7.5 miles north of Highway 404 (Pineda Causeway). Weather/Climate - Golf is an outdoor activity and thus weather will impact activity and revenue. NGF estimates that over 90% of golf rounds are played when the temperature is between 55 and 90 degrees. Rain is a mitigating factor that reduces the number of playable hours/days. Years with higher rainfall lead to reduced rounds, and vice-versa. This issue is significant for CBCC, as the course has poor drainage characteristics in many areas. National Golf Foundation Consulting, Inc. Review of Cocoa Beach Country Club, Cocoa Beach, FL 15

20 COCOA BEACH GC GOLF MARKET NGF has identified six to eight primary and secondary competitors for Cocoa Beach Country Club, based on location, price point, and quality level (please see charts in Appendix D for comparative information and fees). The results of our golfer survey have borne out that the most important competitors to CBCC for both daily fee and tournament market share are: Viera East Golf Club 18H Daily Fee Duran Golf Club 27H Daily Fee (includes 9H par 3) Savannahs Golf Club 18H Municipal (Brevard County) Turtle Creek Golf Club - 18H Daily Fee Baytree National Golf Links - 18H Daily Fee Secondary competitors include Manatee Cove Golf Course at Patrick AFB, the City of Melbourne s two 18H municipal facilities Crane Creek and Mallard s Landing and Brevard County s Spessard Holland GC in Melbourne Beach. We note that these facilities offer a variety of fees and amenities, but all are open and available to the public year-round and are generally competing for the same customers, especially during the off season. Competitive Golf Facility Summaries The following map shows the relative locations of the primary and secondary competitors to Cocoa Beach Country Club. After the map, NGF provides summary descriptions of CBCC s key competitors. NGF considered the relative price/quality propositions of CBCC and its competitive set, as well as our understanding of the dynamics shaping the local and regional golf markets, when formulating fee recommendations for CCBC. National Golf Foundation Consulting, Inc. Review of Cocoa Beach Country Club, Cocoa Beach, FL 16

21 Savannahs Golf Course (Brevard County) Located east of Courtenay Parkway and just north of Highway 528, this 18-hole county owned facility is the most proximate competitor to CBCC and the closest golf course to both Port Canaveral and the Kennedy Space Center. The Savannahs offers an aqua driving range and 6,000 square foot bi-level clubhouse, which includes a very small kitchen and lacks the seating space to accommodate tournaments and banquets with 100 or more people. The site s proximity to sensitive wetlands and other undeveloped property has contributed to some of the physical limitations with this property, such as soil problems and poor drainage, and the condition of the golf course is generally inferior to that of CBCC. The Savannahs GC was originally conceived, designed and constructed to be a real estate golf course with maximization of golffrontage real estate as the primary driver of golf course design. The result is a golf course with some inherent design problems in basic flow and playability. The course was turned over to Brevard County from the original developer in the early 1990 s, and the County still has some balance on revenue bonds issued at that time, as well as additional upgrades made to the facility in more recent years. The indebtedness has contributed to the financial struggles of the facility, which is a primary impetus for the County s recent decision to send an RFP out to seek lease operators for its three facilities. The County currently has private vendors in place for the golf course maintenance and food & beverage operation at the Savannahs. During its time as a Brevard County municipal golf course, the Savannahs has never really been overly popular in the local golf market. Activity peaked at about 41,000 rounds in the late 1990s, and bottomed out at only 26,000+ rounds in 2013 after a steady five-year decline. The course was very popular with Kennedy Space Center employees, many of whom were active in corporate leagues that used to be more prevalent at the facility. Thus, the closure of the Space Shuttle program in 2011 has clearly affected the Savannahs golf operation, which generated only $773,000 in revenue in 2013 and generated a net operating loss of $104,000. The summer rack fees at Cocoa Beach are the lowest in the market, with peak 18-hole riding rates of only $25 (resident and non-resident). Winter rates top out at $45 for residents and $55 for nonresidents. The Golf Discount (loyalty) card offered by Brevard County is comparable to others in this market. The cards cost $40 (Florida residents) or $95 (out of state) and provide a list of benefits, the most important of which is the green fee discounts (up to $10) and the free round after 12 paid rounds. The County offers an Advanced Green Fee Card for $700 (per round surcharges are $6 for nine holes, and $8 for eighteen, December 1 through April 14 only), as well as a Brevard County Player Card (all three courses; includes cart and tax) for $3,800. National Golf Foundation Consulting, Inc. Review of Cocoa Beach Country Club, Cocoa Beach, FL 17

22 City of Melbourne The City of Melbourne's Leisure Services Department operates and maintains two 18-hole golf courses. Mallards Landing GC is an 18-hole regulation-length golf course with appropriate length and includes features typically associated with better quality public golf, including nice terrain, open fairways and several water hazards. The 18-hole Crane Creek Reserve GC features a shorter (5,886 yards) course that is easier to play and popular with seniors. Both courses can be played for less than $30.00 with cart for most of the summer. City financial reports show that together, the two Melbourne courses produced a total of $2.23 million in gross revenue in FY 2013, divided evenly between Crane Creek ($1.05 million) and Mallards Landing ($1.18 million). The total system had expenses of $2.49 million, resulting in a ($260,000) loss on operations that was covered by a transfer into the Golf Fund from the General Fund. The two courses combined for only 86,300 rounds in FY 2013, down 23% from the 111,500 rounds in 2009 and down 36% from the 134,500 rounds in Duran Golf Club Private/Public Duran GC in Viera is the newest (2005) daily fee golf course in Brevard County, located approximately 20 miles from the Cocoa Beach CC and in immediate proximity to the Wickham Rd exit west of I-95. The facility includes an 18-hole championship course and a 9-hole par-3 course, plus extensive driving range/practice facility. This facility represents the high-end of public golf in the market area with modern design features, well-maintained Tif-Eagle greens (considered among the best in the market) and a large clubhouse. This facility is active in the non-golf restaurant and catering business. The course was developed as an amenity to support a large real estate development that borders much of the golf course. The playing fees are the highest in this market area. Peak rack green and cart fees in the summer range from $51 weekday to $60 weekends and they no longer offer resident vs. non-resident rates. There are several other discounts going all the way down to $24 on weekday afternoons. Duran has a strong loyalty program (Crown Club) for $99 and includes $6 to $10 discounts on green fees and other benefits. There are several levels of membership, with the highest and most inclusive membership selling for $2,195 for an individual unlimited pass. Payment plans for membership are available to pay monthly. This course is family owned and while details of rounds, revenue and expenses were not available, it is expected by NGF that this facility has seen some declines in rounds activity in recent years, although likely not as severe as some of the other facilities reviewed by NGF. Turtle Creek Golf Club Private/Public Turtle Creek GC is an 18-hole daily fee in Rockledge, approximately 22 auto miles from CBCC with direct frontage and easy access to I-95. The course is an older semi-private golf club (1969) with a simple golf course design with portions routed through a residential development. This facility is one of the more active public courses, drawing a lot of play from organized groups and clubs. The facility still has an active membership although it is declining in numbers. Turtle Creek has a nice clubhouse with good functionality. This course has completed a greens renovation, converting to champion Bermuda grass greens in Green fees are at the lower end of the market in summer, holding to under $30 for all days and all times of day. With discounts, there are golf rounds available as low as $16 in the late afternoon with cart. Memberships are available for as low as $750 for a single weekday-only, up to $1,500 for a single 7-day and $2,400 for a family 7-day. Payment plans for membership are available to pay monthly. The club reported to NGF hosting around 40,000 to 50,000 rounds in , but activity has subsequently fallen to under 40,000 rounds. National Golf Foundation Consulting, Inc. Review of Cocoa Beach Country Club, Cocoa Beach, FL 18

23 Viera East Golf Club Public/Private Viera East GC is an 18-hole golf course located immediately proximate to Turtle Creek and the I-95 / Fiske Blvd. interchange, and about 20 miles from CBCC. The course opened in 1994 and was originally conceived, financed, and developed as a fully public facility with focus on supporting the residents of the Viera East Community Development District (CDD). The facility includes a high quality golf course that is maintained in good condition. Like other public courses in the area, Viera East recently went through a change in greens to the Ultra-Dwarf Bermuda. The clubhouse is larger than many of the other public courses in the area (except Duran), but it also functions as a community center for the Viera development. The fees at Viera East are within a few dollars of CBCC s Florida resident rates, with peak summer rack rates for green + cart fees at between $32 and $42 for residents and non-residents, with an $18-$19 twilight special. The course does not report having a membership or pre-paid green fee arrangement. In the early 2000s NGF documented upwards of 50,000+ rounds played on this course, although there were resident memberships at the time. NGF projects that Viera East rounds activity is now around 35,000 to 38,000 rounds annually. Baytree National Golf Links Public/Private Baytree National is another real estate driven golf facility from 1994, located proximate to Duran GC on the east side of I-95 at the Wickham Rd exit, about 18 miles from CBCC. This facility, designed (former PGA Tour great Gary Player) and operated to be a higher-end golf course, is routed through the residential community. The facility includes a highly rated golf course and a modest clubhouse with deli/snack bar and banquet space. The club is operated via agreement with Fore Golf Partners who operate several clubs in the area (including the Majors). Along with Duran, fees are among the highest level of the market in the winter season - upwards of $65. During the summer of 2015, the club is charging $45/$50 (WD/WE) for its peak rack rate with cart, with discounts for residents ($39/$44) and twilight ($23-$28). Memberships are available for as low as $1,620 for a single weekday-only, up to $1,980 for a single 7-day and $2,940 for a family 7- day. The club reported to NGF hosting around 45,000 rounds in , but activity has fallen to under 40,000 rounds. National Golf Foundation Consulting, Inc. Review of Cocoa Beach Country Club, Cocoa Beach, FL 19

24 Summary Findings - Competitive Golf Market Some key findings on the area competitive golf market include: The public access golf market in Brevard County is highly competitive, as there are several key competitors operating similar price/quality propositions. Still, NGF observes that Cocoa Beach Country Club is one of more attractive venues in the market in terms of overall value and golf experience. CBCC also benefits from its proximity to the beaches and lodging properties of Cocoa Beach, as well as Port Canaveral and the Kennedy Space Center. With appropriate marketing, the subject should be in strong position to capture a robust share of visitor golf demand. While CBCC compares favorably in terms of overall golf experience (especially scenery and greens), NGF believes the facility is not as competitive to higher quality daily fee facilities such as Viera East and, especially, Duran for larger tourneys such as fundraisers due to clubhouse / food & beverage service limitations and the overall level of service afforded tournament patrons. (NGF was told that outings held at Duran offer a first-rate experience, from the arrival greeting and bag service, to registration (including bag of goodies) and the procession to the course, to the food, on-course services, and post-event festivities). The Brevard County golf market is seasonal, and highly dependent on seasonal and tourist golf demand in order to adequately fill the area s golf courses. As such, there is limited time in which golfers are active and rounds demand is strong. The seasonal patterns in Brevard County show that the typical high demand season lasts from December through mid-april, with relatively soft demand the remainder of the year. This short peak demand season reduces the total rounds activity that can be sold at premium rates, and also adds a degree of risk to golf facilities in the area for uncontrollable factors such as weather (both local and up north) and the economy. The overall trend in golf rounds activity in the Brevard County market area is clearly downward. For example, the Brevard County municipal golf system has seen rounds fall from a 10-year peak of 140,594 in 2009 to 93,207 in 2014, a decline of 37%. The City of Melbourne s 2-course system declined from 128,702 rounds in 2007 to 80,151 by 2014, a decrease of 38%. For comparison, in 2014 CBCC averaged 50,937 rounds per 18 holes of golf, compared to 31,069 for Brevard County (54 holes) and 40,076 for City of Melbourne (36 holes). As we are observing across the nation, fewer rounds in this regional market are being sold at rack rates. There is a myriad of ways that fees are being discounted during nonpeak demand times. In addition to everyday discounts for juniors, seniors, etc., many clubs have loyalty / frequent player programs and active internal yield management programs that include sending out special promotions to their databases. Additionally, third party tee time providers such as GolfNow.com are playing a larger role in moving unsold tee times in this market. These arrangements make the overall comparison of green fees difficult. National Golf Foundation Consulting, Inc. Review of Cocoa Beach Country Club, Cocoa Beach, FL 20

25 Cocoa Beach C.C. Summary of Key Findings & Recommendations Based on our evaluation of the Cocoa Beach Country Club, NGF has formulated recommendations that the City can implement to enhance or supplement its existing business and marketing plan for its golf courses. The intent of these recommendations is to help the City identify physical improvements and business plan elements that will maximize rounds and net revenues for the City, while maintaining or enhancing the golfer experience. Recommendations are organized in three categories: (1) basic oversight and structure; (2) physical improvements; and (3) operations. BASIC OVERSIGHT AND STRUCTURE The City operates its golf facility entirely in-house with City employees. This form of selfoperation remains the most common form of structure in public sector (municipal) golf operations nationwide, although there is a growing trend towards privatization. Though the City is not considering changing the operating structure at this time, NGF has prepared a review of options that are available to Cocoa Beach City should it decide to alter the operation of its golf courses in the future. Structure Options Below are descriptions of the most typical management/operational options for public agency golf courses. In our experience, there is no ideal operating scenario that fits all situations, and each public entity must arrive at its own unique approach to operation and maintenance. The most common management options are shown below (these are not intended to be exhaustive, as there are hybrids and variations thereof), presented in order from most direct City involvement to the least direct City involvement: 1. Self-Operation: This is the status-quo option for Cocoa Beach. A key challenge in this option for many municipalities is finding and retaining qualified personnel, especially in key positions such as manager and superintendent (the NGF review suggested the City is strong in this area). The key advantage to this structure is direct City control of the operation for maximum benefit to the community, while the disadvantages are mostly economic, as the City must absorb the potential risks associated with underperforming revenue and rising expenses, including the relatively high cost of labor resulting from the City s operations of the restaurant. National Golf Foundation Consulting, Inc. Review of Cocoa Beach Country Club, Cocoa Beach, FL 21

26 2. Concession Agreements: These are similar to lease agreements and can come in several types or combinations. The advantage is shifting some risk and payroll to a private entity. The key areas of operation include Pro Shop, Food and Beverage, and/or Maintenance and involve the City contracting for one, some, or all of these services. One subset of this concept includes multiple concessions, a system in which the City creates multiple contract agreements for separate entities for each facet of the golf operation. The most common concession agreements for municipal golf courses include: a) Contract for Food / Beverage Services involves direct City control of maintenance and pro shop management while contracting F & B operations. b) Contract for Maintenance and Food / Beverage Services involves direct City control of the pro shop function, while contracting with separate private entities to provide golf course maintenance and food / beverage services. c) Multiple Concessions involves creating multiple agreements for separate entities for each facet of the golf operation (pro shop, F&B, and maintenance). 3. Full-Service Management Contract: A golf management company is hired to operate all aspects of the golf facility. The City would continue to earn all revenues, be responsible for all expenses (salaries, maintenance, liabilities, capital) and pay a management fee to an operator. Some advantages to this strategy are a shifting of labor expense from a public to a private structure, and the expected benefit of professional management, including access to national purchasing and marketing programs. The main potential disadvantages are some loss of City control and the fixed fee for service, regardless of yearly variations in performance. 4. Hybrid Contract: A hybrid contract combines some of the advantages of a lease with those of a management contract. The most common difference from the management contract is that a variable management fee is included, allowing the operator and City to share in the risk of the operation. Advantages are similar to the management contract with a shifting of payroll, adding expertise, but reducing some City control of the operation. 5. Operating Lease: A municipality leases the golf facility to a private operator in exchange for an annual (or monthly / quarterly) lease payment. The lease could be established to include certain requirements, including capital investment in facility improvements, minimum maintenance standards and/or restrictions on green fees. The key advantage of privatization of the golf operation, assuming a lease partner can be found, is the theoretical shifting of economic risk away from the City and onto the private operator. The key disadvantage is the nearly complete loss of City control on not just the operation, but likely policies, procedures and fees as well. NGF believes that continued self-operation by the City is the best fit for CBCC at this time, in light of potential opportunities to improve the facility s economic performance by implementing recommendations made in this report. If the City were to give serious consideration to an alternate structure in the short term, NGF believes the best fit would be for the City to retain management of golf operations and course maintenance, while seeking a lease partner for the food & beverage operation. National Golf Foundation Consulting, Inc. Review of Cocoa Beach Country Club, Cocoa Beach, FL 22

27 PHYSICAL PLANT IMPROVEMENTS Cocoa Beach Country Club has required an average of just under $130,000 in annual capital expenses since 2010, mostly accounted for by equipment purchases. There are various other small capital projects that are done in-house by staff each year, such as repair of range netting, and removal of cattails along the ponds. These are accounted for out of the golf course operating budget. In its cash flow pro forma for CBCC, NGF is recommending a capital reserve line item equivalent to 7.5% of adjusted gross revenues to address annual renewal and replacement needs. Short-Term Improvement Needs In collaboration with the facility GM, NGF has identified a list of additional short-term improvement needs for Cocoa Beach CC. Some of these may not require immediate attention, but rather tie to the opportunity for increased revenue (e.g., new permanent forward tees for ladies and older seniors) and/or reduced operating expense (bunker repairs, cart path replacement). These improvements are summarized in the table below (cost estimates do not include any lost revenue that may occur due to business disruption during the period these projects are ongoing). Not included are items that would come out of the Public Works budget, such as bridge repair on #1 River, and repairing concrete pads on starter shack and on-course restrooms. Cocoa Beach CC Cocoa Beach Country Club Potential Capital Items Year 1 to 5 NGF Estimated Cost Cart Paths $150K - $200K New Forward Tees of ±2,000 yards (20 tees) $60,000 Bunkers (substructure and sand; ($3K per bunker; 20 per year) $60,000/yr. Total Shorter Term Improvements $270K - $320K Longer-Term Improvement Needs (Year 5+) With the exception of 7 of the 9 holes on the Lakes course, which date back to the 1960s, most of the infrastructure at CBCC dates back to the early 1990s redesign and renovation, including greens, tees, fairways, bunkers, irrigation system, and clubhouse. (While all 30 greens were resurfaced in 2011, substructure was not reconstructed). Seven of the original nine holes are on the Lakes course, which features push-up greens with no drainage. Though NGF has often observed course infrastructure last far beyond the current age of that at CBCC, much of the facility s golf course assets are approaching, or even beyond, their expected life cycles (see Appendix F for USGA Life Cycle Chart). The point is that the City can expect some larger scale capital items down the road, and should plan accordingly. The biggest looming, and inevitable major project, will be the irrigation system. As noted, the system is aging and management reports that it is becoming increasingly difficult to find aftermarket parts for the Toro Network 8000 irrigation system. A new system will ultimately cost $1.5 million or more, in addition to lost revenues. National Golf Foundation Consulting, Inc. Review of Cocoa Beach Country Club, Cocoa Beach, FL 23

28 Other Considerations Other considerations regarding the physical plant at Cocoa Beach Country Club: The three courses include 100+ total sand bunkers. While bunkers can lend excellent aesthetic value to a golf course and most of those at CBCC are strategic, NGF recommends that golf course management (perhaps in consultation with an ASGCA architect) carefully inventory current bunkers to see if some can be eliminated or converted to grass bunkers to save on daily maintenance time and sand/repair costs. (We believe the bunkers on the right side of #1 Dolphin are examples of those that could go away without detriment to the golf experience). NGF noted, and the results of the golfer survey confirmed, that CBCC has quite a few problem spots on its fairways due to water retention in low lying areas and the high salt content of the treated water used for irritation. Management should consider calling in an agronomist for consultation to see if anything can be done other than the current strategy of patching problem areas as they occur. For instance, the USGA s Course Consulting Service (CCS) offered by Green Section offices throughout the country. NGF has found that these experts bring expert and impartial perspective regarding turfgrass management. However, we also recognize the inherent problems of the course (i.e., nowhere for water to drain in some low lying areas) and that there may not be an inexpensive or practical solution. Consideration of Clubhouse Upgrade NGF believes that the Cocoa Beach Country Club clubhouse has some limitations that result in relatively poor functionality and considerable wasted space. These include: While the banquet space (auditorium) is the largest in the market, both the Auditorium and the smaller meeting room need to be updated in terms of both aesthetics and audio/visual capabilities. Additionally, the attractiveness of the large venue for wedding receptions especially those held during the day is greatly reduced by having a view of the parking lot as opposed to the golf course. The restaurant area is not modern, attractive or inviting as a venue for gatherings, theme nights, or golfers simply wanting to enjoy food & beverage after a round. NGF is told that the concrete patio, in addition to having a very institutional feel, is essentially unusable because it collects rainwater that drains toward the rest of the building. This not only precludes this large space from being used by patrons to enjoy a cocktail or food, but it requires ongoing maintenance after rain events (e.g., squeeging water and brushing with Clorox). NGF recommends that the City invest in rain-sensitive louvers or storm shutters, and changing the grade does not seem like a practical solution. The kitchen has limitations with respect to handling large groups, which currently must utilize buffets or outside caterers. The lack of adequate bag storage and lockers, while normally not an issue for a standard municipal golf course, is potentially detrimental to revenue because Cocoa Beach is a tourist and a seasonal resident market. These limitations constrain revenue, especially as they relate to the ability to attract and host larger golf outings and other events such as banquets. As such, NGF presents a brief discussion of the implications of a large scale renovation or replacement of the existing building. National Golf Foundation Consulting, Inc. Review of Cocoa Beach Country Club, Cocoa Beach, FL 24

29 Clubhouse Renovation or Replacement Basic Implications In consideration of possible large-scale capital upgrades that the City could undertake to improve or replace the clubhouse at CBCC, NGF offers a summary of likely implications of a large capital investment. Any upgrade assumes adequate space for large tournaments, other parties or banquets/weddings. The NGF has not completed a full due-diligence review of these options, and recommends that any municipality considering such an investment undertake a comprehensive Clubhouse Feasibility Study and Banquet Market Analysis. The basic implications of clubhouse renovation / replacement at CBCC include the following: The City should expect the costs of the new or renovated clubhouse to be large - likely in the ± $3.0 million range, depending on size, level of quality, local cost factors (e.g., whether a community has prevailing wage regulations), building codes, etc. NGF has observed a growing trend around the country with municipalities using the investment in new golf clubhouses to create dual-use facilities that function as community centers in addition to golf clubhouses. This helps to defray the cost of the new clubhouse directly on the golf system, as the facility will have other community uses in addition to just golf (e.g., official City meetings, Freedom 7 Senior Community Center). NGF experience shows that major functional and aesthetic improvements in golf clubhouses typically results in enhanced golf revenue from both daily fee rounds and tournaments (as many as 2,000 to 3,000 additional rounds from tournaments alone in an active outing market), and upwards of 5% to 10% improvement in overall average rate per round on green fees. In addition, a new and expanded clubhouse would generate direct revenue from banquets, parties, weddings and other non-golf events. This effect may be mitigated at CBCC because of the City s desire to not compete aggressively with private enterprise, such as area hotels, for large banquet business. In general, and depending on operating structure (self-operation or lease) and sales mix (large banquet / meeting / regular) of the food & beverage operation, the potential annual return to the City should be in the 10% (lease) to 20% (well managed self-operation) range, after direct expenses. Standard golf facility ancillary revenues tend to improve when new clubhouses are added to existing golf courses. Total revenue derived from food, beverage and alcohol sales (exclusive of banquet business) can increase to $8.00 to $10.00 per round of golf, compared to the ~$5 per round earned by CBCC. This is a result of increased spending by golfers, but also the ability to attract additional non-golf lunch and perhaps dinner business. Total golf merchandise sales also tend to improve when clubhouses are made more inviting and functional, so CBCC could expect improvement over its current ±$2.30 per round. National Golf Foundation Consulting, Inc. Review of Cocoa Beach Country Club, Cocoa Beach, FL 25

30 The City of Cocoa Beach may not have an appetite, or the resources, to make this level of investment at this time. For future consideration, NGF has observed that the addition of new clubhouses, if construction and associated costs can be kept in the $300 to $400 per square foot range, at high activity golf courses in good markets can often result in the following: Rounds and total revenues will increase. Operating expenses may or may not increase. Net operating income will increase. When financing costs are considered, net income may decrease (perhaps until the debt is fully paid off) if all development costs are charged to the golf operation. The City will have a beautiful revenue producing new asset that will reflect well on the City and produce higher ROIs once the development costs are retired. OPERATIONAL RECOMMENDATIONS NGF Consulting offers the following recommendations that may improve activity levels and net revenues. These recommendations are based on the lead consultant s experience and expertise, and stem from a relatively limited review of the operation and facilities. We recognize that some of these items are already be enacted to varying degrees and that various administrative and other limitations may prevent the City from implementing some of these items. National Golf Foundation Consulting, Inc. Review of Cocoa Beach Country Club, Cocoa Beach, FL 26

31 Fee Recommendations Based on our analysis of the subject Cocoa Beach Country Club s overall value proposition in the competitive market, its recent activity history and current fee structure, NGF has put together the fee recommendations summarized below (please refer to Appendix E for the current CBCC fee structure). Daily Green Fees The plethora of discount arrangements make the overall comparison of green fees in this market difficult, as a good proportion of tee times are sold at less than rack rate. However, NGF believes that rack rates are generally appropriate given the price/value proposition that CBCC offers, but that there is room for some upward adjustment in peak season rates. Following are some of the considerations used in formulating our recommendations: As noted earlier in the report, most of the public access golf courses in CBCC s competitive market are competing at NGF-defined Standard price points (peak green fee with cart in the range of $40 to $70). A facility would have to really stand out in terms of golf experience and service to create separation from this pricing strata. With a large retiree population, the Brevard County golf market appears to be more price sensitive than other resort-type markets in Florida. This factor, combined with the highly competitive pricing due to prevalent discounting in the market, means that large scale price increase are likely not sustainable at any club. The observed peak demand periods at CBCC are not traditional and reflect the large retiree population that lives in proximity and uses the facility regularly. At least during the off and shoulder seasons, demand can be just as strong mid-week and in the afternoon than during the more traditional weekends and early mornings. As a result, green fees at CBCC make no distinction between weekdays and weekends. This type of split pricing model may be an opportunity for higher revenue on weekend mornings during the peak winter season. The table below reflects NGF s recommendations for peak season winter rates. Based on the highly competitive summer season in this market, we do not see room for increases at this time. NGF assumes that non-prime time (e.g., after 11 a.m., twilight, etc.), walking and Fall season rates will be adjusted by the General Manager as he sees fit, based on their traditional relationship with peak season rates. In addition, the City should also consider introducing a nonresident twilight rate in winter for the 12:00 to 2:00 p.m. period. Currently, all golfers, regardless of residency status, pay the same $32 rate. With a proposed $7 increase in morning nonresident rates, some may choose to simply wait for the $32 rate at noon. NGF suggests trying a non-resident twilight rate during the winter of about $40, which should add some revenue and somewhat reduce the incentive to wait until noon to play. Cocoa Beach Country Club Proposed Winter Rates 7 days a week 9 Hole Riding Prime Time 18 Hole Riding Prime Time Current Proposed Current Proposed Cocoa Beach Resident $ $ $ $ Florida Resident $ $ $ $ Non-Resident $ $ $ $ Non-prime time (e.g., after 11 a.m., twilight, etc.), walking and Fall season rates adjusted accordingly as recommended by General Manager National Golf Foundation Consulting, Inc. Review of Cocoa Beach Country Club, Cocoa Beach, FL 27

32 Prepaid Tickets The number of prepaid ticket holders at CBCC has declined steadily over the years, from a peak of about 500 in the early 1990s (when they accounted for about 50% of total play) to less than 90 now. This is a trend we have observed nationwide at municipal facilities due to the very low average revenue per round that is typical of this type of play. For example, at Cocoa Beach, in FY 2014 the average revenue per round for prepaid ticket play (ticket revenue + per-round surcharges, excluding cart revenues) was only $12.68, 39% lower than what was achieved for 18-hole Cocoa Beach resident daily fee play and 63% lower than for 18-hole non-resident play. Additionally, as much as 60% of league players are reported to be ticket holders, who sometimes take prime high-revenue rounds such as early morning. With this in mind, NGF recommends that the City institute fairly aggressive fee increases for prepaid tickets, with the twofold purpose of: (1) Raising the average revenue per round from prepaid play; (2) Continuing the facility s shift toward an even higher proportion of daily fee play. Cocoa Beach Country Club Proposed Pre-Paid Rates Current Proposed Cocoa Beach Resident Individual $700 $1,000 Family $1,165 $1,500 Non-Resident Individual $930 $1,300 Family $1,400 $1,800 Proposed Surcharge Rates Current Proposed 9-Hole $3.81 $6 18-Hole $7.67 $10 CBCC management introduced a 12-Play Card three years ago (currently about 55 Cardholders) that offers a modest discount on posted rates, as well as a residency upgrade. NGF recommends that, in lieu of the prepaid program, management market this more aggressively and consider a loyalty/frequent player program as well. These have become ubiquitous across the country and are an effective way to increase frequency of play among some customers. There are many varieties of these programs, but all involve a low-fee or no-fee membership that entitles the holder to fee discounts or allow them to accumulate points that can later be applied toward purchases. National Golf Foundation Consulting, Inc. Review of Cocoa Beach Country Club, Cocoa Beach, FL 28

33 Dynamic Pricing and Yield Management CBCC offers many ways to play discounted golf, including a relatively high number of rounds through GolfNow. While GolfNow and similar third party tee time providers can help move inventory during slow demand periods, there is also a price to pay in the form of discounts and no-revenue barter rounds. (NGF s analysis shows about 1,500 GolfNow barter rounds in FY14). NGF notes the following considerations when it comes to use of third party providers, and the practice of discounting in general: The idea behind fee discounting is to trade rate for volume, and hope that, on balance, green/cart revenues increase. However, discounting often extends to a facility s most frequent and loyal players, to whom it does not make economic sense to offer discounts. While the goal of discounting is to not lose perishable inventory during slow demand times, excessive use of discounting ultimately devalues the perception of the golf product. The flip side is that GolfNow exposes new players to the course, and management says this is the case at CBCC. The ultimate goal of yield management and dynamic pricing (matching price to demand during various periods of the week) for online tee times is to maximize revenues. This practice cannot be done in a vacuum and must consider several factors, such as weather, market demand, and competitors pricing, and is not easily accomplished. However, it begins with maintaining rate integrity when the facility has pricing power typically weekend mornings (and, in this market, late afternoons during league season). There is no reason to discount to anyone during consistent high demand periods. To avoid overuse of third party tee time providers, NGF recommends that golf managers utilize the tools available within their POS systems to practice more internal yield management and dynamic pricing. Dynamic pricing works best if the database is segmented by customer groups; this allows more creative marketing than simply sending an all-inclusive blast offering a discounted Tuesday midday green fee. Also, as a facility captures more information about its customers and what gets them to the golf course more often, its reliance on exposing lower rates to the general public (thus devaluing the product) can be lessened and hopefully eliminated over time. National Golf Foundation Consulting, Inc. Review of Cocoa Beach Country Club, Cocoa Beach, FL 29

34 Marketing Plan CBCC has a much wider potential market draw than a typical municipal golf course, since the facility has a local, seasonal and tourist market target markets. NGF believes the facility is strongly positioned to take advantage of its location and the golf experience it offers to draw more play from each of these segments if it has the appropriate marketing budget and focus. In 2015, NGF noted the absence of a true marketing plan at the golf course level to establish a strategy & goals, and define specific activities. NGF was told that the golf course marketing budget was under $10,000 for FY Among the marketing activities are advertisements with Tee Times USA, GolfPac, and the Space Coast Golf Association, as well as a Father Day radio blitz and a 4x/year blast to the 3,500 or so names in the database. In addition to marketing that comes from golf course management, the City allocates 25% of City marketing to CBCC about $15,000. NGF s interview with the City s Marketing Director indicates that she has her finger on the pulse of what is necessary to draw more visiting golfers to the club. NGF noted the following activities: Promotional Cards (offering $5 off a round or free rental clubs or $4 off non-resident 18H rate of 50% off rental clubs) are distributed to area lodging properties, the Cocoa Beach Convention & Visitors Bureau (1,100 visitors per month) Coupons are published in a variety of publications, including Space Coat Dine Around, Dynamite Discounts, Space Coast Golfer, and the Entertainment Book. Nearly 700 of these coupons were redeemed between November 2013 and August Port Canaveral oriented marketing has included: Working with taxis and shuttle services to provide free transportation to CBCC Providing deals, such as a $90 package of 18 holes, rental clubs, and lunch, to tour operators (City cannot go directly to Port or cruise lines). Hotels have talked to front desk personnel at hotels; they do not view Cocoa Beach as a destination for golf and are not interested in packages that don t bring incremental people to their properties. Other: CBCC is on the city s mobile app (can book tee times; 3,700 downloads) Radio Golf Card Advertising in Discovery Map (250,000 distributions), Space Coast Business, I-4 Magazine, Space Coast Golf Association A marketing emphasis is critical to creating awareness, correcting misperceptions and increasing daily fee and tournament play. Strategies may include advertising to create a brand image (e.g., centered around themes such as CBCC s beautiful waterfront venue) and maintain awareness, and increasing utilization of direct selling in this tourist market. An effective and comprehensive marketing plan must incorporate research, planning, strategy, market identification, budget, advertising, timetable, and follow-up. Advertising should be tracked adequately to gauge its effectiveness. National Golf Foundation Consulting, Inc. Review of Cocoa Beach Country Club, Cocoa Beach, FL 30

35 Efforts to enhance golf activity at Cocoa Beach City golf courses should include: (1) enhanced use of technology & electronic marketing; (2) direct selling (e.g., outings, leagues, banquets); and (3) advertising & branding. While some of these activities are ongoing, NGF believes these efforts - particularly electronic marketing and direct selling of golf and non-golf events - could be enhanced in the coming years of operations. The City and golf course should remain active with local organizations to help promote the golf course, such as area Chambers of Commerce and visitor organizations. Further, the NGF recommendations for marketing Cocoa Beach Country Club involve: (1) maintaining or building loyalty and wallet share from existing regular-play golfers; (2) improving the messaging and reach to attract greater participation from golfers not residing in Cocoa Beach, including tourists; (3) developing a comprehensive tournament and outings strategy that includes direct face-to-face marketing to potential target groups and charities (more later). Examples of effective marketing tactics for CBCC are summarized below: Utilization of Technology / POS Capabilities Technology is one of the most important and tools available to a golf course management team to create incremental revenue. Technology defines and guides the marketing strategy to build a larger customer database, create customer loyalty and boost revenue. The efficiency of software for tee time reservations, operations / accounting reporting, retail point-of-purchase reporting, and overall management information systems has advanced dramatically in recent years and can help improve overall performance. The City s golf operation would benefit from maximizing the POS technology that is available within the IBS system in place at CBCC. This system should have access to tools for initiatives recommended by NGF, although some may require additional training or upgrade of hardware/software. In general, the City should seek to maximize technology by: Using the POS system to identify specific customers and spending patterns to help effective implement targeted marketing campaigns (i.e. data mining), rather than one-size-fits-all blasts. Allowing for social media tools to be integrated into marketing. This can be done automatically through delivery tools that automatically integrate to the leading social media forums, i.e. Facebook, Twitter, Instagram, etc. Consider developing a smartphone application developed that includes yardage guides and allows golfers to receive text alerts broadcast from the system. The average person checks their cell phone 150 times per day. Having a mobile application facilitates connecting with the customer. databases are essential in today s golf market place, as a means of staying in touch with the golfer customer base. marketing, with the exception of word-of-mouth and free advertising, is the most cost-effective advertising possible. Management reports about 3,500 records in the CBCC database, which NGF considers to be fairly robust. We recommend at every golf course that pro shop staff ask every unknown customer who walks through the door what their address and zip code is. National Golf Foundation Consulting, Inc. Review of Cocoa Beach Country Club, Cocoa Beach, FL 31

36 Website and Internet The Internet is the most cost-effective form of advertising for golf facilities. is the address for the dedicated website for CBCC, while the City homepage also has information (and a link to the dedicated site) under Leisure Services. Search optimization: the site is the first non-paid listing to come up in Google search of Cocoa Beach Golf and Golf in Cocoa Beach, but fails to come up at all with searches involving Brevard County or Space Coast in combination with golf. Look and feel: The site has most of the basic functionalities we expect in a public golf course website, but has a dated and pedestrian feel that does not convey the image of a high quality golf course. Overall, the site includes most of the key pieces typically associated with quality golf websites, such as directions to the course, ability to book tee times online, information on rates & pre-paid green fee arrangements, and scorecard. NGF recommends that the City budget for a new website that will enhance existing features and add: More pictures (and perhaps an overhead drone video) of the golf course, emphasizing scenic beauty and wildlife. Testimonials/accolades. More information on the banquet and meeting rooms, such as capacity, types of functions it has hosted, and who to contact for more information. If the City were to improve these facilities as recommended, there should be a prominent dedicated section of the website for meeting and banquet services. Club / Specials section to capture customer s. Growing the existing database may be partly accomplished with a simple message such as Connect with our Club. Social Networking - Social networking is the fastest growing marketing tool in golf. NGF recognizes that CBCC has a mostly older clientele. Still, as part of an effort to draw and engage more young people the City should become more active with tools such as Instagram, Facebook, and Twitter to communicate what s going on type of messages (e.g., who won a tournament, who had a hole-in-one, etc.). This tends to help build loyalty and repeat activity. YouTube is the second most utilized search engine on the internet. CBCC could develop a presence, including informational videos of the facility and golf course, as well as activities such as league play, tournaments, & instruction. National Golf Foundation Consulting, Inc. Review of Cocoa Beach Country Club, Cocoa Beach, FL 32

37 Direct Selling While the City s marketing director is extremely knowledgeable about strategies to draw more visiting golfers to CBCC, she obviously has other responsibilities in addition to marketing the golf course. NGF believes that Cocoa Beach should consider adding a position such as a Business Development Manager that would be responsible for, among other things, generating new activity at CBCC. NGF recommends that this position (part-time, with incentive-based compensation) be added for the purpose of direct selling of: Tournaments and Outings The Business Development Manager ( BDM ) should expand direct marketing to tournament and outing prospects to bring in a larger share of that business to the courses. NGF recognizes that the market for these events is highly competitive and that overall service must be enhance to be successful at drawing a strong share of these larger tournaments. Prospects that should be proactively contacted include charities, churches, civic organizations, corporations and small companies, especially those that have hosted tournaments in the past and have not been contacted recently. In-House Leagues The GM and golf staff have been very active and successful at cultivating, promoting and facilitating golf leagues. A new BDM could take some of the administrative burden off of the GM, and solicit new leagues. Banquets & Meetings NGF was told at the time of our visit that the City does not actively promote the meeting room at Cocoa Beach Country Club. The new BDM could actively solicit groups for meetings & banquets, if the City is comfortable competing with private enterprise. This could be especially successful if the City improves the existing facilities, including technological capabilities. Area Lodging Properties Both the facility GM and City marketing director indicate that there have been mixed results at best when trying to solicit lodging properties for cooperative marketing such as package deals. Perhaps a dedicated BDM could gain some traction here. While the golf course website infers that packages are available through TeetimesUSA, GolfZoo, and GolfPac, NGF did not see any listed that included CBCC. Port Canaveral As noted in this report, the Port is undergoing rapid growth, not just as and embarkation point but also as a destination. (For example, for Royal Caribbean sailing out of New Jersey, Port Canaveral is their first stop and passengers stay for an entire day). A new BDM could potentially augment the activities that the marketing director has already undertaken to put CBCC in prime position to take advantage of the Port s expected growth. The Tourist Development Council has made arrangements for cruise customers to leave their car for free, so there may be opportunity to draw some of these customers both before and after their cruise National Golf Foundation Consulting, Inc. Review of Cocoa Beach Country Club, Cocoa Beach, FL 33

38 Advertising and Branding Branding In marketing CBCC, the City should continue to take advantage of the Cocoa Beach brand that is strong in this area. The name Cocoa Beach has a following for both residents and visitors, and the city is a strong focus behind Space Coast tourism development efforts. Print / Brochure Print materials can still be effective in golf, and the City should continue to market the small rack cards (NGF is told that lodging properties have resisted larger rack cards) that are distributed to. This piece should be distributed and placed in as many area visitor centers, hotels, and tourist attractions with information racks as is reasonable. NGF research reveals that 33% of all golfers play golf when they travel. We also encourage brochures and advertising to focus on the meeting/banquet facilities at CBCC, though the City has indicated that it does not want to compete aggressively with private enterprise. Signage To extent possible, the directional signage along A1A for CBCC should be improved as is allowable by local guidelines. When traveling northbound or southbound, it would be easy for a visitor to the area to pass the turnoff to the Minutemen Causeway. Signage for the golf course should make it clear that the golf facility and all amenities are City owned and operated, and open and available to the public. Tracking Results Savvy marketers realize it is important to monitor the effectiveness of their marketing campaigns constantly to identify which campaigns, specials and programs are actually working and make appropriate adjustments. CBCC staff should attempt to track the effectiveness of all marketing and direct advertising (as the City s marketing director has done with print coupons and promotional cards). We recommend utilizing a formal log to track all incoming inquiries, and using codes to track all promotions and specials. National Golf Foundation Consulting, Inc. Review of Cocoa Beach Country Club, Cocoa Beach, FL 34

39 Player Development NGF and other industry research confirms that golf, in order to combat the headwinds that have resulted in decreased participation (especially among young people), must become much more active and effective in player development and onboarding to get more people into the game; the same applies to programming to keep people engaged and retain them as golfers. These elements are constrained at CBCC, largely due to a lack of resources. For instance, the pro shop manager works 6 days a week, is responsible for (among other things) the pro shop and outside services (managing 26 people among rangers, starters, cart attendants, etc.), and is asked to give lessons off the clock. As a result, there is little in the way of player development; exceptions include group clinics for Ladies on some Saturday mornings, and a Wednesday open clinic. (Clinics are available for juniors on Saturday at 11:00 a.m., though there reportedly is little interest). CBCC does not currently offer any of the PGA of America s more popular programs, such as Get Golf Ready and PGA Junior League Golf, though the manager would love to have the time to implement these. There are plans to offer the popular LPGA/USGA Girls Golf. As noted earlier, more aggressive marketing and direct selling will be key to successfully building market share at CBCC. However, one of the critical elements to the long-term viability of public golf courses is player development, especially a strong Junior Program. Also, because of today s difficult climate for golf operations, tapping latent demand among groups that traditionally have shown low golf participation such as women and minorities is more important than ever. PGA data shows every new golfer developed could be worth as much as $250 per year (10 rounds at $25), and the common successful player development program produces at least 200 new golfers per facility. Key recommendations for player development programming include: Ensure that staff resources are available to accommodate more player development. Work directly with the PGA for specific guidelines on programs that work, and how to properly implement and promote them (e.g., Get Golf Ready, Hook a Kid on Golf, Drive Chip & Putt, PGA Junior League, and LPGA s Teaching Her program). Add focus on transitioning new players from learning to playing golf. Create programs to provide older, used golf equipment to always be available free of charge for beginners, and possibly for other needy prospects via donation or at a deep price discount. Other Programming The key to maximizing activity levels beyond a club s core constituency in today s golf climate is programming tailored to various groups, such as beginners, women, and young adults. It is clear to NGF that CBCC especially given the flexibility that having 27 holes affords should be much more active with programs and events (both golf course and food & beverage) in order to cultivate new customers. Following are NGF recommendations to increase programming at Cocoa Beach Country Club: National Golf Foundation Consulting, Inc. Review of Cocoa Beach Country Club, Cocoa Beach, FL 35

40 Tournament and Outings NGFC has observed that tournaments and outings can be big business in the Space Coast golf market, and that CBCC is now underperforming when it comes to large outside (e.g., not league or Men s Group, etc.) outings. NGF was told that the number of annual tournaments has declined from about 75 at its peak to about 45 today, and this includes inside events. In terms of larger outside events such as fundraisers, the number is down to 18, with total annual outside tourney rounds of only about 1,750. The decline can probably be attributed to a variety of factors, including the lack of food & beverage capabilities for larger events, the absence of a first rate service experience, insufficient direct selling (solicitation) of these events, and club accessibility issues. For example, the 18-hole Men s Group has 10 tee times blocked from 8:00 a.m. to 10:00 a.m. every Monday, Thursday, and Saturday, even if days fall on a holiday such as Thanksgiving or Labor Day. Saturday mornings (especially during the spring) are an ideal time for large fundraising tournaments. NGF believes that if CBCC is to be run like a business, that the City should seriously consider giving large events top priority over these blocked tee times for club events. On occasions where these morning times can be filled with larger, more lucrative events (or even higher fee daily fee rounds), perhaps the men s group can be moved to later in the morning, especially given that NGF was told the 10 a.m. to noon time is a traditionally slow period. That being said, the men s 18H league and other groups are extremely valuable customers and could be given some other type of concession in exchange for giving up their blocked times when necessary. Other Events Other examples of potential events (or variations thereof) to consider for Cocoa Beach Country Club: Open Club Championship Triathlon with golf, pool, and tennis (e.g, with husband-wife teams) Junior Championship Leagues for younger people, including female-only Friday afternoon scrambles (e.g, combined with food & craft beer tasting Nine & Stein ) Sunday afternoon Father/Daughter events Millennials / Young Adults One of the major initiatives to grow activity that NGF recommends is a young adult program (e.g., reduced rates for golfers age on weekday afternoons). National NGF research ( Golf & the Millennial Generation ) has shown this to be a key demographic in growing golf activity. Please see separate attachment to this report for real-life example of programming and events that golf operators have instituted to increase the golf participation and engagement of young adults. National Golf Foundation Consulting, Inc. Review of Cocoa Beach Country Club, Cocoa Beach, FL 36

41 Increasing Female Participation This represents a major industry best practice and is recommended by NGF to every golf course we review. At present, women account for about 20% of golf participants, but 40% of beginners. There are many reasons why female golf participation is low, but increasing participation from women is one of the keys to maximizing revenue. The most common issues relate to golf course difficulty, retail selection, on-course services (restrooms, drinking fountains), food / beverage selection, and customer service. Programming, such as leagues, and special events (e.g., the 9 and Wine event that the pro shop manager every 1 st and 3 rd Thursday from March through early November) are also key to making the golf course a more inviting and social place for women. Recent NGF studies related to women and golf revealed several facets that were key in their consideration of where and how much to participate in golf. NGF identified several common characteristics that female-friendly golf facilities exhibit, such as: Golf courses that are not too overly difficult, and have a most forward tee of less than 4,600 yards with, with no forced carries of over yards. Restrooms (cleaned several times a day) at least every six holes on the golf course; features and items should include mirror, soap, lotion, sunscreen, Band-Aids, etc. Ball washers on the forward tees. At least one female instructor and a golf staff that takes a consistent approach to all players regardless of gender. Help with selecting equipment and even women-only demo days and/or women-only custom fitting days. The availability of women s club rental sets. Programs that allow more social and/or family involvement. National Golf Foundation Consulting, Inc. Review of Cocoa Beach Country Club, Cocoa Beach, FL 37

42 Customer Experience Though obvious, we cannot overstate how important it is to have consistent high quality customer service, especially in highly competitive golf markets where consumers have a lot of choices. If CBCC expects to be able to sustain fee increases (beyond the yearly CIP-based increases of the last 8 years) and gain market share for both daily fee play and larger tournaments such as charity fundraisers, the City must raise the overall level of service from the moment the golfer sets foot on the property. This is especially important for large tournaments, which often will rebook their annual outings after a good experience and which expose quite a few customers to the course for the first time. While NGF was not on property long enough to observe any obvious deficiencies in service, our interviews with City staff, as well as the results of our golfer survey, indicated there is room for improvement and consistency. For instance, there are expectations regarding operating hours for food & beverage, as well as on-course services (i.e., beverage cart). Another example from the survey is that some GolfNow customers feel they are treated like second-class citizens when they check in. We cannot know if these are anything more than isolated incidents, but even one occurrence can be detrimental to the facility s reputation in the market. Our recommendation in this case would be that management either sever its relationship with GolfNow or find a way to ensure that every golf customer is treated the same, regardless of how they booked their tee time. Food & Beverage The food & beverage operation was a common topic of discussion between NGF and the City and golf course staff we interviewed. Though the food quality and customer service were deemed to be good (and at very reasonable prices), availability of service is an issue. We were told that hours have been cut back in recent years for budget considerations (including Obamacare implications of having part-time workers over 29 hours) and, as a result, the kitchen is open only from 7:30 a.m. to 3:30 p.m. (the bar is open until dark). NGF would not recommend these limited hours for any golf operation, except perhaps in northern climates during the shoulder seasons when daylight hours are short. While we understand that CBCC does not do substantial non-golf related F&B business after the lunch hour, food & beverage service is there for golfers, whose green and cart fees are the economic lifeblood of the operation (more below). This is especially salient at clubs such as CBCC that have a vigorous late afternoon league business, including a large Tuesday afternoon 18-hole Business League of up to 100+ players. Another limitation of the food & beverage operation is that it cannot accommodate larger tourneys and non-golf events for sit down meals (must be buffet, or outside caterer). The direct cost of sales for food & beverage at CBCC has been in the 40% range over the last several years (may be slightly understated because rental revenue was included in sales), which is right at the industry standard. While food & beverage has generated a profit of between $25,000 and $40,000 annually over the last several years, F&B service at a public golf course is not necessarily intended to be a profit center, but rather is there to support the primary business of selling green and cart fees. For instance, food & beverage carts, in isolation, are often money losers for a golf course, but this is a service that is expected by golfers, who might otherwise play elsewhere (especially in the tropical Florida climate). National Golf Foundation Consulting, Inc. Review of Cocoa Beach Country Club, Cocoa Beach, FL 38

43 NGF recommendations regarding food & beverage operation at CBCC: Expand kitchen/restaurant hours at the very least experimentally at the minimum to cover busy late afternoons (e.g., for summer Tuesday afternoon Business League of 100+ players) and special events. Consider moderate price increases for food items such as burgers and sandwiches, as well as alcoholic beverages. Embrace the philosophy that the most successful food and beverage operations at public golf courses are those that offer simple, quick, and inexpensive service that is convenient to the round of golf. (The golfer doesn t view the operations as being separate; rather, it is all one level of service to them and ultimately reflects on the golf course and the City). Invest in cosmetic improvements, as well as a significant upgrade to the a/v and other modern technological capabilities (e.g., Wi-Fi), of the auditorium and the smaller meeting room to make them more marketable for government, corporate, and civic meetings, as well as banquets and other events. If it fits within the City s philosophy, more aggressively market the meeting and banquet spaces after improvements are made. Offer more combination specials; for example, golf & meal on holidays. When budgeting for expanded hours of operation, allow for accommodation of events such as theme nights and brunches (prices are just illustrations): o Mondays: 50-cent wing night + happy hour through Monday Night Football. o Tuesdays: $5 pasta night. o Wednesdays: Trivia night with buffet menu. o Fridays: Pub night with light fare menu o Sundays: Sunday brunch special $9.95 adults and $6.95 kids National Golf Foundation Consulting, Inc. Review of Cocoa Beach Country Club, Cocoa Beach, FL 39

44 Merchandising The golf retail business is highly competitive, and many markets are not conducive to on-course golf shops doing a high volume. For instance, in this market CBCC faces competition not only from other on-course retail shops, but also from stores such as Bell s Outlets for men s and ladies apparel (often in form of closeout sales), Dick s Sporting Goods (Melbourne) for both golf apparel and equipment, and Golf USA (also Melbourne) for hard goods, balls, etc. Also, there is much competition for hard goods on internet sites. Finally, the Brevard County market is price sensitive (in response, there are three separate price points for ladies apparel) and highly seasonal (mid-november through February peak), putting some constraints on merchandise sales. NGF s cursory review reveals that the pro shop manager is doing a good job of selling merchandise in the face of some obstacles to success, but we also see potential for some improvement, especially in terms of logoed merchandise for non-resident golfers. CCBC has averaged just under $180,000 in annual merchandise revenues over the last several years, equating to about $2.30 to $2.40 per round, similar to the national average for a facility at this price point. Management in the last couple of years has shifted away from the highly competitive and space consuming hard goods (e.g., golf club sets, bags) to a focus on soft goods (e.g., apparel, gloves), and buys in small quantities. NGF concurs with this new emphasis, especially since the club does not offer club fitting. The pro shop still features a few hybrids, wedges, and putters (kept in back), as well as limited bags and the most popular drivers, which are mainly demos. The items that tend to sell best at facilities like CBCC are the obvious impulse items (balls, gloves, hats, towels, socks, etc.), but also logoed merchandise like shirts and outerwear. CBCC has severable attractive logos, including one found mostly on hats that features a water/dolphin scene, that are highly marketable on items such as shirts and jackets, especially during the winter season. The direct cost of merchandise sold has declined from 73.3% in 2013 to 63.5% in 2015, compared to an industry standard of 70% cost of sales. Management told NGF they strive for a goal of 40% margin. We note that, as with the food and beverage operation, the total net to the City will never be significant compared to the core business of selling green and cart fees. Primarily, this is a service to golfers to make the overall experience at the golf course more enjoyable and help to bring them back for more. NGF recommendations: Continue with emphasis on soft goods, and expand use of logoed apparel Make sure to stock adequate inventories of larger sizes (even for women) Consider holding Demo Day events National Golf Foundation Consulting, Inc. Review of Cocoa Beach Country Club, Cocoa Beach, FL 40

45 Pace of Play Though NGF was told that a typical 18-hole round at CBCC ranged from 4 to 4.5 hours, Pace of play was one of the satisfaction factors that rated low for CBCC on the golfer survey, scoring in the lower 30% nationally on this measure. It was also one of the recurring themes in the openended comments about golfers would like to see improved. While there is no magic bullet that can be pressed at a busy municipal golf course especially during peak demand times - that has customers with all manners of skill levels, there are some things that can be done to speed up play and mitigate the pace issue. One thing that stood out from the survey comments was that the marshals were lax on enforcement, so a training (or retraining) program for them may be in order, and that care is taken in hiring employees that are not simply taking the job for free golf privileges (NGF is not purporting that to be the case at CBCC). Other things the City should consider to improve pace of play include: Lengthen the 7.5 minute tee time interval during traditionally slow periods. Prioritize the addition of new forward tees on all three golf courses; a forward tee of ±2,000 yards on each 9-hole course should considerably speed up play for some ladies and/or older seniors. Bring in a pace of play consultant to study play patterns, layout, etc. City Allocation of Overhead Like many municipalities that operate golf facilities, the City of Cocoa Beach has a program for assessing the golf course for certain services provided by other City departments. Allocated charges are often a point of contention for those municipal staff charged with ensuring that golf operations remain economically viable. A common contention is that the amount charged may not fully represent "market rate for the services rendered. It is difficult for NGF to appropriately estimate the true value of these services during our consulting engagements, but we find that the amounts are typically higher than what a privately-owned golf course would pay for comparable services such as financial, accounting, legal, custodial, IT, administration, etc. Though it is difficult to say if the direct charges from the City s general fund to golf operations is charged at an appropriate amount, but at $ 310,000 in FY 2014 it represented a significant 13% of total golf expenses. Essentially, the amount of the charge for any municipality boils down to a public policy decision based on two key factors: 1) Is the amount of the charge justified based on the actual cost for other departments to provide these services? 2) Does charging this amount result in a reduced operating budget (thus perhaps weakening the facility s ability to compete effectively) and/or preclude the Golf Fund from financing necessary capital improvements, the deferral of which will eventually lead to a serious deterioration of the product? Each municipality must answer these questions according to their own policies and objectives, as well as the health of their General Fund. In general, the NGF recommends that the services be charged at a rate as close to market as can be established. That is to say that the golf course should not be charged for these services at a rate that would be higher than would have to be paid for the services if acquired through private sources on the open market. National Golf Foundation Consulting, Inc. Review of Cocoa Beach Country Club, Cocoa Beach, FL 41

46 Other Recommendations Operations Manual NGF recommends that every golf course, be it municipal or privately owned, have an operations manual with specific goals (and activities to achieve the goals) laid out in detail each year. The presence of this type of written plan is less common at municipal golf courses and more typically associated with corporate management companies. Golf Club Rentals One key to increasing the volume of tourist golf rounds is to have a good quality of high quality rental golf club sets available, and communicating this fact to potential customers. Many better quality golf courses in tourist markets are showing success by purchasing newer, brand name rental sets and renting them for 1-2 years and then selling them in the pro shop. The funds gained upon sale can be used to purchase newer rental sets and keep the cycle going. The key revenue sources for CBCC are green and cart fees, and rental sets help sell more rounds. Thus, the rental sets themselves are not viewed as a strong direct profit center. National Golf Foundation Consulting, Inc. Review of Cocoa Beach Country Club, Cocoa Beach, FL 42

47 Financial Projections for Cocoa Beach Country Club Below we present a summary cash flow model for the continued operation of Cocoa Beach Country Club, assuming implementation of key NGF recommendations regarding operating structure, fees, marketing and programming. The five-year cash flow model was prepared in consideration of our review of current operations, recent historical performance, analysis of the golf market, and local and regional demographic and economic factors (e.g., expansion of Port Canaveral, recovery of Space Program). The model is based on a set of assumptions that may or may not become reality, but NGF believes that it represents a reasonable estimate of performance for this facility based on the factors discussed in this report. Following are the general assumptions that have been used in the development of NGF s cash flow model for the operation of Cocoa Beach Country Club over the FY 2017 through FY 2021 period. (All figures are expressed in 2015 dollars). Assumptions Rounds and Revenues Rounds played estimates are based on recent historical numbers but assume enhancements in service, marketing and programming. They also reflect a changing mix of play as attrition of ticketholder play continues. Total paid rounds are expected to stabilize at about 72,000 by the third year of the new program, with the vast majority being daily fee rounds. Average rounds per ticket are assumed at 95, in keeping with recent historical averages. Comp ( no revenue ) rounds are projected to decrease to about 5,000 with more judicious use of third party tee time providers, resulting in total rounds stabilizing at about 77,000 annual rounds. Average daily green fee revenue per round in year 1 of the program (illustrated as FY17) is expected to be about 7.5% higher than actual FY 14 results, based on implementation of proposed fee increases and the changing mix of play. The average rate is assumed to increase by 3% each year thereafter. Average cart revenue per round in year 1 is expected to be about 2.5% higher than actual FY 2014 results, with similar annual increases through the five-year period. Average revenue per prepaid ticket in year 1 is projected to be about $1,000, representing an increase of about 35% over actual FY 14 results, based on recommended fee changes. Annual increases of 3% thereafter are projected for the five-year period. National Golf Foundation Consulting, Inc. Review of Cocoa Beach Country Club, Cocoa Beach, FL 43

48 Food & beverage sales per round in year 1 are expected to be about 5% higher than in FY 2014 as a result of proposed price increases and increased service hours, growing at 5% annually years 2 through 5. Merchandise sales per round in year 1 of the program are expected to be similar to recent historical averages, growing at 2.5% annually years 2 through 5. Driving range revenues per round in year 1 are expected to be similar to recent historical averages, growing at 2.5% annually years 2 through 5. Prepaid ticket surcharges per round in year 1 are projected to be 40% higher than in FY14, based on recommended fee increases. Surcharges will grow 5% annually years 2 through 5. Guest service (club rentals, etc.) revenue per round in year 1 of the program are expected to be 20% higher than in FY14 to reflect increased marketing to the tourist market, growing at 2.5% annually years 2 through 5 Other revenue per round in year 1 are based on recent historical averages, growing at 2% annually years 2 through 5. Assumptions Expenses For this preliminary financial analysis, we ve made estimates for CBCC operating expenses based on recent actual expenses and trends, NGF experience, and the expectation of some improvements in service levels at the facility (e.g., expanded F&B service hours, part-time Business Development Manager, increased marketing). Cost of goods sold for both merchandise and food & beverage are assumed at 65% and 40%, respectively, based on recent history. Year 1 labor expenses are assumed to be 10% higher than FY 2014 actual, growing at 3% annually thereafter. Year 1 other operating expenses are assumed to be 5% higher than recent actual, growing at 3% annually thereafter. Maintenance and repair expenses in addition to normal maintenance will likely be necessary during the course of operating a high quality golf facility. For purposes of this analysis, NGF has assumed a capital improvement set-aside fund for Cocoa Beach Country Club equivalent to 7.5% of adjusted gross revenues. This is not expected to help fund any needed major improvements such as replacement of the irrigation system, but should fund equipment purchases and other small-scale repairs and improvements. National Golf Foundation Consulting, Inc. Review of Cocoa Beach Country Club, Cocoa Beach, FL 44

49 Cash Flow Statement NGF Consulting utilized the previously mentioned assumptions to create the preliminary sketch pro forma below. Each category of revenue has been listed separately, and all figures have been rounded to the nearest $100 for simplicity. Cocoa Beach Country Club Summary of Projected Revenues and Expenses FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 Ticketholders Daily Fee Rounds 63,000 66,000 68,000 69,000 69,000 Prepaid Rounds 6,175 5,225 4,275 3,325 2,375 Total Paid Rounds 69,175 71,225 72,275 72,325 71,375 Non-Revenue Rounds 6,000 5,500 5,000 5,000 5,000 Total Rounds 75,175 76,725 77,275 77,325 76,375 Revenues per Round/Ticket Daily Green Fees $16.20 $16.69 $17.19 $17.70 $18.23 Cart Fees $8.89 $9.11 $9.34 $9.57 $9.81 Rev. per Prepaid Ticket $1,000 $1,030 $1,061 $1,093 $1,126 Food & Beverage $5.16 $5.42 $5.69 $5.97 $6.27 Merchandise $2.30 $2.36 $2.42 $2.48 $2.54 Driving Range $0.55 $0.56 $0.58 $0.59 $0.61 Surcharge (per prepaid rd.) $7.30 $7.67 $8.05 $8.45 $8.87 Guest Service $0.30 $0.31 $0.32 $0.32 $0.33 Other + Misc. $0.20 $0.20 $0.20 $0.20 $0.20 Revenues Greens Fees $1,020,600 $1,101,276 $1,168,687 $1,221,450 $1,258,094 Cart Fees $614,637 $648,673 $674,692 $692,038 $700,021 Prepaid Fees $65,000 $56,650 $47,741 $38,245 $28,138 Food & Bev. (incl. rental services) $387,746 $415,528 $439,432 $461,702 $478,832 Merchandise $172,903 $180,879 $186,730 $191,522 $193,899 Driving Range $41,346 $43,254 $44,653 $45,799 $46,367 Surcharge $45,078 $40,050 $34,406 $28,098 $21,074 Guest Service (Rentals, etc.) $22,553 $23,593 $24,356 $24,981 $25,291 Other + Misc. Revenues $15,035 $15,345 $15,455 $15,465 $15,275 Total Revenues $2,384,897 $2,525,248 $2,636,153 $2,719,301 $2,766,990 Cost Of Goods Sold Merchandise $112,387 $117,571 $121,375 $124,489 $126,034 Food & Beverage $155,099 $166,211 $175,773 $184,681 $191,533 Total COGS $267,485 $283,783 $297,148 $309,170 $317,567 Adjusted Gross Income $2,117,412 $2,241,465 $2,339,005 $2,410,131 $2,449,423 Expenses Salaries and Wages $1,328,369 $1,368,220 $1,409,266 $1,451,544 $1,495,091 Other Operating Expenses $512,682 $528,063 $543,905 $560,222 $577,029 Total Oper. Expenses (Excl. Depr.) $1,841,051 $1,896,283 $1,953,171 $2,011,766 $2,072,119 Net Operating Income $276,361 $345,182 $385,834 $398,365 $377,304 Capital Expenses (7.5% of AGR) $117,555 $177,073 $210,408 $217,605 $193,597 Net Inc. Avail. for City Overhead $158,806 $168,110 $175,425 $180,760 $183,707 National Golf Foundation Consulting, Inc. Review of Cocoa Beach Country Club, Cocoa Beach, FL 45

50 Results The results of NGF Consulting s preliminary cash flow projection show that Cocoa Beach Country Club, with most of key NGF recommendations regarding physical plant, fees, marketing, programming and service level implemented, is projected to generate approximately $2.385 million in total operating revenues to the City in FY 2017, growing to approximately $2.77 million by FY Considering all preliminary expense estimates prepared by NGF Consulting, net income (after capital reserve) available to the City for cost allocation is projected to be about $159,000 in FY 2017, growing to about $180,000 by FY National Golf Foundation Consulting, Inc. Review of Cocoa Beach Country Club, Cocoa Beach, FL 46

51 Appendices Appendix A Golfer Survey Appendix B Golfer Survey Origin of Customers Map Appendix C Local Golf Demand and Supply Indicators Appendix D Summary Information for CBCC Competitive Set Appendix E Cocoa Beach Country Club Fee Schedule Appendix F USGA Golf Course Expected Life Cycle National Golf Foundation Consulting, Inc. Review of Cocoa Beach Country Club, Cocoa Beach, FL 47

52 APPENDIX A GOLFER SURVEY Cocoa Beach Country Club Golf Sat Questions 1. About How many rounds have you played at Cocoa Beach Country Club in the past 12 months? rounds 2. Do you play most of your golf at Cocoa Beach Country Club? Yes No 3. What other courses in the area, if any, have you played on a somewhat regular basis in the past 12 months? A. rounds B. rounds 4. How satisfied are you, overall, with Cocoa Beach Country Club? Very dissatisfied Very satisfied Given the cost to play here, do we meet your expectations? Falls short of your expectations Exceeds your Expectations How does your overall satisfaction with Cocoa Beach Country Club compare to your satisfaction with other similarly priced courses you have recently played? Unfavorably Favorably In the next 12 months, are you likely to play here more often, less often or about the same? Much less often Much more often If asked, how likely would you be to recommend Cocoa Beach Country Club to another golfer? Not At All Extremely Likely Likely What do you like most about Cocoa Beach Country Club? 10. If you were the person in charge, what improvements, in any aspect of the course or our service, would you consider making? 11. Approximately how long would you say you've been playing golf at Cocoa Beach Country Club? 12. Have you recommended Cocoa Beach Country Club to anyone in the past 12 months? Yes No If yes, how many? 13. Have you advised anyone against playing at Cocoa Beach Country Club in the last 12 months? Yes No If yes, how many? National Golf Foundation Consulting, Inc. Review of Cocoa Beach Country Club, Cocoa Beach, FL 48

53 14. Please circle a number from 1 to 10 indicating your level of satisfaction on each factor shown below. Very Dissatisfied Very Satisfied Overall Experience Amenities (clubhouse, pro shop, locker room) Food and Beverage Service Overall Quality of Golf Shop Condition of Bunkers Tee Time Availability Overall Quality of Golf Shop Apparel Overall course conditions Condition on Greens Condition of Fairways Overall value Friendliness/helpfulness of staff Overall Quality of Golf Shop Merchandise Golf course design/layout Pace of Play What would you estimate is your average cost per round (including green fee, golf car if used, range balls - but excluding merchandise and food & beverage) at Cocoa Beach Country Club? $ 16. About how much would you say you have spent in total on merchandise (e.g., apparel, golf balls and clubs and other items) over the past 12 months at Cocoa Beach Country Club? 17. About how much would you estimate you spend, on average, on food & beverage each time you visit the course? 18. Please enter the zip / postal code of your primary residence 19. Gender Male Female 20. Please enter your age: 21. Please enter your average 18-hole score: 22. Which of the following best describes you? ( X one box only). Daily Fee Player Cocoa Beach Resident Daily Fee Player Florida Resident Daily Fee Player Non-Florida Resident Resident Prepaid Player Non-resident Prepaid Player Name Phone Address National Golf Foundation Consulting, Inc. Review of Cocoa Beach Country Club, Cocoa Beach, FL 49

54 APPENDIX B GOLFER SURVEY ORIGINS Overview Map - Golfer Survey Origin of Customers National Golf Foundation Consulting, Inc. Review of Cocoa Beach Country Club, Cocoa Beach, FL 50

55 Close-Up Map - Golfer Survey Origin of Customers National Golf Foundation Consulting, Inc. Review of Cocoa Beach Country Club, Cocoa Beach, FL 51

56 APPENDIX C SUMMARY DEMOGRAPHICS AND GOLF METRICS Cocoa Beach Golf Course 5 miles 10 miles 15 miles Brevard County Florida U.S. Summary Demographics Population 1990 Census 33, , , ,962 12,936, ,584,652 Population 2000 Census 35, , , ,234 15,982, ,399,034 CAGR % 1.85% 1.82% 1.81% 2.14% 1.25% Population 2010 Census 35, , , ,376 18,801, ,745,538 CAGR % 1.02% 0.87% 1.33% 1.64% 0.93% Population Estimate , , , ,216 19,948, ,190,947 Population 2019 Projected 40, , , ,578 21,309, ,562,705 CAGR % 1.42% 1.31% 1.36% 1.58% 0.82% Median HH Income (2014 Estimate) $49,229 $50,900 $49,713 $46,913 $46,543 $55,040 Median Age (2014 Estimate) Ethnicity White 93.1% 82.6% 84.6% 81.9% 73.8% 72.3% African American 1.9% 10.1% 8.3% 10.7% 16.7% 12.6% Asian 2.1% 2.6% 2.5% 2.4% 2.9% 4.8% All Other 2.9% 4.8% 4.7% 5.0% 6.6% 10.3% Hispanic Population Hispanic 5.4% 8.0% 7.9% 9.0% 23.6% 17.2% Not Hispanic 94.6% 92.0% 92.1% 91.0% 76.4% 82.8% CAGR = Compound Annual Growth Rate Cocoa Beach Golf Course 5 miles 10 miles 15 miles Brevard County Florida U.S. Golf Demand Indicators Total Households 17,720 77, , ,593 7,972, ,773,469 Number of Golfing Households 2,412 12,411 19,886 37,417 1,198,046 17,483,010 Projected Golfing Households (2018) 2,417 13,061 21,090 39,995 1,280,658 18,901,970 Projected Annual Growth Rate 0.00% 1.00% 1.20% 1.30% 1.30% 1.60% Seasonal Golfing Households ,100 2, , ,117 Latent Demand/Interested Non-Golfers 3,818 18,715 30,258 59,096 2,117,873 29,260,420 Household Participation Rate 13.60% 16.10% 15.90% 15.40% 15.00% 14.50% Number of Golfers 2,820 15,345 24,612 47,030 1,628,051 24,719,620 Rounds Potential (resident golfers) 77, , ,953 1,087,894 36,210, ,310,200 Estimated Course Rounds (in-market supply) 79, , ,652 1,095,826 42,778, ,310,200 Demand Indices Golfing Household Participation Rate Seasonal Golfing Households Latent Demand/Interested Non-Golfers Rounds Potential per Household (resident golfers) Cocoa Beach Golf Course 5 miles 10 miles 15 miles Brevard County Florida U.S. Golf Supply Golf Facilities Total ,027 15,404 Public ,458 Public: Daily Fee ,983 Public: Municipal ,475 Private ,946 National Golf Foundation Consulting, Inc. Review of Cocoa Beach Country Club, Cocoa Beach, FL 52

57 Public Golf Facilities by Price Point Premium (>$70) ,341 Standard ($40-$70) ,973 Value (<$40) ,144 Golf Holes Total , ,163 Public , ,478 Public: Daily Fee , ,132 Public: Municipal ,818 41,346 Private ,415 71,685 Non-Regulation (Executive & Par-3) ,069 21,987 Net Change Net Change in Holes past 5 years ( ) ,540 Percentage Total Holes Past 5 Yrs 0.00% 0.00% 0.00% 2.00% -3.70% -3.50% Net Change in Holes past 10 Years ( ) ,705 Percentage Total Holes Past 10 Yrs 0.00% 0.00% 4.00% -7.10% -4.40% -2.50% Cocoa Beach Golf Course 5 miles 10 miles 15 miles Brevard County Florida U.S. Supply-Demand Ratios Households per 18 Holes Total 11,813 8,117 9,608 9,369 6,858 8,356 Public 11,813 14,021 13,878 11,883 11,471 11,534 Public: Daily Fee 0 19,279 19,216 17,400 13,421 14,775 Public: Municipal 11,813 51,409 49,962 37,476 78,932 52,579 Private 0 19,279 31,226 44,290 17,053 30,326 Premium (>$70) , ,395 46,621 74,276 Standard ($40-$70) 11,813 14,021 22,710 23,199 26,618 28,424 Value (<$40) ,452 28,658 35,511 26,278 Golfing Households per 18 Holes Total 1,608 1,306 1,530 1,439 1,031 1,210 Public 1,608 2,257 2,210 1,825 1,724 1,670 Public: Daily Fee 0 3,103 3,059 2,673 2,017 2,139 Public: Municipal 1,608 8,274 7,954 5,756 11,862 7,611 Private 0 3,103 4,972 6,803 2,563 4,390 Premium (>$70) ,257 24,945 7,006 10,752 Standard ($40-$70) 1,608 2,257 3,616 3,564 4,000 4,115 Value (<$40) 0 0 9,943 4,402 5,337 3,804 Household Indices Total Public Private Premium (>$70) Standard ($40-$70) Value (<$40) Golfing Household Indices Total Public Private Premium (>$70) Standard ($40-$70) Value (<$40) Rounds per 18 Holes Rounds Potential (resident golfers) 51,725 37,957 44,073 41,842 31,148 29,841 Estimated Course Rounds (in-market supply) 52,875 37,708 39,512 42,147 36,798 29,841 National Golf Foundation Consulting, Inc. Review of Cocoa Beach Country Club, Cocoa Beach, FL 53

58 APPENDIX D SUMMARY INFORMATION FOR CBCC COMPETITIVE SET Facility Cocoa Beach Country Club Viera East Golf Club 1 18H- DF 27H- Duran Golf Club* 1 DF Savannahs Golf Club 1 18H- MU Turtle Creek Golf Club 1 18H- DF Baytree National Golf Links 1 18H- DF 9-Hole WD/WE w/ cart 18-Holes WD/WE w/ cart Key Competitors Summer Rates Twilight Rate WD/WE w/ cart Super Twilight Rate WD/WE w/cart Peak Winter Rates WD/WE w/car TYPE Resident Non-Resident Resident Non-Resident Resident Non-Resident Resident Non-Resident Resident Non-Resident Resident Cocoa Residents Cocoa Res. Cocoa Res. Cocoa Res. $743.54/$ 27H- $18.20/$18.20 $32.90/$32.90 FL After 12pm After 12pm 9 holes after 5pm/4pm(DST) $38.50/$38.50 $23.55/$23.55 $43.90/$43.90 $54.90/$ , MU FL Res. Res. $26/$26 $26/$26 $13/$13 FL Res. Surcharge $20.30/$20.30 $38.50/$38.50 $43.90/$43.90 $7.67 Cart fees not included Brevard Resident $20/$20 $20/ $20 FL Resident <11am $37/$42 11am-2pm $32/$37 <11am $37/42 11am-2pm $32/$37 FL Resident $27/$28 $27/$28 FL Resident $18/$19 6:30am-11:59am: $51/$ pm-Twi: $38/$41 $37/$37 Brevard Resident $25/$25 $25/$25 Brevard Resident '$21/$21 $21/$21 N/A $16/$16 $16/$16 $26/$29 $26/$29 $22/$22 $22/$22 $18/$18 $25am & $18pm / $25am & $18pm Tues-Fri: Open $39/$44 11am $34/$39 Tues-Fri: Open $45/$50 11am $40/$45 Mondays: Open $35 / 12pm+ $25 1pm Tues-Fri: $29/$32 1pm Tues-Fri: $34/$38 4pm Tues-Fri: $23/$23 $18/$19 4pm Tues-Fri: $26/$28 Brevard Resident $45/$45 $55/$55 Unlimited Membership Indiv. / Family / Senior / Junior Non- Resident $991.41/$ 1, Surcharge $7.67 Cart fees not included Signature Open Membership $149 per month Advanced GF $ expires 11/30/15 Surcharge $8 per rnd Brevard County Player Card $3800 $750 / - / - / - Cart fees not included Rates are per month $165/$245 -/$75 Seasonal: $235/$350 /-/- Mallards Landing Golf Course 18H- MU $18.64/$ /$18.64 Open-11am $29.83/$ am-1pm $26.63 / $26.63 Open-11am $29.83/$ am-1pm $26.63 / $26.63 $24.50/$24.50 $24.50/$24.50 $14.91/$14.91 $14.91/$14.91 $772.13/$1,141.68/-/- Per Rnd surcharge $3.20 April-Oct. Crane Creek Reserve Golf Club Spessard Holland Golf Course 18H- MU 18H- MU 18.64/$ /$18.64 Open-11am $29.83/$ am-1pm $26.63 / $26.63 Open-11am $29.83/$ am-1pm $26.63 / $26.63 $22/$22 $22/$22 $29/$29 $29/$29 * Duran Golf Club has 1 18Hole Reg. course and 1 9Hole Par 3. Rates are for the 18H Championship course. 1 Sales Tax not included $24.50/$24.50 $24.50/$24.50 $14.91/$14.91 $14.91/$14.91 After 12pm $25/$25 After 12pm $25/$25 $20/$20 $20/$20 $43/$43 $43/$43 $772.13/ $1,141.68/ -/- Per Rnd surcharge $3.20 April-Oct. Advanced GF $ expires 11/30/15 Surcharge $8 per rnd Brevard County Player Card $3800 National Golf Foundation Consulting, Inc. Review of Cocoa Beach Country Club, Cocoa Beach, FL 54

59 APPENDIX E COCOA BEACH COUNTRY CLUB FEE SCHEDULE Cocoa Beach Country Club Winter Rates 2015 December 15, April 15, days a week Cocoa Resident Florida Resident Non-Resident Walking Riding Walking Riding Walking Riding Regular 18 Hole $25.72 $38.50 $31.12 $43.90 $42.12 $ Hole $12.72 $19.75 $16.02 $23.05 $20.37 $23.05 Twilight 18 Holes, after 12pm (includes cart) $32.00 Unlimited Walking Special After 2pm/3pm after time change $ Hole Riding After 4pm/5pm after time change $16.00 Summer Rates 2015 April 15, September 30, days a week Cocoa Resident Florida Resident Non-Resident Walking Riding Walking Riding Walking Riding Regular 18 Hole $20.12 $32.90 $25.72 $38.50 $31.12 $ Hole $11.67 $18.70 $13.77 $20.80 $17.11 $24.14 Twilight 18 Holes, after 12pm (includes cart) $26.00 Unlimited Walking Special After 3pm after time change $ Hole Riding After 5pm after time change $13.00 Fall Rates 2015 October 1, December 14, days a week Cocoa Resident Florida Resident Non-Resident Walking Riding Walking Riding Walking Riding Regular 18 Hole $22.27 $35.05 $27.82 $40.60 $36.61 $ Hole $12.22 $19.25 $14.97 $22.00 $18.21 $25.39 Twilight 18 Holes, after 12pm (includes cart) $28.00 Unlimited Walking Special After 3pm/2pm after time change $ Hole Riding After 5pm/4pm after time change $14.00 Pre-Paid Rates Individual Family Cocoa Beach Resident $ $1, Non-Resident $ $1, Surcharge for all prepaids 9 Holes 18 Holes $3.81 per person $7.67 per person National Golf Foundation Consulting, Inc. Review of Cocoa Beach Country Club, Cocoa Beach, FL 55

60 APPENDIX F USGA GOLF COURSE EXPECTED LIFE CYCLE National Golf Foundation Consulting, Inc. Review of Cocoa Beach Country Club, Cocoa Beach, FL 56