We have finished our first golf season under new ownership after being run by the Keweenaw County since the Lodge opened in 1934. As such, we now have first-hand data of what is working and what isn’t working for the golf operations.
In addition, we have data on golf rounds, golfer’s appreciation of the golf course, and the staffing operations. Based upon our analysis of the data, and making sure we are making decisions aligned with our vision of being a wilderness resort, we have started to make various decisions for the 2020 golf season.
Below are several of the main changes at this time:
- No golf memberships in 2020
- Increased cart storage fees
- Increased, simplified green fees
The announcement of the golf memberships and cart storage fees was made on September 22nd. However, we include that information again in this post (see below), as well as more information about the 2020 green fees.
No golf memberships in 2020
When looking at the setup of the Lodge from inside the operations this summer, and knowing our strengths and weaknesses, we realized we were making decisions for being both a resort and a country club. Thus, this season we were catering to two different types of very different customers. That is not a very good strategy for the Lodge — as the result will be that we do a poor job addressing the needs of both customer sets. We need to focus on one customer type or the other. The clearer opportunity for the Lodge at this time, based upon our values and our vision, is to focus on being a resort, not on being a country club.
With this in mind, we will not have golf memberships during the 2020 season. All golf play will be paid via green fees or through lodging packages. The staff will focus on running the golf course as a resort facility, and make decisions accordingly. This means we will keep the golf course open to resort guests and visitors at all times outside of special golf tournaments and events (in which the organizers pay for using the golf course accordingly). This decision is aligned with our values, our vision of the Lodge, and being a financially sustainable operation. [ the golf activities operated at a loss this season, with membership dues representing only ~2% of the revenue ]
Increased cart storage fees
As for cart storage, there will be cart storage available in 2020. However, the fees will be increased to be inline with the other golf courses in the area (Calumet Golf Club $275, Portage Lakes Golf Club $325). The 2020 cart storage fee will be $300 (May 15, 2020 – May 14, 2021).
If you have your cart stored at the Lodge currently, your cart storage agreement for the 2019 season runs through May 14, 2020. Thus, you are able to store your cart through this winter / spring at the Lodge; after which time, you will need to renew your cart storage at the 2020 season fee. If you decide not to keep your cart at the Lodge for the 2020 season, we will kindly ask you to remove your cart from the cart barn by May 14, 2020.
Increased, simplified green fees
Since we are now going to be focused on green fees and resort packages, we did some research and looked at our data from this season. We looked at the green fees for the local market golf courses, the resort golf courses around the country that we consider our peers, the history of the green fees at the Lodge, and the vision we have for the golf course and overall resort to be a financially sustainable operation. This lead us to simplify the green fees to be the following for the 2020 golf season (see current draft below):
| Regular Rates | Discounted Rates* | |
|---|---|---|
| Green Fees | ||
| Friday, Saturday, Sunday, and holidays | ||
| 9 Holes | $25 | $20 |
| 18 Holes | $35 | $30 |
| Monday-Thursday | ||
| 9 Holes | $20 | $15 |
| 18 Holes | $30 | $25 |
| Cart Rates | ||
| 9 Holes | $15 | |
| 18 Holes | $20 | |
| Push / Pull Carts | $5 | |
| Club Rentals | ||
| Per Day | $45 | $30 |
| For 3 Days | N/A | $70 |
| rental includes 2 sleeves of balls | ||
| * Discounted rates are available for Lodge guests and Keweenaw County residents. | ||
None of us want to pay more in golf-related fees, but these incremental increases are essential to keep the golf course operating in today’s economic environment at the standard we desire for the Lodge.
As mentioned in a blog post earlier this summer, the average green fees for privately-owned golf courses is $40 for 18 holes on weekends. Our highest green fee for 18-holes this season was $30. If we keep at that rate, then the KML golf course has a higher probability of not surviving — the majority of the golf courses that closed in 2016 charged below $40 per 18 holes. As well, we hope that we aren’t an average golf course….but one that is special for those that want to enjoy the where they are playing a round of golf.
These decisions outlined above are in line with our core values of fun, joyous, and adventuresome, and choosing to have everyone enjoy the course at any time on any day. These decisions are various decisions that will lead us through the journey of creating a higher quality resort and create a financially sustainable business that can offer that level of quality for a number of years.
I’ve been following your KML blogs with interest. I’m not sure if you meant to insult senior golfers, many of whom have belonged, played, and supported the golf course for longer than you’ve known of it, but to a man, from those I’ve spoken to, that’s the way it was taken. I also can’t imagine how our twice weekly matches negatively impacted any of your resort guests.
As for memberships, I was disappointed in the value I received by being a member. For most of June, the greens were unplayable due to excess sand and no mowing. Then, from mid July through August, we dealt with burned out fairways due to irrigation pump problems. Finally, in mid September with almost a month of good golf weather remaining, the greens were once more plowed up.
I hope you will reconsider your membership stance. I feel there’s room for locals and out of town visitors.
Barry, no, it is not the intent to insult anyone; if you would get to know me better, you would understand that, and would understand that I make decisions to support a viable business while supporting the local community. If I was making decisions against you and the members, or being anti-local, I would either make the golf course a high-end-exclusive-application-only-members-course or shut it down completely.
I also understand your frustation of not being able to say you are an annual member of the Lodge golf course. I am appreciative that you, and others, were able to support the Keweenaw county for so long in its operations of the Lodge. We provided a year of the status quo (low membership rates) to get first-hand experience and data to see how the golf operations would work rather than making a decision based upon numbers at the time of the purchase of the Lodge last year. I wanted to give the members an opportunity to show their support and to see how golf members appreciate the golf course, while also seeing first hand how the financial figures add up. During that time, it gave you and other members the chance to enjoy the golf course — or in your case, based upon your comments above, get frustrated with the golf course from a member’s perspective.
As I have mentioned, the data indicates there needs to be a change. Doing both the country club model and the resort / public golf course model does not work. One can not do both in an excellent fashion, even though you and others continue to think that can be done (even though it wasn’t done well during the days the county operated it — the golf course lost money).
I am seeing this to be the case at the Lodge, and other golf courses around the country are seeing that as well. Run-of-the-mill golf courses are seeing golf membership decline, and there are more golf courses closing than there are opening each year.
I am not a person that wants to run a golf course that loses money or does things that are half what I expect them to be. I am a member of a golf course in Austin that just raised its monthly dues under the reasoning that they can’t operate at a level they want to without raising the dues to fund the quality golf course operations. When looking at the those monthly dues, they are 7x the dues of what was paid for the 2019 Lodge membership. I don’t think that this year’s members would like to pay 7x what they paid this year, or 3-4x even (which is what it would take to cover the operating expenses of the golf course).
[ Note: Here is some fun math to think about: on average each member pays $425. There were 41 paying members this past year. It costs more than $500-750 / day to run a small golf course crew (maintenance and pro shop). We will be open for around 180 days this summer / fall season. How much of the costs do the members cover of the over golf course labor expenses? ]
In the end, your comments about the golf course this year confirms we are not good at the country club model in its current model. Members felt they were slighted because the golf course wasn’t in good condition — you included– even though we were making up for what hadn’t been cared for over the last couple of years by previous ownership / management (aeration hadn’t been done in several years, the pumps hadn’t been replaced in 20+ years, and so on). Basically, you are confirming that we should not have memberships next year because we are not good at being a country club / membership-based golf course. So rather than disappointing you next year, we are removing the memberships all together.
The resort / public / green fee model gives EVERYONE an opportunity to play the golf course…as long as the golf course stays in operation. No one is stopping locals from paying a green fee to play the golf course — and this is standard practice at a majority of resort / public golf courses.
Not once did I say anything about your play on Monday or Friday hindering non-members. Nor have I said anything not supportive of the local golfers or members. This is a decision to be able to focus on a single strategy rather than a dual-strategy (which is a failed strategy) in order to try to make the golf course operations a viable entity. If we don’t make this decision now, the golf course will be closed in the near future. So this decision is to try to ensure the golf course continues forward to be a viable operation, and that we provide excellent service to the golfers accordingly. I would hope that you, and others, would appreciate that effort rather than condemn it.
This wasn’t an easy decision, and it took a year to make. I let the data and the results play out for at least a year before making this decision. I wouldn’t have bought the Lodge if I didn’t believe in the local market. So you might want to review your assumption that the golf course will continue to operate.
Knowing that I am not going to consider doing both the country club and the resort / public course model, how else should I show my appreciation to the local golfers than by trying to keep the golf course open?
Remember, the only change to you is that you have to pay a green fee each time you play (just like paying for cart rental), and like one would do at many golf courses around the county. And please don’t take this as an insult, as that is not the intent. I respect what this year’s golf members did when the county owned and operated the golf course. However, that doesn’t change the fact that the golf course continues to lose money in its current country club / resort dual model.
I and my wife and daughter stayed at the cabins in Aug. Ate dinner every night except one, great food and service. My daughter and I played golf and enjoyed our rounds and the fees were very reasonable. We will be back with others family members in the future!
You’re giving the locals the middle finger. Good luck with that.
Kerry, thank you for your comment, and concern for what is happening at the Lodge…..albeit, not in a respectful manner.
Please explain why you think moving from a country club model to a resort / public / green fee model is anti-local.
This wasn’t an easy decision, and it took a year to make. I let the data and the results play out for at least a year before making this decision. I wouldn’t have bought the Lodge if I didn’t believe in the local market. So if you actually got to know me, and you would read through what has been posted, you would understand that this decision is pro-local.
When looking at the historical data, and the data this year, it indicates that the golf course should be shut down. It loses money in it’s current state — the status quo — which is how it was run at this year. This is the same as the previous number of years, where the golf course operations continued to lose money (and the years you are referring to).
The golf operations has lost money for a number of years, and this past season it was no different (the first hand experiences and data confirmed that). When an operations, or a part of an operation, loses money for a number of year, logical thinking would be indicated the operations should be shut down.
However, rather than shutting down the golf course because it loses money, this decision of working through the resort / public / green fee model is an opportunity to keep the golf course available to EVERYONE, locals and resort guests. I would think that trying to keep the golf course open rather than shutting it down would be pro-local and would show respect to the people that tried to keep it going under the auspices of the county.
So it is interesting logic that you would think that losing money on the golf operations is pro-local, or that shutting down the golf course would be pro-local.
The resort / public / green fee model gives EVERYONE an opportunity to play the golf course….as long as the golf course stays in operation. No one is stopping locals from paying a green fee to play the golf course — and this is standard practice at a majority of resort / public golf courses.
Thank you for your thoughtful response.
I think it’s a mistake. When you drive away the local members, you end up driving away the “ambassadors” of the Lodge. Sometimes you have to lose money to make money, especially in this market.
Kerry, yes, I don’t doubt it might be a mistake; time will tell. Nor do I disagree about the concept of spending money to make money. However, what I do know is that the status quo wasn’t working. Data this season supports it, and the data over the last 9 years has shown it (which is the amount of data that I have access to at this time).
If you use the concept that you have to lose money to make money, and the Lodge has had members as “ambassadors” for those past 9 years (and longer), then one would of have seen that over time the golf course loses money, but eventually generates a profit from its overall Lodge operations. However, if you look at the last 9 years, the golf course and the entire Lodge operations lost money. During that time there were golf members, and those golf members would have been ambassadors of the Lodge. That would suggest the “golf members being ambassadors” logic didn’t have a positive outcome….unless one has to lose money for more 9 years to see the ambassador model be beneficial.
Yes, one wants ambassadors, and overall supporters of an organization. I am not arguing that. However, there are multiple ways to have ambassadors. The golf membership isn’t the only way, and the data indicates it wasn’t working. So no, I don’t know if this is a mistake, but I do know the status quo, the current duo-strategy of being a country club and a resort / public / green-fee golf course, wasn’t working.
“I don’t doubt it might be a mistake; time will tell.” is a response that makes me feel you are not sure of your decision. Making this type of decision should be thought of well (which I am sure you have). This type of comment makes me think you are unsure of your decision. Did you keep track of how many people that stayed in the lodge ended up golfing? It would be interesting to see this.
I have been playing this course since I was a kid (actually played my first round here). I am getting close to retirement age and have been looking forward to having this as my new home course as a member. 🙁
It is a shame you cannot find a way to make both. What were you charging for 2019 memberships? 41 members seems like a lot, considering where this course is located.
I also extremely disagree with your statement below “The resources, training, and mindset required to have a solid country club, including golf course maintenance staff, pro shop, equipment, tend to be much more robust than a resort / public / green-fee based golf course.” unless of course you mean you don’t have to be as good to be a resort because people are on vacation and don’t care as much? Please elaborate on why resort staffing doesn’t have to be as good/robust? My personal experience is the staffing at resort clubs of northern lower Michigan by far outshine those at country clubs.
You have stated in numbers in different posts that memberships account for ~2% of the income and that the course accounts for 6~8% of the total income for KML. That to me is a pretty high % with 25-33% of the course income coming from memberships.
I wish KML all the best of luck in the future.
Why is a membership based golf course and a destination resort mutually exclusive? Is there a difference in level of service or a change in daily operations that make membership an inconvenience to the lodge?
Mac, interesting questions. The resources, training, and mindset required to have a solid country club, including golf course maintenance staff, pro shop, equipment, tend to be much more robust than a resort / public / green-fee based golf course. This would include the level of service required, as exhibited by the expectations of the members of a country club setting as compared to golfers in a resort / public / green-fee based golf course.
As a quasi “local” (Hancock born but a long time resident of Indiana), who has spent the past 21 summers at our place in Eagle Harbor, I’d like to offer a few comments.
First, I’d like to wish you all the best in the future of KML. I can remember another era when it was the pride of the Keweenaw – Dinner/Brunch reservations were de rigueur with packed houses (of dressed up people-but that era has passed!).
In evaluating golf course profitability, I wonder if you consider ancillary revenues generated by regular golf members over a season, e.g. apres golf high margin beverages plus food, in my experience typically $15-20+ each time.
I have actually always considered the annual membership and cart fees to be a great bargain, but perhaps as a loss leader. The 40-50 total plays my wife and I have worked out to approximately $10 each (whether 9 or 18 holes). Although again, we would always spend more after golf on food and drinks than we would have without the attraction of a unique course. Typical muni and privately owned courses in northern Indiana charge Seniors between $20-30 to ride 18.
Although conditions this past summer were far from ideal, the periods of lack of grass enabled this old man the opportunity to reach greens in reg that I thought were long gone – maybe inducing self-delusion!
Re. the resort motif – I have stayed at a multitude of resorts throughout the U>S> and Europe and the vast majority appear to be multi-faceted to appeal to different interests of guests with spas, pools, dining options, golf, local attractions, on-site meeting facilities etc. Perhaps a wilderness adventure motif will succeed but maintaining a high revenue stream may be interesting.
Again best wishes in your endeavors.
Joe, thank you for your response.
I am glad you and your wife were able to enjoy the golf course this season, enjoy the golf course as it once was (prior to the irrigation system being installed 25+ years ago; resembling a Scottish-style golf course), and that you felt the annual membership has been of value.
Yes, $10 is a good value for nine holes. That would equate to $20 for 18 holes per golfer when paying greens. The analysis of our round data indicates that it cost members $12-15 per nine holes (membership fees and the number of members rounds this season).
In a post I made earlier in June, I mentioned data indicating that any golf course that is charging less than $40 per 18 holes has a high probability of not being financially viable — thus, has a high risk of being shut down because of the lack of revenue covering operating expenses. As an example, the Lodge could not even pay back their debt service the past 10 years, and had to call upon the tax payer’s general fund each year to cover normal operating expenses. The golf course operations was part of that reason, as revenue didn’t come close to covering the expenses (based upon the governmental accounting done prior to private ownership last year).
Of note: This season, golf course expenditures are 10-15% of the Lodge revenue. We are still working through the expenses as the golf course operations are still going (operations will be shutting down soon, with the snow flying this weekend). So that figure isn’t locked down yet, and could go up or down. In any event, overall golf revenue is between 6-8% of the Lodge revenue.
Good point about the ancillary revenue. Yes, we have considered the ancillary revenues from members. What we can tell from the data that we have, members contributed on average $100-120 in additional food and beverage revenue per day. That equates to between 1-2% of the overall revenue of the Lodge this season. However, one would also want to look at the direct costs involved for that F&B revenue from members; one would then need to consider the food and drink costs (30-40% COGS on good days, including drinks; yes, the drinks were 30-40% COGS when they should be 18-25% — something I am looking into) and labor costs (another 30-40%).
I want to remind everyone, that people can still play golf at the golf course in 2020. This is not about making the golf course exclusive to any single group of golfers. Anyone can come to the golf course in 2020, pay the green fees, and play. This is standard practice at a majority of the golf courses around the country.
Again, thank you for the response and the best wishes.
As Joe Ruppe noted above, I wish you all the best in the future of KML. John, we WANT you to be successful and bring KML back to those glory days. The KML is your investment and like you said earlier, you didn’t buy it to lose money.
Unfortunately, the tone of those responding to your blog is not positive; I really feel there is a perception problem. I would be surprised if you have not previously discussed with your business students the concept that “perception is reality” in business management, operations, customer service, and media exposure. That needs to be fixed if you are to be successful in your new “resort” vs. “country club” business model. (BTW, I’ve been playing golf at KML for close to 50 years and NEVER have I heard KML referred to as a “country club”).
I think you may have taken a little bite out of the negative feedback by sharing the metrics you have gathered about KML since your takeover; I believe you have gathered some facts that were never measured before. Good for you. I’m still not sure how the resort vs country club models differ so maybe you can shed more light on that subject. Earlier you mentioned a difference in resort vs CC to Mac’s enquiry but I saw that response as being more “loose” in operations and management with the resort model; correct me if I’m wrong. I, as well as others I associate with at KML, think you need more controls.
Here are a few more comments and questions:
1. We all think Bill Alband, Tom, Karl, and Jake did a tremendous job of maintaining the golf course based on the resources they had available and the maintenance problems you previously discussed. No one knows the course better than Bill and his crew of Tom, Jake, and Karl are always busy, very professional, and very customer-service centric. I sure hope you have them all in your future plans for course development and maintenance.
2. Kudos also for Taylor. Taylor started in the bar and found his way to the Pro Shop where he took excellent care of us golfers, as well as, KML guests I’m sure.
3. Like Joe, I had the opportunity to play golf at RESORTS throughout the world during my business career. Although not the rule but the exception, many resorts provide an “incentive” to local residents who desire to use the resort facilities on a weekly basis. I’m not sure why that wouldn’t work at KML if a reasonable package was put together for the residents consideration. Why not develop your resort model and rebrand your investment on THE KEWEENAW RESORT & GOLF CLUB?!?
Question: You earlier said that you researched “the resort courses around the country that we consider our peers”. Would you please expand on that research and identify “our peers”?
Question: You stated ~2% of the 2019 revenue was generated by memberships. How does our member driven revenue compare to “guest-generated golf revenue”?
Question: Are you eliminating men’s, women’s, and senior golf leagues in 2020?
I don’t think there’s a magic solution to what you are attempting to accomplish so keep on collecting the numbers and trying to find the sweet spot. I’m sure there is a logical solution to allow the residents of Keweenaw to INVEST and help you make the resort grand again….just not sure what……maybe the KEWEENAW RESORT & GOLF CLUB.
Thanks for letting me rant!
Jim, thank you for your response, and pointing out individuals that did a good job this year at the golf course.
Yes, Bill, Jake, Karl, and Tom did a wonderful job this year. And I believe they enjoyed working in the current environment of the Lodge.
Yes, Taylor did a wonderful job when he was with us during the summer. He understand how to treat people. However, Taylor left in early-to-mid August shortly after a golf member yelled at him; treating him in a disrespectful manner. The golf member treated him with disrespect when he was standing up for the Women’s Golf League times on Tuesdays, 10am-12pm.
The Women’s Golf League had been playing each Tuesday since mid-to-late June. However, this golf member, in late-to-mide August missed that announcement, and felt slighted that he couldn’t play at a time he wanted with his two “guests”. He took his anger inside the Lodge as well, trying to get his way, rather than wait 45-60 minutes.
The Women’s Golf League was not for an entire day each Tuesday, or even an entire morning; just from 10am – 12pm. However, this golf member felt entitled he and his “guests” (paying green fees) should be able to play anytime he wants to — even during the Women’s Golf League time period. Again, another data point to indicate that we shouldn’t be doing both memberships and green fees, and that we should focus on one or the other.
We will most likely not be organizing the golf leagues next year. However, this is not stopping anyone else from organizing the Men’s and Women’s Golf League. It just won’t be by Lodge staff. And as you know, we did not organize the Senior Golf League this year. The Senior Golf League was a case where people had their tee times, and they played. Some individuals were members, and some individuals were not. Those individuals that were not members paid a green fee when they played. It was wonderful to see the Senior Golf League golfers playing on Mondays and Fridays. That can still be done next year; nothing is stopping that from happening. People need to remember, this decision of no membership doesn’t hinder people from playing golf at the Lodge (or organizing leagues that play at the Lodge golf course). This decision provides ALL golfers with access to the golf course, via one payment method (green fees), at a price that is reasonable based upon the value.
Non-member golfers contributed ~4-6% of the Lodge revenue this year, as compared to the ~2% of the Lodge revenue this year. The overall golf-related revenue was around 6-8% of the Lodge revenue this year.
Sorry to hear about Taylor. He was doing a great job. We were told he had back problems. I and another friend also had problems with the Tuesday Schedule for Ladies League. That was the only time either of us had for golf that week. Looking at the numbers, you have earlier reported 10 women playing league golf. Assuming four-sums that’s not more than 3 holes out of nine active. You had six holes available to make a happy customer (member) with no interference from other golfers. You chose to be rigid and got an opposite result. The member has no excuse for being so out of control that Taylor would quit. But, like I said, we were told by staff it was a back problem. Bottom line as far as I see it is your rules are too rigid. You need to allow your staff to make independent decisions based on the situation at the moment. I find they will more often than not make a good decision and will leave you with a happy customer rather than a melt down. This is not the only incident in which staff have been stuck in the middle of a request by a customer that is rejected because of enforcement of new inflexible rules over items that could have been delivered. Employees are very uncomfortable when forced into that squeeze situation and will often leave for that reason also.
Harvey,
Taylor had every ability, just like all the other employees at the Lodge, to make the decisions based upon the Lodge’s values and having valued customers. And he did it in this case, and I backed him up on it in this case. However, Taylor relented after being yelled at by the golf member and that golf member going to other staff members in the Lodge to tell them that Taylor was making a “bad” decision. Taylor and I talked about it afterwards and he was shaken up because of the way the golf member acted, not because of the policy (this golf member also shook up more staff members in the Lodge). Taylor had no problem with the decision, as he also respected and understood why we there were two hours to be only for women playing golf. He had worked at golf courses that also supported such a policy. He did have a problem with how this golf member acted disrespectful to him.
In the end, the goal in this case was to be respectful and consistent in our decisions to make sure that women felt respected in this case.
Each employee at the Lodge has the ability to make decisions based upon our values for valued customers — it has everything to do with being consistent and respectful.
We respected the Women’s Golf League time, just like we respected the Men’s Golf League time on Wednesday, this past season. The golf course was to be for women to play during that time, 10am – 12pm each Tuesday, so they would not be pressured by men. Women could come anytime between 10am and 12pm to play and not have to worry about men pushing them around. That was the policy, and that is what all the employees knew. Thus, we could be consistent in respecting BOTH men and women golfers.
It is interesting that golf members like yourself feel that they could play during the 2 hours each week that is slated for the Women’s Golf League. And then use the argument that this is about keeping a male customer happy. When someone outside of the Men’s Golf League wanted to play at 5pm on Wednesday, be it a woman or man, we didn’t allow them on the golf course until 7pm — even though there was space on the golf course. That is being consistent in the logic to ensure people understand we respect the slated time for each league.
If we did not have Women’s Golf League, or Men’s Golf League, or golf members, we would not have had such a situation. Rather that golf member, and yourself, could have paid your green fee and then played at your registered tee time on Tuesday mornings between 10am and 12pm. Thus, another reason to support that we aren’t good at the golf membership model, and why we will be focusing on allowing the golf course to be open for play during the 2020 season for anyone that pays a green fee.