1. Golf Industry in 2010 Turning the corner or just another blind dogleg? Stuart Lindsay 29 June, 2010 © 2010 Edgehill Golf Advisors

2. Macro Economics Stocks peak 3 rd Quarter of 2007 and start to tank signaling the start of Recession. Housing market collapses in tandem Huge net worth destruction on 2 fronts. Recessions always have a negative impact on both travel and recreation based on discretionary spending. Recession technically ends in 1 st quarter 2010 However, stock market has only recovered ½ of value lost in Recession Housing starts and Sales of Existing Homes continue slow, meaning no recapture of home equity values lost during recession. Consumer spending is showing signs of life, but will be conservative (NML Study, June 2010)

3. Hot off the Press Consumer Fundamentals from NSGA We had a “net” loss of 700,000 golfers in 2009. Rounds stayed steady on a “weather neutral” basis. This actually means that the average annual frequency per golfer increased !!

4. Positive Growth in the “Avid Golfer” Segment Loss of participation is in the groups of casual involvement The growth in the “committed” group is consistent with demographic trends (aging Boomers) Overall results are sideways, but that is not necessarily a bad performance.

5. 2009 Rounds

6. 2010 Rounds YTD through April

7. 2009 and so far in 2010 Not Kind to Resort Areas 2009 National - 0.6% Hawaii - 12.8% Phoenix - 1.4% Las Vegas + 3.4% Orlando - 3.1% Myrtle Beach - 5.0% Hilton Head - 1.5% 2010 (Jan – April) National - 3.0% Hawaii - 15.1% Phoenix + 2.0% Las Vegas - 4.0% Orlando - 9.9% Myrtle Beach - 1.8% Hilton Head - 6.6%

8. Has the recession ended for golf? The answer is mixed after we look at the Weather. We look at Weather in a variety of ways with a set formula of static data points (monthly, day of the week and Year to Date) If we look at Orlando through the first half of the year, they lost a lot of Playable Hours to poor weather Orlando’s 1 st four months were off 9.9% - the same amount as their rounds decline

9. Weather had a major impact to start 2010 2010 (Jan – April) Rounds Weather National - 3.0% + 4.0% Hawaii - 15.1% - 4.3% Phoenix + 2.0% - 1.7% Las Vegas - 4.0% - 2.6% Orlando - 9.9% - 9.9% Myrtle Beach - 1.8% - 8.0% Hilton Head - 6.6% - 10.7 With the exception of Hawaii and Las Vegas, the others out- performed the weather. While nationally the northern climate courses got an early break of favorable weather, warmer resort areas have mostly been hammered with very poor weather to start 2010.

10. You’ve never met a one-armed Economist On One Hand The Recession is supposedly over Resort areas have out- performed poor weather to start 2010 Consumer spending is picking up On the Other Hand The recovery is “shallow” We have only recovered a portion of the household wealth destroyed in the stock and home equity markets. Consumers appear to be taking a conservative approach to spending.

11. Golfer/Consumer Fundamentals Do Resorts all Chase the Same Consumers? Are they really the same? Bucket List Golfers 1.Affluent 2.Avid Golfers 3.Want to play as many top courses as possible 4.More likely to come from public golf ranks Comfort Golfers 1.Affluent 2.Avid Golfers 3.More likely to return to same resort every year 4.More likely to come from private course ranks

12. What both Types Have in Common Affluent, Avid and Older Golf Population and rounds played is skewing older – This is being confirmed as we see our projection of 50% of all golf being played by golfers over 55 in 2010 holding true. Golfers are becoming more concentrated in higher income levels Internet Adoption not keeping pace with other industries Internet Usage 55+ = 55.9%* Internet Usage All = 71.0%* Golf’s primary market segment is using the Internet 21.4% less than the general population *Source: Pew Research

13. You Have to Market to both Groups Customer Information is Key 1.Who are our customers? 2.Do they come back? 3.How often do they return? 4.What % of our revenues does each group represent? 5.What customer Information have we collected? (Name, Address, Phone, Email)

14. Where do my Customers Really Come From? 1.Are we National or Regional? 2.How Much Play is actually “local”? Area % Local Demand Myrtle Beach < 10% Hawaii < 10% Williamsburg < 25% Phoenix > 60% Orlando > 60% Las Vegas > 60% Sources: Pellucid Golf Local Market Analyzer, Arizona State University

15. Customer Attraction and Retention Enhance Total Guest Experience to Boost Customer Attraction and/or Loyalty Survey Results Reasons for choosing a course to play: Condition: 1.6 Price: 1.7 Pace of play: 1.8 Layout: 1.9 Availability of promo prices: 2.0 Availability of tee times: 2.0 Key satisfaction areas of client courses: Overall enjoyment: 2.1 Condition: 2.2 Customer service: 2.2 Price: 2.6 Pace of play: 2.6 Do we know who our customers are, how much they spend and whether they come back?

16. Conclusion Customer Relationship Marketing (CRM) Customer Segmentation and Targeted Marketing Golf fared better in the Recession than many other industries, but Resorts generally got hammered worse than the golf industry in general. Resorts are showing better early 2010 results than the general golf industry, especially on a weather adjusted basis. Golf in general and Resorts in particular will continue to fight over the same golfers, even though resort golfers are generally more affluent and avid. In spite of economic “recovery”, golf will continue its relatively stagnant growth pattern into the foreseeable future. Courses will have to adapt using more modern CRM principles and customer service tools that will require better staff selection and training. Management will have to provide better technical tools and better customer analytics in order to grow revenues.