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Saturday, Feb. 4, 2006

Golf driving resorts' profitability

A top-level course can extend seasonal appeal, experts say

Tuesday, March 9, 2004
Special to The Globe and Mail

World-class golf courses have sprouted at both summer and winter resorts across Canada in recent years, bringing a huge payoff for developers and owners.

Not only do the courses bring in new revenue on their own, they can also lure in more guests, allow for increases in room rates, and provide additional income from a variety of revenue streams, ranging from restaurants to sales of time-share real estate.

While supply has risen to extremes in U.S. destinations such as Myrtle Beach, S.C., which has more than 100 courses, even more modest Canadian resort areas have seen a boom in new golf courses during the past five to 10 years.

Whistler in the mountains of British Columbia, for example, now has four. Muskoka in Ontario's cottage country has nine, Prince Edward Island has about 20 and even Niagara Falls has four major ones with two more on the way.

Those figures do not include nine-hole or lower-rated links, says Joel Rosen, chairman of Horwath Horizon Consultants in Toronto.

Canadian resorts have come to appreciate the benefits of golf courses later than their U.S. counterparts.

For those with the foresight -- and space -- to add big-name-designed links, the benefits have been considerable. Golf can turn a one-season destination into a year-round attraction. Equally important, a top-level course is a powerful lure for lucrative corporate business.

"A resort of any size needs two elements today: A golf course and a spa," says Mr. Rosen, whose company is recognized as a top consultant in the leisure and business travel industry.

"A first-class course can expand a resort into both the business and leisure market. They feed off each other. Any place once limited to winter activity like Whistler or summer business like Muskoka has to find ways to extend its seasonal appeal."

The economics demand it, says Jeff Stipec, president of Intrawest Golf, a Scottsdale, Ariz.-based subsidiary of Vancouver's Intrawest Corp. His company owns 15 courses in North America and manages 17 others. Seven are in Canada with one under construction in the Blue Mountain ski area near Collingwood north of Toronto. They include Greywolf at Panorama, two Swan-e-set courses at Pitt Meadows, and the Whistler courses, all in British Columbia; Le Géante and Le Diable at Mont Tremblant, Que.; and Monterra at Collingwood, Ont.

"In resort destinations, if you get a 10-per-cent return on a stand-alone course, you are probably doing well," he says. "If the course is part of a resort, you can bump that into the 20-per-cent to 25-per-cent range."

When a resort adds golf, it creates synergies. The resort can bump up room rates because it offers a top-level course. The course attracts both business and leisure traffic, a combination that reduces vacancy rates. "A great golf course or, better yet, a number of courses can turn a resort into a real travel destination," Mr. Rosen says.

If the course is added to an established tourist and business conference destination, so much the better, especially if that area enjoys a climate that extends the golf season.

One week of extra play at the beginning and end of the golf season translates into significantly higher returns, says John Sorokolit, president of Consulate Development Corp. of Mississauga.

His family-owned company is spending $160-million to turn 776 acres of land west of the Queen Elizabeth Way in Niagara Falls into a two-course, time-share and hotel community.

"Time-share has gone through the roof. It is now a $30-billion-[U.S.]-a-year industry worldwide. Golf is a necessity for a successful new project," he says. "Niagara is also an underdeveloped destination. Besides, it has a climate that gives you a longer playing season -- an extra week in April and an extra week in October."

Consulate's new project also supports the theory that as far as golf goes, more is decidedly better.

Consulate's two courses -- one designed by Rees Jones, son of legendary course designer Robert Trent Jones, and one by golfer Greg Norman -- are within a few minutes drive of the Niagara Parks Commission's new 54-hole Legends of Niagara course.

They are also just half an hour from the Parks Commission's original 18-hole course overlooking the Niagara River's whirlpool and rapids.

"Niagara is becoming a golf destination," he says. "It offers easy access to a huge U.S. market as well."

The Parks Commission's Legends property, which opened in 2002, is proof of the lure Canadian courses have for U.S. golfers, he adds. More than 50 per cent of its business comes from U.S. players.

Courses at resorts feed on each other, says Bruce Simmonds, president of ClubLink Corp. of Toronto, which has 34 courses in Ontario and Quebec.

"If people are at a resort for three or four days, they want to play three or four different courses," he says.

That philosophy has led ClubLink to create clusters of courses in resort areas. In Muskoka, for example, ClubLink now has the Lake Joseph Club in Port Carling, Rocky Crest in Mactier, Grandview in Huntsville and Sherwood Inn across the lake from the Lake Joseph Club. It owns both the resort and course but farms out resort management to Delta Hotels Ltd.

The boom in resort-based courses has also brought about major changes in course design, he says.

"In the past 10 years, all these new resort courses in Canada have not only been of top quality, but they have been designed to reflect the specific topography of the resort area.

"The rocks of Muskoka would have been an impediment a decade ago; today they give the courses their distinctive feel and character. Taboo at Muskoka Sands is an example; it celebrates the rock."

Resort courses have become all about collecting memories, adds Murray Blair, corporate director of golf for Fairmont Hotels & Resorts Inc., based at the chain's Chateau Whistler property in B.C.

Fairmont has six resort courses in Canada, including Chateau Whistler, Banff Springs, Jasper Park Lodge, Château Montebello, Manoir Richelieu at Pont au Pic, Que., and St. Andrews in New Brunswick.

"People who golf are after two things: the play and the experience. They collect memories of the courses they play. If a resort doesn't have one, it can find itself losing a tremendous amount of business."

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