The Pellucid Perspective - August 2019 - 17

Demand equilibrium and how the picture has changed from
'00-'17 based on rounds demand change vs. supply change,
you can see in the table above that Supply expanded 18% over
that period, well above the national average of 11% (a Compound Annual Change Rate (CACR) of roughly 0.6%). On
the facility-reported rounds demand side of the equilibrium
equation, Phoenix follows the national trend of slight annual
decline over the '00-'17 period of 9% which mirrors the national average (a CACR of roughly -0.4%). The combination
of modest supply growth and modest demand decline produces a cumulative dilution of supply of 27% net which is meaningfully over-supplied vs. the national benchmark of -17%.
The average EHE has throughput of roughly 38K rds/yr
which handily beats the national average before factoring in
climate and daylight influences. The more accurate measure
is the market's 52% Utilization Rate which validates the market's over-performance by beating the national average (42%).
This means that, after neutralizing the weather impact of very
favorable annual weather conditions, the market's average golf
"factory" runs at a noticeably higher throughput vs. the average US course.
In summary, strong population growth, above average Play
Rate (local population rounds per capita per year) and above

average Utilization contribute to Phoenix's Top 10 standing.
On the flip side, supply dilution is still a challenge for the
market and the "workout rate" currently is negative (i.e. continued modest supply growth paired with modest rounds decline) so there's no visibility to when equilibrium (2000 level)
could be achieved until either supply contraction or rounds accelerate. The wild card for Phoenix is the annual tourism rate
and the share of those tourists who bring their clubs or rent to
partake in the beautiful green & wasteland golf settings. As
with most markets currently in the US, it's likely a "keep your
head above water" proposition for the majority of existing operators and those entering it as buyers need to either strike an
extremely discounted deal or have a marketing plan that will
bring tears to your eyes. Our assessment, for better or worse,
is that Phoenix isn't going anywhere in the next several years;
neither significantly up (unfavorable sentiment) nor away (favorable sentiment).
If you'd like to order the full scorecard with over 50 measures for each market and the composite ranking scores, you
can do so at Pellucid's website by clicking here. You can also
get facility draw area-based analysis quickly and affordably by
ordering the GLMA Market Workbook; click here for more
information.
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The Pellucid PersPecTive

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The Pellucid Perspective - August 2019

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