2005: Business - Pinehurst expects major return on Open
Dallas-based ClubCorp owns or operates more than 100 golf courses, clubs and resorts, but its primary focus right now is on only one of these properties: Pinehurst. That’s because the venerable North Carolina retreat is playing host to this week’s U.S. Open, which brings with it a bevy of financial and marketing opportunities.
But maximizing this hosting gig requires a well-conceived plan. Though some perks, such as media exposure, are gained easily, others require far more effort to be mined.
And few understand the investment in time and money needed to reap the potential windfall: The season’s second major likely will generate about $60 million in revenues, through the sale of everything from U.S. Open-logoed merchandise to corporate entertainment. But it also will cost roughly $50 million to stage. (Unlike other U.S. Open settings, such as Winged Foot, which essentially “rent” their clubs to the U.S. Golf Association, Pinehurst is in charge of virtually all operations.)
There are other financial ramifications as well. Hosting the event requires Pinehurst to temporarily close three of its eight courses, forcing it to forfeit hundreds of thousands of dollars in revenues. For example, the U.S. Open course – Pinehurst No. 2 – closed to guest play beginning Memorial Day and will be out of commission for more than three weeks, which translates into a $350,000 loss in green fees. And Pinehurst No. 4, which is being used for corporate hospitality and television production, and doubling as a vendor compound, may be off limits to golfers for as much as a month. That hiatus likely will cost Pinehurst a similar sum.
But Pinehurst executives and other resort officials who have hosted the national championship say the event’s benefits far outweigh any drawbacks.
“We will recoup whatever losses in revenues we might incur through hosting the event with the money we get in the end from (running) the Open,” says Beth Kocher, Pinehurst’s executive vice president and chairwoman for the 2005 championship.
But such bottom-line gains are, in fact, only a portion of the ultimate payback the resort hopes to receive.
“More than anything else, we view the championship as a real investment in the future,” Kocher says. “It allows us to expose ourselves for a substantial amount of time to a very large audience that fits our resort demographic, and it builds our business for many years to come.”
R.J. Harper, senior vice president of Pebble Beach and general chairman of the 2010 U.S. Open scheduled to be held at the northern California resort, agrees.
“The key for us is the long-term, incremental business generated by having the U.S. Open brand identified with Pebble Beach,” he says. “That is the biggest, most lucrative piece of the puzzle.”
The rewards of that affiliation are measurable.
In 2000, a year after Pinehurst hosted its first U.S. Open, resort revenues increased 9 percent.
And through the first half of this year, Pinehurst’s business is 17 percent above budget, which officials attribute to the excitement and attention the Open is attracting.
Though perhaps not as significant, ClubCorp and Pinehurst officials also say staging such a prestigious event yields intangible benefits: A boost in corporate morale as employees strive to make the tournament a success.
That includes developing marketing initiatives that leverage the resort’s ties to the Open. Pinehurst has created a Championship Package: A $2,005 vacation bundle that offers a golfer three nights at the Carolina retreat, one round on No. 2 – with a caddie whose jersey displays the guest’s name – and unlimited play on the resort’s other courses.
Pinehurst’s staff also is crafting a variety of strategies to solicit spectators’ names for future marketing mailing lists, and showcase the entire resort to the thousands of tournament fans who are expected to visit the grounds each day.
Regardless of the Open initiative, the goal is to help set Pinehurst apart from the rest.