ORLANDO – At Drive Shack’s first location near Orlando International Airport, the 90 hitting bays are filled with racks of golf clubs and comfortable furniture, just waiting for guests to arrive and start beating balls and pounding wings and beer.
In The Fairways event space on the first floor, tables and a bar are set up for groups of as many as 150 people during what is expected to be a busy opening two months.
Meanwhile, some 470 employees have been hired and are in the midst of final training before guests begin arriving, which is only days away.
By the end of March, the public will get the chance to see the country’s first Drive Shack, which has substantial financing and hopes of competing directly with Topgolf.
In golf circles, Drive Shack is better known by its former name: American Golf. The company operates 75 golf courses, 51 of which are in California. It owns 26 of those courses and leases or manages the remaining 49.
Sara Yakin, Drive Shack’s chief operating officer, said the company has been “right-sizing” that portfolio and will continue to do so. A presentation released this month noted plans to restructure or terminate about 15 leases, and the company has sold money-losing courses.
The operation of traditional golf courses will remain the biggest part of the company’s business for the foreseeable future, but Drive Shack clearly sees the biggest upside in creating golf entertainment venues.
“We have the luxury of being able to be on both sides of the business in a meaningful way,” Sarah Watterson, the company’s CEO and president, said during a recent visit to the Orlando location. “On the traditional golf side, we found that the place where we have the greatest amount of success and the longest tenure in terms of experience and expertise is on our municipal leases, on our long-term management contracts, especially in great markets.”
But she’s cognizant of the same problems affecting other course operators: declining participation, particularly among millennials, and what she sees as “barriers to entry” because consumers might view golf as intimidating or too expensive.
“There are between 14,000 and 15,000 18-hole equivalent courses, and there doesn’t need to be that many in the U.S.,” Watterson said. “I think everyone knows that.”
While Topgolf has a big head start in creating golf entertainment venues, Drive Shack has plenty of capital to make headway in the market. Drive Shack announced plans to redeploy as much as $300 million, including $140 million in cash on hand, to build entertainment venues. It has been stockpiling cash for this purpose.
Drive Shack wants to develop five to 10 locations annually. It has announced plans to open locations in Palm Beach, Fla., Richmond, Va., Raleigh, N.C., and most recently, New Orleans and Marietta, Ga. It has dropped plans, for now, to develop a Phoenix site opposite a Topgolf location.
The company has said that each venue will cost around $25 million but indicated that the Orlando location was more expensive to develop because it is the first location.
Inevitably, there will be comparisons between Topgolf and Drive Shack. Watterson argues they’re simply two competitors in a much bigger, untapped market.
“There’s Dave & Buster’s and there’s Main Event. There’s Lowe’s and Home Depot,” Watterson said. “There’s room for more than one peer in the market, and we view ourselves as kind of in the overall ‘eatertainment’ market, not just golf entertainment.”
The Orlando site is located southeast of the Orlando airport, just off the FL-417 toll road in Lake Nona, a developing business and residential area. It’s easy to access but not yet a high-density community.
Visitors will note Drive Shack’s similarities to Topgolf. The range is three stories, and each bay has three monitors, two for guests to watch TV and one dedicated to the games. The company has created five games. They include DS Classic, in which players rack up points by hitting targets; Shackjack, which is the company’s play on blackjack; S-H-A-C-K, similar to a game of HORSE; Monster Hunt, in which players attempt to knock out virtual monsters on the range; and Pro Practice, which provides swing data.
Players can use Drive Shack-branded clubs made by TaylorMade, upgrade to current TaylorMade equipment or bring their own clubs. The cost to rent a hitting bay will range from $30 to $50, depending on the time of day, Yakin said.
As Topgolf has shown, food and beverage might be even more important in this format than golf. Drive Shack has bars on each level and an extensive menu posted on its website (driveshack.com). Chuck Beyer, the general manager, said the plan is to provide live music on the third level four nights a week.
Group sales are expected to be a large portion of the business. Amy Phillips, senior vice president of marketing, said The Fairways event space is almost sold out for April and May.
Beyer said the company’s service mantra is: AOBFF, or Always Open Bright Forward and Fun. He estimated at least 85 percent of his hires have hospitality experience. As part of final preparations, the staff has gone through role-playing exercises.
“They’ll compete and go head to head with each other,” Beyer said. “That’s when you really test them.”
Then it’s time to throw open the doors and welcome in the public. Gwk