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April 2020 Industry Report

As phrases of “social distancing” and “flattening the curve” have entered our lexicon, I thought you would appreciate these four facts that explain the current virus in straightforward terms. I think this is useful to share with your family and staff on why certain procedures are in place:

(1) The virus is not a living organism, but a protein molecule covered by a protective layer of fat. This outer layer of fat is eliminated by soap or detergent. By dissolving the fat layer, the protein molecule disperses and breaks down virus. That’s why hand washing for 20 seconds with warm water is so effective.

(2) Bactericide or antibiotic gel is ineffective. Why? The virus isn’t a living organism, so antibodies cannot kill what is not alive. Also, vinegar is ineffective.

(3) The virus molecules remain stable in cold air. They also need moisture and darkness. Therefore, dehumidified, dry, warm and bright environments will degrade it faster. The more confined the space, the more concentration of the virus. That’s why (and hope) the arrival of spring and warmer weather should help mitigate the virus.

(4) The virus cannot penetrate healthy skin. Washing hands often can lead to dry skin. The virus can hide in micro cracks in your skin. Consider introducing a hand moisturizer to your daily routine to keep your hands from becoming cracked and rough.

Data from past shocks to the economy

I thought in this ever-evolving macro environment, you would appreciate a perspective on golf during several shocks to the economy.  

During our 48 years of publishing Executive Golfer, we have experienced three previous major blows that immediately impacted the game: the 1972 oil crisis, 9/11, and The Great Recession.

I would like to give you an overview of what happened to golf during 9/11 and The Great Recession in the following six months aftermath. These are averages combining resort, real estate, and private club membership sales. I am concentrating on a six month time frame in the hope our country’s mitigation efforts, arrival of warmer weather, and the hope of a vaccine for next year make the dramatic events over the past 10 days – a sudden stop – that we can recover from in an equally swift manor.

Six month impact of 9/11:

– Resort revenue: down 43%.

– Real estate sales at golf communities: down 82%.

– Membership sales: down 39%.

– Impact on stock market: No more than one month had elapsed before the Dow Jones, the Nasdaq, and the S&P had regained its pre-9/11 levels.

– Summary: the shock ground almost everything to a halt for 60 days. Then as fiscal stimulus kicked-in and the hope another terrorist attack wasn’t forthcoming consumers took advantage of lower interest rates and discounts.

Six month impact of The Great Recession:

– The Great Recession was more of a rolling calamity versus a sudden shock.

– While 9/11 was a shock to confidence, The Great Recession was a financial disaster.

– Resort revenue: down 55%.

– Real estate sales at golf communities: down 90%.

– Memberships sales: down 95%.

– Impact on stock market: Over a 16 month period, the Dow fell 51%.

– Summary: The collapse of many of our financial institutions created a domino effect that took almost seven years to recover from.

What about club usage during 9/11 and The Great Recession:

– It may seem counterintuitive, but private club usage actually went UP by 2%.

– Why? Members felt their club was a safe haven and since they were paying dues, they might as well use existing amenities. For example, why go out to a movie and dinner (spending $100) when we can have an equally good meal and listen to live music at the club for $70.

Thoughts on COVID-19:

– This is such a highly volatile situation, it may have changed even as you are reading this.

– It is my belief economic statistics for the first and second quarter are going to be disastrous – equaling 9/11 and The Great Recession numbers – or worse.

– So, how do we plan?

– With (warranted) government restrictions and non-existent consumer confidence, throwing discounts to lure prospects for the next 30 days is futile.

– So, protecting your brand for the rebound is critical.

– You may disagree, but we have an even better than 50/50 chance of the virus becoming manageable in the second half of the year.

– If this is the case, government fiscal stimulus and pent up demand may result in an enormous surge in activity. While far from certain, it’s a possibility.

My advice:

– Plan. Don’t panic. Your staff is going to be looking to you for comfort and leadership.

– Economy: Our economy went into the crisis with a full head of steam. This should help in the recovery if the severe downturn has a limited timeframe.

– Employees: While a reduction in hours is likely, try to hold off from permanent layoffs. With a 50/50 chance of a recovery in the second half of the year, it will cost more to hire/train a new employee when demand warrants.

– Marketing: It’s important to keep your name in the marketplace, but be careful of your message. Make sure it’s sensitive to the news of the day. For example, I saw a Facebook post from a resort in Mexico showing a beach with the promotional headline stating: “We allow you to have social distancing.” While a play on words, many will find it self-serving and tactless.

– Take mitigation steps to show you are on top of things. For example: if you offer movement exercise classes reduce to half the size for separation. This shows you are having members stay farther apart (minimum of six feet).

– Promote takeout/delivery with a twist: While takeout limits interaction with other guests, many may question who prepared their food. So, place a small notecard in each delivery that explains staff cleanliness standards. This may sound extreme, but it shows you are on the ball.

In summary, keep communicating. Whether business-to-business or consumer, companies and brands need to keep speaking to and engaging with customers. Without this there is an information vacuum. In the medium term, as the situation develops, there is a risk of being forgotten as the golf industry and your business heads towards recovery. Typically, crisis communications focuses on three phases: (1) Ready, (2) Respond, and (3) Recover.

 

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