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November 2020 Industry Report

A question to ponder: Do discounts still work in a pandemic? I will use travel to Hawaii as a case study for your review. Before the pandemic hit, Hawaii was on track for another banner year of tourism with around 30,000 visitors arriving daily.

With limited medical facilities statewide, seven months ago the governor basically slammed shut tourism by requiring a 14 day quarantine for all travelers to limit COVID’s spread. The number of visitors declined 96%.

Several weeks ago, the state of Hawaii reopened for visitors by requiring a negative COVID test result within 72 hours of departure. Hotels and airlines “ramped up” for a return to business – albeit at a lower level. Southwest Airlines lowered airfares an average of 20% and resorts did likewise.

The first day the quarantine was lifted, about 9,000 travelers arrived, a huge improvement from the 188 travelers who arrived on a daily basis a month before. Now, several weeks into the new travel guidelines, Hawaii is averaging 2,000 – 3,000 travelers per day, or a decline of around 80-85% pre-pandemic arrivals.

So, do discounts still work when there is a lack of confidence? Is a brand hurt by offering a discount when it doesn’t stoke demand?

Rounds Played Continue Uptrend

Last month, rounds played jumped an incredible 26% versus a year ago (statistic courtesy of the National Golf Foundation) – resulting in about 12 million incremental rounds.

The surge of play brings year-to-date rounds up 8.7% over last year.

A couple of things to bear in mind.

All these extra rounds do not benefit everyone equally. There are several business segments, such as resort golf and international destinations, that are not enjoying a “V” recovery, and many course tee sheets are full, but banquet and general F&B revenues continues a downward trend.

Ikon Pass by Vail Resorts

The ski industry faces the same challenges as golf: aging demographics, cost of entry, time commitments, and declining avid enthusiasts (who spend the most).

Vail Resorts tackled the problem by creating Ikon Pass – that offers access to 41 ski destinations for one lump sum prepayment.

The catch? The earlier you purchase the pass, the greater the discount. So, even if the snow season is less than stellar, Vail Resorts already has “money in the bank.”

As we all evaluate our business models in the COVID/post-COVID world, I think the Ikon Pass is a program private clubs and resorts can benefit from.

For example, a private club could offer members a bundle of 10 guest fees for friends and family at a set discount price with a “hard” expiration date. This incentivizes members to bring guests to the club and usually results in additional food/merchandise income. Another benefit? The club receives a lump sum payment for the package of guest fees, helping boost cash flow during the leaner off season months.

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