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After enjoying a boom over the past two decades, Korea’s love-affair with golf appears to have landed in a rough patch. Korea Times file |
Skidding golf-course revenue coupled with thriving virtual game
By Kim Tong-hyung
Millions of Koreans have taken to golf in past economic booms. So as the air escapes from the economy, so it appears does the popularity of the game, or at least the version played on grass and dirt.
The exploding popularity of golf over the past two decades, sparked by the international success of professional players such as Pak Se-ri and Choi Kyoung-ju, had triggered a golf-course building spree in the suburbs of Seoul, which now look as if the golf gods threw up on them.
However, there are signs that suggest a slew of bankruptcies among the courses are imminent. There are currently 435 golf courses operating around the country and an additional 180 are in various levels of completion, according to the Korea Golf Course Business Association (KGBA).
The newer courses seem to have picked the wrong time to leap on the bandwagon. After peaking at 18.23 million in 2009, customers at the country’s 228 private courses declined to 17.76 million last year and were measured at 7.74 million as of June this year, which means that touching the 16 million mark this year will be a challenge.
Business has been dismal. A recent report on 114 member-only courses by the Korea Leisure Industry Institute (KOLE) showed that the operating profit margins of the venues dropped 7.4 percentage points annually to 11.8 percent last year.
These same courses enjoyed an average operating margin of 27 percent just in 2002. About 33 of them reported losses last year, compared to just 13 in 2009, and the number of money losers is expected to exceed 50 by the end of the year.
Membership fees are taking a significant shaving. The privilege of playing at famous Gyeonggi Province courses like the Benest Golf Club or Namchon Country Club used to cost close to 2 billion won (about $1.8 million) just a few years ago. The dues at these courses now barely reach 700 million won.
``When combining both private and public courses, the country added 43 more courses in last year alone. However, the number of customers at the courses declined from 25.9 million in 2009 to 25.7 million in 2010. Average customer per hole, an important measure of profitability, dropped by more than 10 percent from 3,881 in 2009 to 3,468 in 2010, and has continuously declined since 2002,’’ said Kim Ju-in, an official from KGBA.
``At least twenty golf courses appear to be on sale right now and one could expect a dramatically larger number of owners bailing next year as profitability continues to deteriorate. The rapid growth number of golf courses over the years and the sharply declining membership sales continue to raise worries that the country might be headed for a similar path experienced by Japan, which saw a large number of courses topple after the golf boom fizzled,’’ he said.
Koreans have developed a passion for golf in recent years with the success of players like Pak and Choi hooking a younger generation of people to the game. Industry officials estimate that more than 2 million Koreans play golf regularly every year.
However, the sluggish economy in recent years has sent a reminder that golf remains a sport for the wealthy. It’s harder for the average Korean to blow $200,000 won-plus on a weekend round of golf when his credit-crunched wallet begins to resemble like dried fruit. The retiring of the post-war ``Baby Boom’’ generation, who have been the sport’s biggest spenders, is also a hit to the golf industry.
Virtual becomes real
Although golf courses are enduring a spanking courtesy of the invisible hand, it would be inaccurate to state the public’s love-affair with the sport is beginning to wane.
With their passion for the game greatly exceeding their ability to play for it, Koreans appear to have come up with the prefect alternative thanks to their obsession with technology.
Millions of people are now playing ``screen’’ golf, a virtual version of the sport that involves real clubs and balls, but replaces the grass and holes with simulated images projected on an indoor hitting screen.
Instead of aiming for a real hole, the player directs his shot at a picture beamed onto the screen. A set of sensors, cameras and a computer will measure the speed and direction of the ball to create an imaginary arc on the screen. Players could pick from dozens of courses, including the virtual versions of world-famous venues like Pebble Beach and St. Andrews.
Industry officials estimate there are nearly 8,000 screen golf shops in business across the country that combine to get at least 200,000 customers a day. The number of virtual players is approaching 1.5 million.
Although prices differ from shop to shop, a round of screen golf will usually cost about 15,000 won (about $13) to 20,000 won per person.
``Screen golf is an ideal marriage between golf and information technology (IT),’’ said Kim Young-chan, founder and CEO of Golfzon, a company that controls more than 80 percent of the simulators and game systems used at screen golf shops around the country.
``We are constantly trying to improve our products, such as improving the conversion of aerial images to three-dimensional (3D) information, sophisticating our computer systems and sensor, and adding high-speed cameras to the tees.’’
Golfzon, which posted nearly 200 billion won in annual sales last year, has sold nearly 20,000 golf simulators so far in Korea and is now looking to go global, with countries in North America, Southeast Asia and the Middle East picked as the immediate targets.
thkim@koreatimes.co.kr
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