Struggling travel industry sees better times ahead

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Balance sheets may be out of balance and financial statements may be blunt. But golf travel daydreams dont operate on a budget ' a fact that has the industry feeling cautiously optimistic.
 
Yes, travel to top golf destinations has soured a bit since the economy went bad last fall. For competitive reasons, hotel and tour operators wont share their depressed occupancy numbers. But those who work in this usually profitable sector believe their downturn has bottomed out, and theyre already seeing signs of recovery. The clarity of the evidence depends on where the business is coming from: corporate or individual.
 
pinehurst no 2 hole 5
Par-4 5th at Pinehurst No. 2
The biggest effect, just as with everybody else, has been the corporate sector, said Janeen Driscoll, communications manager for Pinehurst Resort, the North Carolina golf institution which has hosted several U.S. Open championships, most recently in 2005. We used to have about 60 percent of our business come from corporate bookings and 40 percent from social. Now, just as it was after 9/11, its flip-flopped. Corporate is about 40 percent.
 
In some cases, whole departments of companies that used to book with us are gone. And of course, theres the AIG Effect.
 
The well-known publicity barrage endured by insurance giant AIG, which proceeded with high-end corporate entertainment ' which included golf outings ' just after receiving federal bailout money, has scared other business entertainment planners into finding a way to do what they feel they must while not being seen doing it. So feverish is their anxiety, Driscoll said, that some groups have asked Pinehurst to arrange for hotels other than Pinehursts marquee Carolina. The groups dont want the word Pinehurst to appear on their bills.
 
While it's a shame to miss out on one of the grandest hotels in golf, Driscoll is glad for any business that comes through the door now, even if it doesnt cross the classiest threshold. Rather than let a piece of business go entirely, Pinehurst has even let some entertainment clients with multi-year contracts to skip a year if necessary.
 
Weve always tried to maintain strong relationships, Driscoll said. If they cant book this year, we work with them. We help them downsize their meetings, if necessary, to accommodate fewer people or reduce the expense. Maybe they dont want to play golf, so well arrange something like a putting contest, for example. At least theyre still interacting with the property.
 
On the social side, where the couples, family and golf-buddy trips come in, there are bookings, but theyre coming less enthusiastically than usual. Fall bookings were usually set by spring, Driscoll said, but now theres seldom a booking for more than 90 days out. That makes business hard to forecast. Pinehurst has tried to respond by being aggressive and flexible in its pricing, as Driscoll put it. We were the first to make our main golf package an unlimited golf package, she said, and about a hundred other places followed immediately.
 
Meanwhile, some good news is starting to trickle in, if not quite flow. Pinehurst saw a significant uptick in social bookings after Easter. Resort management is convinced they have hit bottom, and they look to a brighter future. All the corporate groups who have had to cut back have done so, said Driscoll, and social bookings are picking up nicely.
 
And the resorts pull on customers within 500 miles is robust, Driscoll said, with evidence that east coasters are choosing close-by options rather than going to Pebble Beach or some place far away. Of course, that works on both coasts. Pebble may well be attracting those who prefer to drive rather than fly, at least this year. (Pebble Beach officials declined to be interviewed for this story.)
 
One way to work around the problems with corporate business is to do without it. Thats the approach at Bandon Dunes, the four-course coastal Oregon resort.
 
pacific dunes hole 11
Bandon Dunes Resort has hosted several important amateur tournaments including the 2006 Curtis Cup.
Its going OK, said Josh Lesnik, president of KemperSports, which runs Bandon. We dont really talk about our numbers, but were in a little bit of a fortunate position in that were not a heavy business-corporate destination. Were a golf-guys-trip kind of destination, the group of eight or 12 buddies. That side of the business, were hearing, is holding up pretty well throughout the industry.
 
Bandon prides itself on a reputation for top-quality rustic golf in a comfortable natural setting, without the usual trappings of more manicured resorts that push their spa and restaurants as much as their fairways and greens. What you wont see at Bandon, said Lesnik, is the line of 40 carts in the morning, with guys on cell phones standing around waiting to go out. The formula has had some appeal.
 
Weve seen an uptick in the past month or so, Lesnik said. For as bad as the unemployment numbers are getting, a lot of people still do have their jobs. The ones who dont rely on huge bonuses, who work mostly for salary, still have confidence that they can go out and spend money.
 
Still, Lesnik hears stories of cut-down trips, mostly involving people whose gut tells them this is not a good time to be away from the office. That fear is also crimping plans for that big overseas trip, be it a once-in-a-lifetime dream itinerary or a high-income group extravaganza.
 
If someone doesnt have the confidence that theyre going to have a job to come back to, you could give them the trip, and theyre not going to take it, said Gordon Dalgleish, founding director of PerryGolf, which arranges custom golf trips to Scotland and at least 11 other countries.
 
And the eight-guy group, even if theyre all big earners and spenders, has less economic armor than it used to.
 
If you can find a group of eight guys who are used to traveling together for golf, and not one of them has been affected by the economy, thats rare, said Dalgleish. And going deeper, guys say, Well, if Billy and Bobby cant go, were not going either. So theyll take a trip to Myrtle instead.
 
The guy whose portfolio used to be worth $10 million, he woke up one day and it was worth five. Hes still rich, but his mindset has changed. He doesnt know if that five is going to three or eight. So he takes maybe two trips a year instead of four.
 
Even with that competitive pressure, Dalgleish is beginning to hear of some easing.
 
Now it seems to be opening up again; people think the world isnt going to end, he said.
 
Still, challenges remain. But a challenge for Dalgleish and his peers may be an opportunity for their customers. Currency fluctuations can hammer the bottom line, but theyre just a part of the business for international tour arrangers. The pound, for example, has dipped from $2 to about $1.50. (Perry protects its customers against a trip price rising because of ballooning currency values between the time of deposit payment and departure date. But consumers cant come back and get the price slashed if their home currency happens to get stronger instead of weaker against overseas money.)
 
With the dollar bulking up against the pound, the savings for consumers may be the travel equivalent of foreclosure deals on homes: Its a turbulent time, but bargains are there for the careful, courageous shopper.
 
On that note, Dalgleish lays an extra caveat on the careful, advising prospective golf traveler to keep an eye on who they book with. If a price from an arranger or tour bundler seems too good to be true, it probably is; and if that company vanishes before the departure date or in mid-trip, any deposits could be lost. One red flag would be if a tour company refused to take American Express, said Dalgleish. The credit card end of that company reviews financial statements of its partners to get a deeper understanding of any losses Amex might be insuring against. Many credit card servicing companies and the banks who underwrite the expenditures offer make-good promises for a vendors misbehavior or financial ruin. But Amex is one that checks into the companies before agreeing to take that risk, Dalgleish said. That doesnt mean that a company that refuses Amex is trouble, he was quick to point out. But such a refusal might cue a little more investigation.
 
The high-end golf travel sector, while never completely bulletproof, has endured downturns strongly, bouncing back quicker than other parts of the golf economy. How does the current set of economic disasters stack up against 9/11, the last great crisis to batter the industry? This downturn feels ' and looks ' deeper, say the people in the trenches.
 
September 11 was a definable event, said Dalgleish. Not to minimize in any way the immense human tragedy. But economically, every day after 9/11 from a travel industry perspective was a better day. We were further away from what happened, and we could see some certainty.
 
Now, things are less clear. Is General Motors going bankrupt? Will the unemployment numbers be bad next time? Will another Bernie Madoff appear? Yes, 2002 was a bad travel year. But if we get out of this year at 50 percent, Ill be delighted.
 
And its likely that high-end golf travelers would be just as delighted to knock the dust off their luggage and tee it up somewhere else ' where daydreams come true.