Yukyeong Choi Senior Researcher at Yanolja Research / [email protected]
In a report published last year by Yanolja Research titled “COVID-19, the Surge in the Golf Industry, and the Post-Endemic Outlook”, the golf industry was highlighted as one that thrived during the COVID-19 pandemic. According to the report, the number of golf course users increased by approximately 10% annually during the pandemic. In 2021, the number of annual users surpassed 50 million, setting a new record. This growth was driven by the influx of women and younger people into the sport. Additionally, golf emerged as a substitute for overseas travel, with the industry absorbing some of the demand for international trips. However, as the world transitions to an endemic phase, with international travel and overseas golf now possible, domestic golf demand is expected to gradually decrease. Indeed, in the first half of 2023, golf-related spending in South Korea decreased compared to the same period the previous year.
For the first time in 2023, domestic golf demand showed a decline. According to data from the Korea Golf Course Management Association, the number of golf course users in the country had either steadily increased or remained stable since 2005. However, in 2023, the total number of golf course users nationwide was 47.72 million, representing a 5.7% decrease compared to 2022. The number of users per hole also decreased by 7.9%, from 5,006 in 2022 to 4,610 in 2023. Meanwhile, the number of golf courses increased, with 522 courses in 2023, up by eight from the previous year. This indicates that while supply continues to rise, demand is actually declining.
Nationwide Golf Course Usage Status
The region with the most significant decrease in demand was Jeju. In 2023, the number of golf course users in Jeju was 2.39 million, a 15% decrease compared to the previous year. Other regions also saw declines. On a per-hole basis, the number of users decreased by 13.1% in Jeonnam, 10.9% in both Gangwon and Chungbuk, and slightly less in Gyeonggi (-5.7%), Gyeongbuk (-5.8%), and Gyeongnam (-3.1%), which are regions near Seoul, Daegu, and Busan.
Status of Golf Course Users by Region
It seems that some golfers who were confined to domestic play during the pandemic have begun traveling abroad. According to the Consumer Insight “Weekly Travel Behavior and Plans Survey,” 20.7% of those who traveled domestically for leisure or sports in 2021 played golf. However, this figure decreased to 17.6% in 2022 and further to 16% in 2023, showing a downward trend from 2021. In contrast, a different pattern emerged among those who traveled overseas. In 2021, 34.9% of those who traveled abroad for leisure or sports played golf. This percentage increased by 2.7 percentage points to 37.6% in 2022, and by 4.1 percentage points to 41.7% in 2023. This indicates that while domestic golf travel demand is steadily declining post-pandemic, overseas golf travel demand is gradually increasing.
The primary reason for this shift is cost. Many domestic golfers have expressed dissatisfaction with the rising green fees during the pandemic. According to a “2024 Golf Industry Planning Survey” conducted by market research firm Embrain, 82.7% of the 3,000 adults aged 20-59 who played at least one round of golf in 2023 believed that domestic golf course fees had become more expensive in recent years. In contrast, the cost of playing golf in popular overseas destinations, such as Southeast Asia, is significantly cheaper than in South Korea. According to global golf tech company AGL, the average cost for an 18-hole round at an overseas golf course, including cart and caddie fees, is about 151,000 KRW. Considering that domestic golf rounding costs per person range from 250,000 to 300,000 KRW, playing overseas is perceived as a more reasonable option. Additionally, golfers are drawn to the idea of combining their golf trips with broader travel experiences abroad.
Furthermore, there has been a rise in the number of golfers looking to save on the recently increased golf costs. In the same survey by Embrain, 82.3% of respondents expressed their willingness to use no-caddie (self-rounding) options. This preference was particularly strong among middle-aged golfers, the main consumer group in the golf industry. While 72.9% of men in their 20s and 75.1% of men in their 30s showed an inclination for no-caddie rounds, the figure was higher among men in their 40s (83.5%) and 50s (86.6%). Women also exhibited a similar pattern, with 86.4% of those in their 40s, 85.0% of those in their 50s, 82.8% of those in their 30s, and 72.8% of those in their 20s expressing an interest. The 4050 generation likely finds no-caddie play attractive due to their extensive golf experience, allowing them to play smoothly without assistance, and the appeal of reduced costs. A similar trend was observed regarding the use of self-carts. The preference for no-caddie and self-cart options is likely to continue in the future.
The decline in domestic golf demand is only just beginning when viewed from a demographic perspective. The retirement of the Baby Boomer generation is now in full swing. The first wave of Baby Boomers, born between 1955 and 1963, has already reached the official retirement age of 60. Following them, the second wave of Baby Boomers, born between 1964 and 1974, is also gradually entering retirement. The first wave comprises approximately 7.05 million people, and the second wave around 9.54 million people, representing 13.7% and 18.6% of the total population, respectively. According to a report by the Bank of Korea, the retirement of the first wave of Baby Boomers led to a 0.33 percentage point reduction in the annual economic growth rate between 2015 and 2023 due to the shrinking labor force. The retirement of the larger second wave of Baby Boomers could have an even more significant impact. Under a scenario where the current employment rate among those in their 60s is maintained, it is estimated that the retirement of the second wave will lead to a 0.38 percentage point reduction in the annual economic growth rate from 2024 to 2034.
Population by Age Group (as of December 2023)
As the retirement of the Baby Boomers is expected to shock the Korean economy, it is also likely to have a substantial impact on the golf industry. The Baby Boomer generation has been a key customer base for the domestic golf industry, with many owning golf club memberships or regularly enjoying golf rounds. However, retirement brings significant economic changes for this group. With the disappearance of regular salaries and increased reliance on pensions or savings, their consumption patterns are likely to change. In particular, spending on high-cost leisure activities such as golf is expected to decrease.
Golf Usage Rate by Age Group
According to the 2023 Social Survey, the highest golf course usage rates were found among middle-aged groups, with 19.8% for those in their 50s and 16.9% for those in their 40s. However, usage drops to 12.1% for those in their 60s, a decrease of 7.7 percentage points from those in their 50s. Among those in their 70s, the usage rate further decreases to 6.6%, indicating a significant decline.
As golf course usage rates decrease, related industries will also be affected, with anticipated drops in demand for golf equipment, apparel, and accessories. Fortunately, the second wave of Baby Boomers is in a relatively better financial position than the first wave, with higher income and asset levels, as well as greater demand for social and cultural activities. They also show a stronger intention to continue working after retirement. Therefore, it is relatively unlikely that their golf participation rate will drop as sharply as that of the current 60-something generation over the next decade. Nevertheless, it is clear that long-term demand reduction due to demographic changes is unavoidable, and proactive measures will be necessary.
As previously mentioned, the long-term decline in golf demand due to demographic changes is approaching. Golf courses, particularly those located far from metropolitan areas and major cities, are likely to feel the impact of this demand decline more acutely. Without proper response, some golf courses may struggle to cover their high maintenance costs and may eventually close due to declining profitability. There are about ten years left until the second wave of Baby Boomers reaches retirement age. From now on, the golf industry must develop effective strategies to address the upcoming decline in demand.
Establishing an Aggressive Pricing Strategy
Golf is still perceived as an expensive sport by many. Costs include not only green fees, cart fees, and caddie fees but also the expenses of purchasing various golf equipment and gear. Existing golfers may already feel burdened by the high prices, and for new golfers, this can be even more daunting.
One of the most effective ways to increase demand is through pricing strategies. Rather than indiscriminately lowering prices, differentiated pricing policies should be introduced. For example, offering various pricing options based on weekdays and weekends, peak and off-peak seasons, and different times of the day could be effective. Significant discounts could be applied during off-peak times, such as weekday daytime or off-season, to maximize course utilization during low-demand periods. On the other hand, higher fees could be applied on weekends or during peak seasons, accompanied by special services or events to provide a valuable experience.
Collaborating with Other Businesses
Golf courses are often located far from city centers, requiring visitors to travel long distances by car. Therefore, it is essential to create incentives for visitors traveling from distant areas. For instance, partnerships with nearby accommodations could be considered. Providing lodging options for golfers traveling long distances would alleviate the burden of having to make a day trip.
Offering integrated package deals that include golf, lodging, and meals could provide greater value to visitors. Additionally, transportation convenience could be improved by offering shuttle bus services for golfers coming from distant areas or partnering with rental car services to offer discounted rates.
Linking golf courses with local tourism resources is also worth considering. Traveling to a different region for a golf outing can itself be a form of tourism. By developing packages that connect golf courses with nearby tourist attractions, cultural heritage sites, and natural scenery, the golf industry can contribute to regional economic revitalization. While golfers stay in the area, they are likely to use various local businesses such as accommodations and restaurants, positively impacting the local economy.
Offering Various Forms of Golf
Traditional 18-hole golf requires significant time and cost. To address this, offering various types of golf programs could be a viable solution. For example, the recently popularized sport of park golf could serve as a benchmark. Park golf is played with just a ball and a club. The courses are relatively short, and the physical strain is minimal. The cost of playing is also very low, around 10,000 won, and the rules are simple. Unlike traditional golf, park golf can be played in parks, making it highly accessible. For these reasons, park golf is particularly attractive to the elderly, as it allows for aerobic exercise while walking, and the risk of injury is low.
Drawing inspiration from this, offering shorter rounds of golf could be another approach. Allowing shorter rounds of 6 or 9 holes instead of the traditional 18 holes could reduce the burden on players. Especially for courses targeting seniors, it would be beneficial to create courses where players can walk rather than use carts, similar to park golf. The shortened courses would reduce both the time and financial burden. Younger golfers, who face greater financial constraints, might also favor these options.
Now is the time for the golf industry to make strategic moves to ensure its sustainability. It is necessary to establish proactive pricing strategies, pursue simultaneous marketing and collaboration with related businesses, and offer diverse golf experiences to consumers. By doing so, the appeal of golf courses can be maximized, and participation from various segments of society can be encouraged. Moreover, there is a need to position golf not just as a sport but as a comprehensive leisure activity with cultural and economic value, linked to tourism. By implementing these multifaceted efforts, the golf industry can pursue sustainability for the future.
* To reference this article please use the below citation. “Yukyeong Choi (2024), Current State and Future Challenges of the Golf Industry, Yanolja Research Insights, Vol.17.”
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