[Chatham House Roundtable] 'Can't Golf Course Fees Be Lowered?'..."Sufficient Supply and Choice System Are the Answers"

Restoring Demand and Supply Balance Post-COVID
Expand Optional Services like No-Caddy, Increase Public Golf Courses
Government Efforts Needed: Introduce Leisure Cards and Policy Support

It is "abnormal." This refers to the usage fees of domestic golf courses. Although the COVID-19 pandemic has ended, booking a tee time is still not easy. Green fees, caddie fees, and cart fees are soaring. On the 10th, Asia Economy held a "Chatham House Roundtable" at the Asia Media Tower in Jung-gu, Seoul, under the theme "Can golf course usage fees be lowered?" The Chatham House is a nickname for the Royal Institute of International Affairs (RIIA), a top-tier research institution in the field of diplomacy and security in the UK. The roundtable included Seo Cheon-beom, director of the Korea Leisure Industry Research Institute; Ok Kwang, professor of Physical Education at Chungbuk National University; Choi Bo-geun, director of the Sports Bureau at the Ministry of Culture, Sports and Tourism; and Han Sang-seok, standing auditor of The K Sophia Green CC (in alphabetical order).

The participants expressed concern over the high usage fees at domestic golf courses. They predicted that dissatisfaction among the 5.69 million golfers could grow. "Due to excess demand caused by COVID-19, green fees have skyrocketed. Along with that, caddie fees and cart fees have increased, burdening golfers. Even after the COVID-19 situation has ended, golf course usage fees have not easily decreased," they pointed out.

Participants are having a discussion on the topic "Can Golf Course Usage Fees Be Lowered?" at Asia Media Tower in Jung-gu, Seoul, on the 10th. From the left, clockwise: Ok Kwang, Professor of Physical Education at Chungbuk National University; Seo Cheonbeom, Director of the Korea Leisure Industry Research Institute; Choi Bogeun, Director of Sports at the Ministry of Culture, Sports and Tourism; Han Sangseok, Standing Auditor of The-K Sophia Green CC. Photo by Yoon Dongju doso7

From 2020 to last year, the net increase in golf course sales reached approximately 2.4863 trillion KRW. Golf courses have greatly benefited from the COVID-19 boom. Some participants argued, "The government should actively build public golf courses to reduce green fees. It is also time to fully expand options such as caddie and cart selection systems." Occasionally, differing opinions clashed. Asia Economy's Chatham House roundtable follows the "Chatham House Rule," where the list of participants is disclosed but individual remarks are anonymized. The discussion was moderated by So Jong-seop, managing editor of Asia Economy's Trend & Weekend section. Below is the full transcript of the discussion.

There are comments like "Golf costs are too expensive" and "Are golfers just doormats?" Do you agree with these opinions?

I agree. Compared to just before COVID-19, public golf courses have raised their usage fees by 33%. Green fees, cart fees, and caddie fees have all increased. Caddie fees range from 120,000 KRW to 170,000 KRW. They claim this is to secure excellent caddies, but I don't believe it. Caddie fees are not costs borne by the golf courses themselves. Caddies are outsourced by golf courses. Usage fees have surged sharply in less than ten years. Carts recover their cost within six months. Even 100,000 KRW is expensive. Recently, limousine carts costing up to 360,000 KRW have appeared. The costs that golfers must inevitably pay are increasing.

While it is somewhat understandable that prices rise due to high demand, public golf courses have enjoyed tax benefits since January 2000. If they do not want to be regulated by the government, they should not receive tax benefits either. When the government provides benefits, prices should be low for the public, but with the outbreak of COVID-19, the number of domestic golf course users surged. The excess demand continues even now. Improvement will not be easy. Even if new golf courses are supplied, it takes more than five years to open new ones. The excess demand situation is expected to last until the early 2030s.

"Golf fees are three times higher than in Japan; should switch from average green fee to highest green fee"

Compared to Japan, our fees are about three times higher. This is because supply is insufficient relative to demand. After COVID-19, demand among younger golfers increased, pushing green fees up significantly. Public golf courses are actually more expensive than membership courses. The government mandated this year that public golf courses keep green fees below an average of 188,000 KRW on weekdays and 247,000 KRW on weekends. Over 95% of all non-membership golf courses registered as public golf courses. Only about 20 remain as non-membership golf courses. Green fees have slightly decreased since the new system. Whether this is due to policy effects or a decrease in demand caused by more active overseas golf needs analysis.

Creating public golf courses is not necessarily beneficial. Some golf courses in the Yeongnam and Honam regions have actually raised green fees. The average green fee is nonsense. The Regulatory Reform Committee has completely nullified the purpose of the green fee ceiling system. It should be changed from average green fee to highest green fee. Only then can we see an effect of green fee reduction.

It is true that green fees have risen. This is a phenomenon caused by the gap between supply and demand. When demand decreases and supply catches up, green fees naturally fall. In the US, 90% of golf courses have green fees of $30 (about 40,000 KRW). In Europe, it's about 130,000 KRW. Building golf courses in Korea requires high costs because they are constructed in mountainous terrain. Land prices have risen from 20,000 KRW per pyeong to 200,000 KRW. Construction costs are high. The rise in green fees is not simply due to COVID-19. Of course, it is true that the increase is higher than the general inflation rate. We need to analyze what a reasonable green fee level is. It is incorrect to say that golf courses are simply profiteering without data. Accurate cost analysis is necessary before adjusting prices.

Outsourcing caddies is not a problem either. Golf courses provide accommodation, uniforms, and food for caddies. Caddies are classified as special employment workers. Outsourcing does not mean golf course owners are greedy. Golf courses also provide extensive caddie training. Even if they discover and train good caddies, they do not stay long. Overall, it is difficult to find caddies, and if nearby golf courses raise caddie fees, caddies move there. Golf courses do not interfere with caddie fees. They try not to raise them if possible, but cannot ignore the trend.

Golf courses are profiteering during the COVID-19 period. To enjoy this boom, golf courses reinvest in facilities. They raise usage fees to recoup investment costs. This is why controlling golf costs is difficult. Construction costs and green fees are correlated. Compared to overseas golf courses, domestic top-tier membership golf courses spent too much on construction. We should distinguish between public and membership golf courses domestically. We need to benchmark how public golf courses operate overseas. There is no need to build luxurious clubhouses.

Golf courses have operating profit margins exceeding 40%, the highest in the world.

Ultimately, increasing supply is important. Institutional conditions should be created to minimize land regulations and financial costs. The culture and philosophy of golf courses must change. The government should also reconsider regulations. Imposing penalties might be excessive intervention. Research is needed to determine the appropriate level of intervention.

To control green fees, supply must be greatly increased or demand reduced. About 2.1 trillion KRW (27.5%) of golf course payments are made by corporate cards. Suppressing business golf could reduce demand. However, there will be resistance, so it may not be easy. National wealth should not be drained overseas, but golf trips to Southeast Asia and Japan continue. Weekend green fees in Hanoi, Vietnam, are 250,000 KRW, not much different from Korea. This is a concern for the national economy.

Green fees are a problem, but cart and caddie fees are also significant. There are calls to expand selection options for carts and caddies.

Selection for caddies is desirable. Caddie training and education should be provided, and if necessary, the government could introduce a certification system. A licensing system requiring training to become a caddie could raise caddie quality and consumer satisfaction. Experienced caddies could even be foreigners. The choice of caddies should be left to consumers.

Mandatory use of caddies and carts is disadvantageous for customers. Cart fees of 100,000 KRW are expensive, yet 37 domestic golf courses have introduced limousine carts costing 360,000 KRW. Golfers complain about high cart fees. Mandatory caddie use is nonsense. The marshal caddie system was introduced in 2016. Marshals drive carts and inform players of remaining distances for the next shot. They do not carry clubs or clean balls on the green, so their fees are cheaper. Retirees work as marshal caddies, driving caddies, smile caddies, and intern caddies. They operate in 70 to 80 locations nationwide. Korean golfers' skills have improved significantly. Using marshal caddies can ease caddie supply issues. Currently, the environment favors playing with caddies. Negative perceptions of caddies have taken root.

Dependence on caddies should be reduced. At a golf course in Gwangju, when caddies contracted COVID-19 and no-caddie play was implemented, golfers canceled reservations. Golf courses do not train caddies but only scout them. It is problematic that golf courses make huge profits without nurturing caddies. The government should stabilize caddie jobs at public golf courses and thoroughly improve education to raise service quality. While domestic golf course prices rise, caddie quality declines. In Japan, over 90% of golf courses operate without caddies. They do not charge cart fees and employ caddies as regular employees. Part-time workers are hired during peak seasons. Japan does not raise cart or caddie fees.

Since many domestic golf courses are in mountainous areas, carts are preferable. When the distance between the green and the next teeing ground is long, carts are necessary. Progress and safety must be considered. Flat golf courses can operate without carts. Beginners and slow players need carts to encourage faster play. The issue of cart selection requires in-depth discussion. Rising cart fees are undesirable. How many people would want to use limousine carts, which are currently problematic? Not all golf courses will adopt limousine carts.

"Need to expand public golf courses and support caddie capacity building"

Overall, there is a shortage of caddies. Demand for caddies is increasing. Foreigners can now work as caddies. The government should support raising caddie skills and capabilities. Each golf course differs, and they should upgrade caddie capabilities. This will improve service quality and operational efficiency.

The government finds it difficult to control general golf courses through policy measures. Opening many public golf courses is one solution. Operating many such courses can lower prices through direct investment. A new culture of selection should be created. Of course, there are barriers. Some question whether the Korea Sports Promotion Foundation should build and operate golf courses. Even if the foundation does not, local governments could intervene using sports funds. Expanding public golf courses is necessary.

Professor Ok Kwang from the Department of Physical Education at Chungbuk National University, Han Sang-seok, Standing Auditor of The-K Sofia Green CC, Choi Bo-geun, Director of the Sports Bureau at the Ministry of Culture, Sports and Tourism, and Seo Cheon-beom, Director of the Korea Leisure Industry Research Institute (from left), are having a conversation after a discussion on the topic "Is it possible to lower golf course usage fees?" Photo by Yoon Dong-joo doso7

Are there any foreign cases worth benchmarking to lower green fees?

In the UK, although it varies by region, leisure cards are issued. These are welfare cards for specific age groups and students. International students can also receive leisure cards to enjoy discounted sports. Public, caddie, and cart options are all selectable. Players can play freely regardless of group size. Clubhouses have locker rooms and shower facilities. They are simple, not luxurious. Snack bars sell sausages and sandwiches. From a consumer perspective, this is a very affordable and good program.

In the US, government, companies, schools, associations, and organizations collaborate to run after-school sports classes. Golf is included in character education programs. While golf has negative perceptions domestically, such as being a culture of business entertainment, gambling, and golf course profiteering, in the US, companies and associations actively invest in good programs to improve the image. Retired star players become golf instructors and engage with local communities. Golf has a very positive image. It is a sport that fosters character, consideration for others, and adherence to rules. Golf began as a sport for gentlemen. Korea should also strive to change the negative cultural perception of golf.

The US is a leader in public golf courses. Japan operates green fees at about one-third of Korea's level. Their management providing affordable services to golfers is impressive.

"Golf courses cannot continue to prosper indefinitely; must change to a cooperative attitude"

Unlike other countries, we mix golf clubs and country clubs. Golf clubs have only golf courses, while country clubs have comprehensive facilities. Golf courses should be used diversely like overseas. They can host weddings, social gatherings, and first birthday parties. Some open nine holes for seniors. Golf courses should serve as community centers. Golf's image improved significantly but worsened after COVID-19. For stable management, the golf population must continue to grow. Currently, golf courses are building invisible walls. They cannot continue to prosper indefinitely. They must change to coexist with golfers.

Thorough investigation of foreign cases is necessary. Korea has focused only on nurturing golf players. We must pursue the essence of golf. Golf courses should be granted autonomous functions and make self-regulatory efforts. The government need not micromanage policies. Consistent government policies that allow golf courses and golfers to win-win are needed.

Let's also discuss this. Golf equipment imports exceed 1 trillion KRW annually. What about golf from an industrial perspective? Any suggestions regarding industry and policy?

Golf courses should be viewed from a sports industry perspective. They account for one-third of golf industry sales and two-thirds of employment. Membership golf courses are considered luxurious and are heavily regulated. It would be better to reduce punitive heavy taxation on membership golf courses. Golf courses cannot be neglected in the sports industry. Most imported golf equipment comes from the US and Japan. Korea has excellent technology in golf equipment. It is time for Korea to create global brands. We do not use domestic carts. Owners think buying domestic carts is risky due to potential breakdowns. Owners' mindset needs to change. The government should support the golf industry to grow.

"Time to create global brands; government must actively support golf industry growth"

Golf courses are making great efforts. They are incorporating future industrial technologies such as fully automated cart systems and drone-based course management. Integrating various sciences reduces costs, benefiting golfers. Equipment companies collaborate with universities and businesses to launch new brands. Mid-priced products are also good. The government should actively support idea contests, industry exhibitions, and startup support programs to create Korean brands.

Domestic golf courses will change significantly with robot caddies and expanded IT technology. Golf apparel is already world-class. Screen golf has developed tremendously. Global brands like Titleist are owned by Korean private equity funds. Rangefinders and smart scoring systems are also strong. Korea's IT strength makes the golf industry promising.

The golf industry size reaches 16 trillion KRW. It accounts for the largest share among single sports within the total 80 trillion KRW sports industry. It is important industrially. More active nurturing policies are needed. Screen golf is a major strength of Korea. It should be fostered from a long-term perspective. It is desirable to develop Korea's strengths.

This content was produced with the assistance of AI translation services.