Despite Golf 'Peak Out' Outlook, Screen Golf Booms

Golf Driving Range Closures and Openings This Year... Increase in Screen Golf Users
Golf Course Sales Expected to Decline Due to Economic Slowdown and Implementation of Tax Law

[Asia Economy Reporter Byeon Seon-jin] The number of golf practice ranges, considered a benchmark of the golf industry, has continued to steadily increase this year. Screen golf is also showing a trend of rising user numbers. The golf industry, one of the biggest beneficiaries of 'COVID-19,' seems unaffected by forecasts that it will experience a 'peak out' due to the government's successive easing of social distancing measures.

Screen golf practice range [Image source=Yonhap News]

According to local administrative permit data from the Ministry of the Interior and Safety on the 6th, the number of newly opened golf practice ranges (including screen golf) from the beginning of this year until September was 299. In contrast, only 3 stores closed. Compared to last year, when 172 stores opened and 19 closed, this shows a clear expansion trend.

An industry insider explained, “Since COVID-19, demand for golf has surged, and the indoor golf population has increased rapidly, almost matching that of the field. Golf is becoming a common leisure activity like health clubs or yoga.”

Boom Contradicting ‘Peak Out’ Forecasts

Within the golf industry, there have been predictions that this year would mark the 'peak out' of the golf industry. According to an analysis by the Korea Leisure Industry Research Institute, the golf population increased by 940,000 from 4.7 million in 2019 to 5.64 million last year. However, it was expected that the special demand from COVID-19 would disappear and that the growth of related industries would slow down or decline due to the popularity of alternative leisure activities like tennis.

In fact, as countries have reopened tourism routes that were closed during COVID-19, domestic golf travelers who had stayed in Korea are now turning their attention overseas. Prices of some golf course memberships have also started to decline.

However, indicators from the indoor screen golf market contradict these forecasts. According to Golfzon, the number one company in the screen golf industry, the total number of Golfzon members currently stands at around 4.17 million, with an average of 150,000 new members joining each quarter since last year. Golfzon stated, “Even in July and August, 120,000 new members joined.”

The departure of customers in their 20s and 30s is also minimal. As of the end of September, the proportion of members in their 20s and 30s at the company was 21.4%. Although this is a slight decrease from 21.9% at the end of last year, it remains higher than the 19.6% recorded in 2020. Thanks to this increase in new members, Golfzon’s operating profit through the second quarter of this year reached 45.6 billion KRW, nearly matching the full-year operating profit of 51.6 billion KRW in 2020.

A Golfzon representative said, “Since it has become a popular indoor sport after COVID-19, it is too early to judge that a peak out has occurred. Rather, as field costs increase, customers are likely to flock to indoor screen golf.”

"Economic Slowdown and Excessive Costs Make Revenue Decline at Golf Courses Inevitable," Experts Predict

However, a decline in revenue is inevitable for major golf courses that posted record operating profits of 30-40% last year. Seo Cheon-beom, director of the Korea Leisure Industry Research Institute, said, “With the U.S. tightening monetary policy and concerns about inflation leading to an economic downturn, not everyone will be able to enjoy expensive golf rounds. This impact on golf courses will accelerate, especially starting next year.”

The amendment to the Act on the Installation and Use of Sports Facilities, effective from November 4, which reduces tax benefits for golf courses charging excessively high fees compared to the average, is also a negative factor for the golf course industry. Reducing usage fees to maintain existing tax benefits will inevitably have a direct impact on golf courses’ sales and operating profits.