Golf Advisory Practice in EMA

Country Snapshot: India

Great challengeseven greater potential

The Indian golf market 2011 Number of golf courses* Number of club members (approx)
*afliated to the Indian Golf Union (IGU) Source: IGU

The Indian economy 196* 100,000 Key indicators Population (m) GDP at current market prices (USD b) Real GDP growth (%) Consumer price ination (%)
*Forecasts Source: Economist Intelligence Unit, 2011

2009 1,166 1,365 9.1 10.9

2010 1,184 1,729 8.8 11.9

2011* 1,202 1,988 7.8 6.8

2012* 1,238 2,326 8.6 5.0

Number of Golf Courses Afliated to IGU

Golf Courses

200 195 190 185 180 175 170 165 160 158 159 155 150 164 161 175 179 186 186 194

196

Overview of supply The British Empire left a golng legacy to India, and a number of high quality courses, steeped in tradition. The introduction of the Indian Golf Union (IGU) in 1955 took over responsibilities for golf organisation and development from the Royal Calcutta Golf Club, who had been handling Indias golf interests since the clubs inception in 1829. According to the IGU, India currently has 196 registered golf courses, and up to 35 additional courses not afliated with the IGU. Around 50% of the registered courses are situated on military bases, which are only accessible to military personnel and select individuals. This leaves approximately 100 courses to cater for a civilian golf demand. The makeup of the golf course supply is split between 18-hole (39% share) and 9-hole (60% share) facilities with three 27-hole clubs. There are ve existing signature courses in the country, including ones designed by Jack Nicklaus, Arnold Palmer and Greg Norman.

2000 2001 2003 2004 2005 2006 2007 2008 2009 2010

Source: IGU

Country Snapshot: India / Golf Advisory Practice in EMA

Cluster map of main golf course supply in India

The majority of courses in India are located in proximity to main urban centres, with many in or close to New Delhi, Bangalore, Hyderabad and Indias largest city, Mumbai. Surprisingly there are still no resort courses in the country even though inbound tourism in India has grown 8.1% in the last year. Overview of demand It is estimated that India has approximately 150,000 active golfers, of which 100,000 are golf club members. Of these, 55,000 subscribe to the IGU for a oneoff fee of around USD 200 beneting them to concessional rates at afliated clubs. The demographic of these players is heavily skewed towards male participants (85-90%) while female and junior golfers comprise the remaining share.

New Delhi

Mumbai

Hyderabad

15-20 courses
Bangalore Chennai

8-12 courses 5-10 courses 4-6 courses

In recent years private clubs have become more accessible to green fee players, however many courses still advertise, or like to be seen as members only. According to our sources, there are only two clubs, both in the capital New Delhi which are dened as public courses. Many clubs restrict green fee players with the majority of courses closing to visitors over the weekend to cater for the members demand. Rounds and revenues Research collected for KPMGs Golf Benchmark Survey indicates that the average number of rounds played per annum at 18-hole facilities ranges from 25,000 to 30,000 (excluding military courses). At some of the busier clubs where oodlights are used, hours can be extended to accommodate a higher demand. Average annual revenues for both nine and 18-hole courses range USD 180,000200,000 (excluding military courses) with some larger, more popular clubs reaching anywhere up to USD 800,000 per year. Membership initiation fees typically range USD 1,800-2,000 however, at some of the more high prole clubs with very restricted and exclusive membership policies, fees of up to USD 20,000 may be charged. Annual subscriptions for individual membership can range USD 100-300 depending on the club. With the average number of members per club estimated at 1,000, although some courses exceed 2,000 members, it becomes clear that a large portion of annual revenues emanates from subscriptions. Average green fees range USD 10-50 and do not contribute to annual revenue in the same way as subscriptions, due to most rounds being allocated to members. Some high-end courses charge up to USD 100 but these are low in numbers. Challenges Our discussions with local industry stakeholders highlighted an underlying theme of lack of professional expertise and knowledge within the Indian golf industry. The requirement for more dedicated and experienced resources to advise and understand the challenges that are faced not only with new projects but also when looking to overcome inherent problems of long established operations. Another major challenge India faces today in developing golf courses is the ability to acquire land in both a cost and time efcient manner. Land parcels are generally small; and developers need to purchase multiple plots at a cost that can quickly inate. The initial steps taken when planning a project with a golf component can be time consuming, expensive and misunderstood, delaying developments and have, in some instances, resulted in the omission of golf from project master plans. In an attempt to drive participation rates, the sport needs to be supported by an increase in accessible courses that focus on affordability to a wider audience. However the viability of such projects can be questioned especially when the only cost effective land available for this would be away from urban areas with limited transport infrastructure.

Distribution of golf courses by size

27-hole + courses 1% 18-hole courses 39% 9-hole courses 60%

Source: IGU

Did you know? India was the rst country outside Great Britain to have a golf course. The Delhi Golf Club was chosen to host the rst golf tournament of the Asian Games in 1982. The average number of members per golf club is 1,000; however, this can exceed 2,000 at some clubs. The New Delhi area has the most courses in India with as many as 18. Environmental considerations could restrict progress in course construction as the use of land and water for nonessential living is opposed.

2011 KPMG Tancsad Kft., a Hungarian limited liability company and a member rm of the KPMG network of independent member rms afliated with KPMG International Cooperative (KPMG International), a Swiss entity. All rights reserved.

Outlining future potential golf demand The population of India stands at 1.2 billion. The estimated population of India with a disposable annual income of more than USD 10,000 is approximately 1.5%* of the total population, resulting in a potential golf target market of 18 million. The proportion of active golfers from this population is 0.8%. Assuming that in the next 10 years, the proportion of active golfers doubles to 300,000, then India would have to build between 90-100 new courses to accommodate the increased demand.
*McKinsey Global Institute with KPMG elaboration

Development and future outlook In the last 10 years, 38 golf courses have been afliated to the IGU, of which 30 were new developments and the remaining eight as re-developments of existing military courses. This has been a very slow growth rate for the last decade, however based on our research; there are currently as many as 30 courses under construction. Due to the lack of transparency it is difcult to estimate future growth rates of demand. One approach, as shown on the left is based on expected participation rates applied to a small section of the population who can feasibly afford to choose to play golf. This suggests that India may need to build up to 100 new courses to satisfy the demand over the next decade. An increase in participation can be achieved by: Building more affordable and accessible facilities Increasing activity in junior and academy golf Effectively promoting professional golf to a wider audience. The IGU has taken positive steps to ensure the development of golf in years to come. A joint venture with the R&A and IGU saw the creation of the National Golf Academy, intent on improving the standards of teachers, players, trainers and course managers. The reach of the professional game will be just as important in driving the sport forward in the future. Players like Jeev Milkha Singh and SSP Chowrasia (both European Tour champions) inspire all ages to take up the sport. Professional competitions such as the Indian Masters (which was inaugurated in 2008 and is now Indias agship golf tournament with a purse of just over USD 2.5 million in 2011) bring exposure to both global and national Indian markets. Additionally, the Indian Open on the Asian Tour has been won by an Indian national three out of the last ve times. Future course development seems inevitable and may need to come hand-in-hand with real estate opportunity. Provided that the challenges that exist in India can be overcome, there is great potential in this growing golf market.

Local contact: Indian Golf Union www.indiangolfunion.org

Acknowledgements: Indian Golf Union, Ranganath Thota Golfgaga.com, Howard Swan Swan Golf Designs, Anit Mehrotra Silverglades, Anil Dev Asian Golf Course Owners Association For further information please contact the Golf Benchmark Team: KPMGs Golf Advisory Practice H-1139 Budapest, Vci t 99 Hungary T: +36 1 887 7100 E: info@golfbenchmark.com
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. The KPMG name, logo and cutting through complexity are registered trademarks or trademarks of KPMG International Cooperative (KPMG International). 2011 KPMG Tancsad Kft., a Hungarian limited liability company and a member rm of the KPMG network of independent member rms afliated with KPMG International Cooperative (KPMG International), a Swiss entity. All rights reserved.