The Toad Valley Golf Course in Pleasant Hill, Iowa, made a radical change when it recently closed its pro shop and converted the space to an indoor golf facility. Gone were shirts, sweaters and assorted swag, and in were simulators. If you need balls or a glove, there’s now a vending machine.
The most profitable way to utilize an indoor golf space depends on the expected clientele, of course. Allison George, who operates the family-owned and public Toad Valley, has seen that the booking of simulators by the hour consistently yields more money than an hour of pro shop sales.
“The renting of the bays is a very high-margin business once you establish what your fixed costs are,” says Jay Karen, chief executive officer of the National Golf Course Owners Association, of which George is a board member. “Before [simulators], owners could only yield more from the tee sheet, which was weather dependent. If demand was flat, that was hard.”
Although indoor golf is booming, it is a tale of two simulators. Some facilities are for grinders, like Toad Valley and a growing number of standalone indoor operations. Other facilities are for events—beer, wings, music and game-ified golf that is fun and especially appealing to those newly interested in the game but not exactly ideal prep for the club championship. To be successful, operators need to know which they are—an event space or a practice facility.
“I took a call from someone who wants to do both well,” says Jimmy Vukanovich, a plus-1 handicap and owner of the Indoor Golf Club, which has three locations in New Jersey. “I said, ‘I don’t think you can do that. Five Iron Golf is always going to do events better than you, and I’m going to do avid golfers better than you.’ ”
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The number of people using simulators in the United States has more than doubled in the past decade, from 3.8 million in 2015 to 8.1 million in 2024, according to a National Golf Foundation report. Sixty-one percent of golf course operators consider simulators a worthwhile investment. The NGF puts the average construction cost to install a bay at $45,000, but the price can go way up. Golfzon, which has movable floor-plate technology and a system that tees up the ball for you, spends closer to $100,000 per bay.
While knowing which type of space you want to be is the start, owners need to keep other variables in mind. Vukanovich, a Stanford business school graduate who has qualified for various New Jersey state championships, offered three steps to success. The first is finding a building where the bays can be set up to give grinders more space and privacy to work on their games, which likely means fewer bays than at an event venue.
The second is knowing how many memberships a location can support. In addition to the basics of revenue offsetting rent (which is often the largest nut for these venues), electricity and any financing costs for the simulators, the numbers owners need to focus on most are in the demographics of the area. Are there enough golfers with desire and disposable income to make the space work as a golf-first venue?
“Affluent, good population density, and heavy golf population are the three must-haves,” says Todd Becker, who opened the 1868 Golf Club in Stamford, Conn., with his business partner Jamie Scholz. By his calculations their niche of lower Fairfield County has about 25,000 affluent golfers and two dozen golf clubs within close driving distance.
To be successful, operators need to know which they are—an event space or a practice facility.
To meet demand where it is, Vukanovich has three tiers of monthly dues to manage the actual usage: for $135, you get two hours; for $250, you get unlimited weekdays or weekends plus two hours in your non-primary window; and for $400, you get unlimited everything. Non-members pay $75 an hour from 8 a.m. to 9 p.m., and only members are allowed after 9 p.m. “I don’t want them to become event spaces,” Vukanovich says.
The third step: Make sure the facility is open for the first winter season when people want to keep their games going. While these businesses are meant to be year-round, that first indoor season is critical to get people sold on the concept.
That rush to open before winter was something that really drove Becker and Scholz, who worked in financial services and real estate, respectively, and understood the numbers. The buildout, they say, was straightforward. They installed seven TrackMan bays and 3,500 square feet of short-game turf from Back Nine Greens. Their pricing model is an annual membership at $250 a month. The permits from the city lagged but fortunately, were rubber stamped by mid-December, so they were able to open just in time for the snow.
Becker says the business was profitable after its first two months and has now sold about 60 percent of its memberships. One of its biggest cohorts comes from a nearby public course with a two-story driving range.
“Their range is hot, crowded, and the ball quality is not great,” Becker says. “Our experience on the TrackMan is way more engaging.”
The big difference between these practice-first clubs and event-first venues like Five Iron Golf and Golfzon is the revenue support from food and beverage. “[Ours] is a bar and restaurant business that runs on golf simulators,” says James McDonald, chief customer officer at Golfzon America.
In this second category, the NGF estimates the average spend of a simulator session is $55 for the simulator and $40 for the food and beverage.
“Where our customers are succeeding, they run it like a bowling alley,” McDonald says. Golfzon owns 10 facilities in the U.S. and has some 300 franchises. “They have weekday leagues, and then they’re open on the weekend to people who want to just come by.”
Where franchises fail, the operators lose focus on the hospitality part.
“Those restaurant hours aren’t for everyone,” McDonald says. “If your focus isn’t on the hospitality and you think that part will be easy, that’s where you’re going to struggle.”
Golfzon is also making inroads into the private-membership model, with a separate product called Golfzon Range. “These facilities are no food, and the beverages are nonalcoholic,” McDonald says. “It’s come in and practice.”
Then wait until you get home to grab that beer.
This article was originally published on golfdigest.com
