News Fore You - April 10, 2009

"The Future of Private Clubs in America"

As many of you know, our goal at Golf Car Specialties is to continuously strive toward Superior Customer Service. And, one of the many ways we hope to provide service is through pertinent industry news.

I recently came across a very interesting article from the National Golf Foundation entitled, "The Future of Private Golf Clubs in America," written by Joseph F. Beditz, PH.D. and James R. Kass. I found it intriguing because of the extent in which the authors “dug” into the issue. They provided a short and compelling history of private clubs in America (much of which I never knew) and a quantitative analysis of the current state of affairs, including a detailed look at memberships. But more importantly than the “facts” is that the authors took a moment to provide a few recommendations for not only the Board of Directors, but also those staff members entrenched in the operation of a private club.

Instead of simply re-writing the article, I felt a summary may be the best manner in which to provide this information. If you find the highlights beneficial, you should definitely read the article in full. It can be found on the National Golf Foundation website under Latest Research Reports.

HISTORICAL AND CURRENT FACTS:

  • On the eve of the Great Depression there were 4,400 private clubs in America, approximately the same number that exist today.
  • Today’s private clubs are supported by an estimated 2.1 million members. What is really interesting is the researchers concluded there are an estimated 2.0 million golfing CANDIDATES that are highly attracted toward becoming a private club member. The trick is, how you can get them to join your club (this will be discussed later).

CURRENT STATE OF AFFAIRS:

  • Recent research has found that a majority of private clubs are doing fine (I guess that is relative and certainly based on national average, not necessarily a local level) with about 10%-15% reporting, what they have called, serious challenges.
  • Nationally, memberships are down 13% and play is down 17% FROM ITS PEAK (they never state when the peak was). But, remember there are the 2.0 million candidates looking for a place to call home.
  • The #1 reason for a member leaving their club (50% of the surveyed people) was financial. But, the researchers are unsure if it was the cost of the membership OR a perceived lack of value for what they are paying. The #2 reason for terminating their membership was due to work and family obligations. It has been stated in other publications that I have read that candidates for membership (between the ages of 30 – 45) are looking for a club that can provide accommodating services for their entire family – swimming pools, fitness centers, junior golf programs, women-only events, or alternative activities such as croquet or volleyball.

HOW CLUBS ARE RESPONDING:

Most clubs are trying a variety of things aimed at “engaging members and increasing utilization.”

  • If the #1 reason people are leaving a club is lack of perceived value, you must be willing to provide enhanced programming aimed at curbing this perception. Increased programming will positively impact reason #2 for terminating a membership: work and family obligations. What programming you ask? Survey your members and see.
  • Offering special membership arrangements to increase the utilization of the club.
  • Making capital improvements may seem like a huge risk, but from a value perspective the “on-the-fence” or “at-risk” members may be looking for these types of enhancements to justify their membership. “If I can go to newly renovated or progressive club for the same money, why wouldn’t I change?”

RECOMMENDATIONS:

I didn’t want to take any literary license with this portion of the article. This is a direct quote from the article.

“Club presidents and their boards, especially those whose clubs are financially at risk, need to honestly assess their club’s business situation. This involves conducting an objective analysis, analyzing current and latent demand, and preparing realistic financial forecasts.

The development of a strategic plan is a must. Too many clubs operate without one. Member input into the planning process is critical and can bring everyone together for the cause. All options, including raising membership caps, converting to semi-private status, introducing new membership categories, and even bringing in third-party management, should be put on the table.

The strategic plan should include a financial forecast that takes into account realistic membership attraction and retention goals, a schedule of capital improvements, projected initiation and dues levels, and more.”

I hope that you found this information as interesting and valuable as I did. We value the business that we are in because it brings so much joy to so many people. We hope to continue to provide information that is relevant so that all of us in the golf business can remain healthy and strong.

John T. Myers
President
Golf Car Specialties