The charts and figures presented in this main State of the Industry article, and also in the “Trendline” sidebars that can be found throughout this issue’s subject-specific feature sections, were drawn primarily from two studies conducted this year by the McMahon Group Inc., the St. Louis-based full-service private club consulting firm.
The studies—the 2005 Operations and Facilities Private Club Marketplace Survey and the 2005 Governance, Policies and Financial Issues Private Club Marketplace Survey—represent the collective input of club executives from private clubs of every size, type and level of affluence throughout the U.S.
The Governance, Policies and Financial Issues Survey covers more than 60 specific aspects of club management issues, including Board/Officers/Committees structures, Fees/Dues/Debt, Capital Improvements, and Proxy/Absentee Voting.
The Operations and Facilities Survey, conducted for the first time this year, provides in-depth data on all aspects of club activities, from Dining to Private Parties/Banquets to all recreational options and services offered to members.
Both studies present overall results and then break data down into four club segments: Country Clubs, Golf Clubs, City/Dining/Athletic Clubs, and Yacht Clubs. This year, input was received from 430 clubs for the Governance Survey and 384 clubs for the Operations Survey, with Country Clubs representing the largest segment in both cases (63% and 65%, respectively). Charts included in this State of the Industry report reflect returns from the Country Club samples of both studies.
Information on how to obtain copies of the McMahon reports, and on how to register to participate in future surveys (participants qualify for significant savings on the cost of the reports), can be obtained at www.mcmahongroup.com, or by calling 800-365-2498.
Both reports feature workbook sections that allow clubs to enter their specific data next to the results for the overall survey and specific club segments, to enable convenient benchmarking comparisons.
The McMahon Group also issues an annual Trends in Clubs report reflecting its assessment, based on its survey data and consulting experience, of the most influential trends driving private club success. This report also highlights key traits of the most successful private club organizations.
Trendlines: Pro Shop Sales
The McMahon Group’s 2005 Operations and Facilities Private Club Marketplace Survey highlighted these trends in club pro shop operations:
• All but one of the 251 surveyed private country clubs have a pro shop, and at 47% of those clubs, the club owns the merchandise (hard and soft goods).
• Club ownership of pro shop merchandise is much more prevalent in the West, where 77% of clubs own the merchandise, and in the South, where 56% of the clubs have ownership. Practices are quite different in the Northeast, where the pro owns the merchandise in 82% of the clubs, and in the North Central region, where 65% of the clubs have pro ownership.
• At smaller clubs (with 250 or fewer regular/full members), it is much more common for the pro to own the pro shop merchandise (67% of the surveyed clubs). At the larger surveyed clubs, ownership is fairly evenly split between the pro and the club.
• Pro shop revenue has increased since 2001 at 42% of the surveyed clubs, while 37% reported that revenues have stayed about the same, and 21% reported decreased pro shop revenues.
• Clubs in the West showed the strongest pro shop revenue trend, with more than half (57%) of the surveyed clubs reporting an increase since 2001. Trends were weakest in the North Central region, with 31% of surveyed clubs reporting an increase, 23% reporting a decrease and 46% reporting flat sales trends.
• Clubs with more than 500 regular/full members were more likely to report pro shop revenue increases, with 48% saying revenues have gained since 2001, compared with 44% of the 251-500 member group and 31% of surveyed clubs with 250 or fewer members.
• Twenty-one percent of the surveyed country clubs use a cost plus buying plan such as the Mill River plan. The practice is more common in the North Central and West than in the South or Northeast.
Trendlines: Club Technology
Some club-, resort-, and golf course related technological developments and trends of note from the year just completed, and things to watch for in 2006:
• In its biennial update of the Rules of Golf released in September, the U.S. Golf Association (USGA) decreed that starting January 1, 2006, the question of whether courses or tournaments permit the use of laser range finders or global positioning systems by players will be determined as a “local rule.” The relaxation of the rule does not apply to players using devices that measure elevation grades, however.
• The USGA has itself gone high-tech by now offering an electronic version of the 500-page Decisions on The Rules of Golf. PCDecisions can be downloaded directly to pocket computers and even some newer cell phones. Cost is $30 and includes a free update for the next round of changes. More information is available at www.usgapubs.com
• The National Golf Foundation (NGF) reported that the Internet now ranks as the third-most-used source of information by golf travelers to select their destination. Golf travelers are defined as the segment of players that plan overnight trips specifically to play at selected courses (as opposed to happening to play a round while traveling for vacations or business). A recent NGF survey showed that 30% of adult golfers have taken such a golf-driven trip in the last three years, and over three-quarters of these recent travelers are core golfers who average 37 rounds a year, with a minimum of eight (this segment represents over 11 million total players). Nearly one-fourth (23%) of this group say they now use the Internet to select the courses they want to play and to plan their trips, ranking only behind word-of-mouth from friends (55%) and researching via phone (27%) as primary influencing factors in determining which clubs they will visit.
• Nearly 90% of core golfers now have e-mail addresses and access to the Internet at home or work, according to the NGF. For occasional golfers (one to seven rounds a year), the percentage is only slightly less (86%). Of core golfers with Internet access, 42% say they visit golf-related Web sites sometimes or often. Twenty percent of this group says it has arranged tee times online, 52% says it has researched golf equipment online, 21% says it has bought golf clubs online, and 14% says it has bought golf balls online. The NGF says that heavy golf Internet users are skewed heavily male and are younger, with higher incomes, more education, and more likely to be in business management when compared to the overall profile of the average golfer.
• Golf lesson-takers tend to be an especially Internet-savvy group, with 94% saying they have Internet access at home or work (vs. 86% among non-lesson-takers) and 16% saying that they visit golf-related Web sites often (vs. 5% for non-lesson-takers).
• After a $65 million renovation, every guest room and suite in the 480- room Hyatt Grand Champions Resort & Spa is now fully wireless, and the property also features 16 poolside cabanas that are each equipped with Internet access.
• All guest rooms at the newly remodeled St. Regis Resort in Aspen, Colo., now have high-speed and Wi Fi Internet access and printers/faxes.
• GPS technology is
gaining favor as a key tool in the trend to restore golf courses to their original looks and feels. For a greens renovation project at Hidden Valley CC in Salem, Va. that was completed this fall (the course will reopen in the spring of 2006), 20 putting surfaces—all 18 holes plus a putting and chipping green—were rebuilt to USGA specs using GPS to preserve existing contours on 16 of the 50-year-old “push-up”-style putting surfaces.
Trendlines: Course & Grounds
The McMahon Group’s 2005 Operations and Facilities Private Club Marketplace Survey highlighted these trends in club course maintenance operations:
• The average maintenance cost per hole for surveyed country club golf courses is $43,157.
• Course maintenance costs are lowest at clubs in the North Central region (averaging $36,388 per hole) and highest at clubs in the West (averaging $50,546 per hole).
• Course maintenance costs increase as membership size increases, from $38,684 per hole at clubs with 250 or fewer regular/ full members to $47,116 per hole at those with more than 500 members.
• Per-hole costs also increase with initiation fees; the average is $24,087 per hole at clubs with initiation fees of $5,000 or less, and $66,914 at clubs with fees above $50,000.
• The average, per-hole maintenance cost also increases as the number of holes offered increases, indicating there are no economies of scale being realized with respect to equipment, staff, and purchasing. The average cost per hole at clubs with 18 holes of golf is $42,593; at clubs with 27 holes; $43,304; and at clubs with 36 holes, $51,927. The explanation apparently is that clubs in the West, where average maintenance per hole is higher, also have a higher average number of holes on their properties (25.7) than other regions (19.0-21.7).
• For a separate survey group classified as private golf clubs (vs. country clubs), the average maintenance cost per hole is higher ($51,169).
Trendlines: Design/Decor
The McMahon Group’s 2005 Operations and Facilities Private Club Marketplace Survey (see box, p. 12), highlighted these trends in club facilities design:
• As the chart (bottom left)shows, over half (56%) of all country clubs surveyed anticipated that they will study or initiate significant facility improvements (upgrades, renovations, expansions) within the next 12 months.
• When the results were broken down by region, clubs in the South and Northeast showed the highest levels of expected facility improvement activity.
• Broken down by size of club, larger clubs (with more than 500 regular/full members) were the most likely to consider improvements.
• Broken down by initiation fee, clubs with fees of over $50,000 were by far the most likely to be considering improvements in the next 12 months (84% of the respondents). Among clubs with initiation fees of $5,000 or less, only 44% of the respondents said they expected to study or initiate facility improvements within the next 12 months.
• Among the surveyed group of country clubs, clubhouses averaged 37,826 sq. ft. in size. Twenty-five percent of the responding clubs have clubhouses with 20,000 sq. ft. or less, and 13% have clubhouses with more than 60,000 sq. ft. The average square footage of clubhouse per regular/ full member was 91 sq. ft.
• Clubhouses in the South region tend to be larger (averaging 41,596 sq. ft.), which would be expected due to a higher average number of members, compared to other regions. Clubhouses in the West have the smallest clubhouses, on average, at 32,595 sq. ft.
• Clubhouse size also increases as membership increases. At clubs with 250 or fewer regular/full members, the average clubhouse is 27,531 sq. ft.; at clubs with more than 500 members, the average is 53,591 sq. ft. A similar disparity is revealed when results are broken down by the size of initiation fees.
• The average number of guests that the surveyed country clubs said they can comfortably accommodate for a special event (wedding or other club function) was 368. Nineteen percent of the respondents set their “comfort level” at 200 or fewer guests, while 12% said they can comfortably handle events with more than 500 guests. Clubs in the South set the maximum number of guests at a far higher average (449) than the respondents from any other region.
• Twenty-nine percent of the surveyed clubs indicated that their current spa facilities are not large enough to accommodate existing demand. By region, inequities between spa facility size and usage demands were greatest in the West.
Trendlines: Food & Beverage
The McMahon Group’s 2005 Operations and Facilities Private Club Marketplace Survey (see box, p. 12), highlighted these trends in club F&B operations:
• The average food and beverage revenue at surveyed country clubs is $1.5 million annually, or $2,087 per member.
• Nearly half (49%) of surveyed clubs report a loss on food and beverage operations; 36% report a surplus, and 15% break even.
• Almost all (94%) surveyed clubs offer casual dining, 72% offer outdoor dining, 64% offer informal dining and 28% offer formal dining.
• Over three-fourths (77%) of surveyed clubs have dining minimums, at an average of $873 per year.
• Forty-five percent of surveyed clubs use a quarterly payment schedule for dining minimums, 26% use an annual payment schedule and 25% use a monthly schedule.
• Nearly half (49%) of surveyed clubs stagger the due dates for dining minimums to manage period-end dining volume.
• Over half (51%) of surveyed clubs allow alcoholic beverages to be applied to the dining minimum; this practice is far more prevalent in the West (69%) and North Central (68%) regions than in the South (39%) or Northeast (26%).
• Carry-out is allowed at 87% of surveyed clubs, with 84% allowing it to count towards the dining minimum.
• A service charge/gratuity is assigned to member à la carte diningby 79% of surveyed clubs. Of the clubs that assign service charges, 37% assign 15%, 33% assign 18%, and 16% assign 20%.
• A flat, monthly service charge (instead of a gratuity on each dining bill) is charged to each member at 17% of surveyed clubs; 10% allow cash tipping for dining.
Trendlines: Interior Design/Decor
The changing face of club facilities is hardly limited to striking exteriors and well-landscaped properties. If anything,broadening the appeal of clubs beyond men and golf alone requires that even more attention be paid to the comforts and features that can be extended to m
embers and guests once they pass through the impressive grounds and building facades.
And “paid” is the operative word, as many new club developers are sparing no expense to create striking new building interiors designed to entice members to spend more time—and money—at the club than at home. Here are just a few of the interesting interior features of new or renovated club facilities that opened this year, or will come on stream in 2006:
• A two-story grand lobby that includes a marble floor, water wall and fireplace at the Inverness Country Club, scheduled to open in Birmingham, Ala. next year.
• A billiards room, demonstration kitchen, arts and crafts room, business center and computer lab, in addition to the usual amenities, at the new Club House at Victoria Hills Golf Club, part of the Victoria Gardens gated community for “active adults” in DeLand, Fla.
• A 50,000-sq. ft. structure “in the vernacular of antebellum mansions of the Old South” that now serves as the new clubhouse at Bay Creek Golf Club in Cape Charles, Va. “The structure brings to mind the stables of the old plantation, complete with brick floors, open-beam ceilings, cupolas and bricked arches,” wrote one especially flowery reviewer. “Rather than anything of an equestrian nature, however, the faux-stable will be home to a herd of golf carts, a 50- seat restaurant, the pro shop and other golf facilities.”
All In How You Look At It
Even the National Golf Foundation (NGF) seems to be having some difficulty breaking out of the doom and-gloom rut as it interprets industry trend data.
About 400 executives responded to an NFG online survey that asked for their perceptions of this year’s economic conditions vs. last year’s, and then for their expectations of the conditions a year from now.
Rating this year vs. last, 21% said economic conditions were better, 44% said they were the same, and 34% said they were worse. Looking forward, 31% of the respondents expected conditions to be better next year, 51% expected them to be the same, and 17% expected them to be worse.
The NGF then issued a news release with the headline, “Tough Year Ahead, Say Industry Executives”—even though 82% of the respondents had said things would either stay the same, or get better. The NGF’s interpretation, though, was that “a majority of executives say they are bracing for 2006, predicting it will be the same or worse economically than 2005.”
“The main reasons given for the rather bleak outlook,” the NFG continued, “are echoed by golf facility operators, golf business proprietors, and golf retailers alike: Fuel costs that will cut into consumer disposable income; continued oversupply in many markets; flat participation and rounds played; and headlines that prevent an outbreak of optimism, including war, natural disasters, rising interest rates, bankruptcies, rising housing costs, and job cuts.”
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