The management-firm pool continues to get broader and deeper, as more club, resort and golf properties decide they don’t want to face the post-recession world alone.
When we reported five years ago on their growing role in the club and resort industry (“Power Players,” C&RB, August 2011), management companies weren’t quite to the point of setting up call centers, in anticipation of a flood of inquiries from properties that were developing deep anxiety over the prospect of going it alone in the post-recession world. But they knew it would be a good idea not to stray too far from the phone.
“We were a little surprised there wasn’t more activity right after the recession, but more and more, it’s built up to have been pretty consistent after 2011,” says Mark Burnett, Chief Operating Officer of ClubCorp. “And we feel pretty good about how the pipeline [of prospective acquisitions] has looked since then. It’s certainly a busy business that’s never dull right now.”
As reflected by the numbers that illustrate the continued growth of major management-firm players since 2011, the club industry’s recovery from the recession has clearly been marked by a surge of increased interest from among both public and private properties that now seek to explore how affiliating with a management company may help them be positioned more successfully for the next era of club operations.
In some cases, this interest has been primarily motivated by financial needs and a desire for access to the added resources that management firms can provide. In other cases, it has been in response to progressive ideas that properties operated by management companies have displayed in key areas such as clubhouse and golf course redesign, introduction of new amenities and recreational activities, aggressive expansion of food-and-beverage programs, and other critical components that can attract tomorrow’s members and guests.
As a result, virtually every day now brings another announcement of a new relationship between a previously independent club property and a management firm, and of successful new initiatives by clubs that are already under a management-company umbrella.
In addition to the increased influence being exerted by the larger and more well-known management companies, a growing number of regional and “boutique” firms have also continued to emerge as significant players. As a result, an abundance of choices now present themselves to properties that want to explore the management-firm route, depending on the primary objective of their owners and members, or their desired exit strategy from self-management.
These options can include an outright cash-out and sale, an infusion of capital, added promotional punch and the attraction of reciprocal arrangements with affiliated properties, and access to resources, purchasing power and specialized management expertise in areas like human resources and information technology.
Much of the impetus for increased management-firm exploration, ClubCorp’s Burnett reports, is a direct result of reality setting in among private-club operations that “initiation fees are drying up” as a lasting post-recession impact and reflection of the club world’s new order. Success in the private-club business, Burnett says, now clearly hinges on having a stable dues line and competing effectively for members and their “share of wallet,” through expanded product offerings and amenities that extend beyond traditional golf-based operations. Visits to a club property per member, as opposed to rounds of golf, are now a key measure, Burnett notes.
ClubCorp’s transition to a publicly traded company has also helped to create more exposure for what a club can gain through affiliation with any management firm, and with ClubCorp in particular, Burnett adds. Company executives still express frustration over the challenge of educating the investment community about the uniqueness of their business (analysts’ obsession with finding “comparables” leads to a lumping of ClubCorp, as the only public club-management firm, into a general hospitality/entertainment bucket that also includes ski resorts, theme parks and hotel chains). But the upside of now being public, Burnett says, is “we’re an open book, and the results are out there for how we’ve helped to improve the properties we’ve acquired through our reinvention strategies and other [efforts to increase] usage and organic growth.”
First-Time Callers
Increased interest in what management companies can offer to private clubs has also spurred a significant shift in inquiry activity being fielded by Troon, which built its portfolio on the strength of its appeal to high-end daily-fee golf courses and resort properties. But where “eight of 10 of the calls coming into our office used to be from [open-to-public properties], now that same number is from private clubs,” reports Jim McLaughlin, President of Troon Privé, the management firm’s private-club arm that has seen significant recent growth, to the point where private clubs now account for about a third of all properties managed by Troon.
“Some people thought we had rocks in our head [when starting Troon Privé], but the number of private clubs that are now open to third-party, impartial management is definitely a bigger trend, whether it’s for a part of the club or the whole thing, or for member-owned or development clubs,” says McLaughlin. “In the last five years, it’s changed significantly from where we weren’t even on the radar to now we’re seeing many more private clubs that are at least open to having a discussion.
“Many of these clubs have gone through several managers while trying to deal with the new challenges [of the post-recession era] and they’ve come to the point where they’re thinking there must be a better way, as they see how the self-managed model is just proving to be dysfunctional for them,” he explains.
McLaughlin sees this shift as a reflection of how private-club management only continues to increase in complexity. “It’s a much more sophisticated business that’s tough for any one individual to handle now,” he says. “The big waiting lists have disappeared for many clubs, and the luxury of initiation fees [as a primary capital funding source] has gone away. It can really help to have access to a larger national platform that can provide purchasing power and resources for assistance with complicated areas like information technology, insurance or human resources and all of the labor and benefits issues that now go with that.”
ClubCorp’s Burnett and Troon’s McLaughlin both acknowledge that even in an environment of more interest and open-mindedness about the management-firm option, the old stigmas about loss of control, corporate-mandated cost-slashing, “cookie-cutter” management and wholesale changes that will disrupt a club’s service standards and traditions must still be addressed.
“We take care to have plenty of focus groups and town-hall meetings to make sure everyone really knows who we are and what we’re all about,” says Burnett. “The ultimate goal has to be creating a win-win for all. Even if a [private club] Board thinks [being acquired is] a great idea, there’s a lot of work that needs to be done with the full membership and staff.
“We also have a bias to want to retain talent [among existing staff],” Burnett adds, addressing a common fear among club managers who may sense a threat to their personal job security when an acquisition or other shift to management-firm affiliation is in the wind. “Contrary to what some may believe, we don’t have a deep bench of general managers and department heads that we’re just waiting to ‘send in’ if we acquire a club. We’re hopeful that the clubs we’re talking with already have great management talent, and our record for those we’ve acquired shows a high rate of retention.”
McLaughlin can’t help but chuckle about some of the concerns he’s encountered as Troon has become more active on the private-club side. “It’s almost like there’s a fear we’re going to land a helicopter on the property and an army of Troon people are going to run out and invade the clubhouse,” he laughs. “Well, we don’t have helicopters, or a closet full of people who are ready to do that.
“Of the 75 or so clubs that are now part of Troon Privé, half are member-owned—and for all of them, you’d have trouble finding the Troon brand anywhere you look,” McLaughlin says. “While the Troon brand is important to the daily-fee and resort properties in our portfolio, we’re very sensitive to how private clubs don’t want to be overrun by guests with Troon cards, even though reciprocal arrangements are a powerful part of the appeal for many of the clubs that are talking to us. So we take care to work with each club to develop customized solutions that focus on helping them continue to have strong, cohesive leadership and governance, and to keep and strengthen their own brand.
“I wouldn’t want to be run by the old-style management companies that were known as ‘the McDonald’s of golf’ either,” McLaughlin says. “But with the successes we’ve had already [in the private-club sector] and all the new interest we’re now seeing, I think we’re just scratching the surface. It’s been a huge change for Troon, and it’s going to be interesting to see how it continues over the next 10 years.”
Always In the News
C&RB’s ongoing coverage of club industry news now routinely includes examples of new and notable relationships that have been forged among club properties and management firms. Some recent examples have included:
• The Members Club at Grande Dunes, Myrtle Beach, S.C. (McConnell Golf). As the “only true private club within Myrtle Beach,” reports Meredith Donahue, Grande Dunes’ Membership Director, her club has become “the ideal getaway” for members from other McConnell Golf clubs who are “looking for a challenging and enjoyable round of golf in a popular vacation area, but without the long pace of play.”
Grande Dunes has also “been able to bring skilled staff on board from other McConnell Golf clubs,” Donahue notes, ”and these personnel have adapted and applied McConnell Golf core principle philosophies at Grande Dunes, creating a sense of familiarity for members visiting from their home McConnell Golf property.”
• Belleview Biltmore Golf Club, Belleair, Fla. (Green Golf Partners). A semi-private facility, Belleview Biltmore GC (pictured on the cover of this issue) reopened in January following a $350,000 renovation. “We have benefitted greatly from Green Golf Partners’ hands-on, high-touch approach,” says Zack Vervaecke, Senior Vice President, Operations. “Green Golf Partners has added tremendous value in the approach of how our staff interacts with each guest that comes to the course, dines at the 1501 Bar & Grill, or hosts an intimate special event for a hundred people or more. We [now] provide an exquisite experience for our guests in a casual atmosphere.”
Adds Matt McIntee, CEO of Green Golf Partners, which is based in Danville, Ind., and manages 15 properties in five states: “For Belleview Biltmore Golf Club, our approach to management has focused on delivering a tremendous return on its investment for the community. Our objective from day one was to make the golf club the centerpiece amenity for the community, both in terms of golf and social interaction.
“What sets Belleview Biltmore GC apart from other courses in the Green Golf Partners portfolio is its location and year-round golf facility,” McIntee notes. “But the real difference is its unique appeal to people, from the members to the community of Belleair and the vacationers that enjoy playing during the winter months.
“Rounds of golf being played, worldclass cuisine, and special events including The Taste of Belleair and the Bluffs have all seen double-digit growth in the last two years at the golf course and clubhouse,” McIntee reports.
“We’re in a fun business,” he adds. “It is golf, after all. And we eat, sleep and breathe it. It drives us to go above and beyond, to do whatever it takes to follow through on our promises, and we actually enjoy all the hard work that goes into achieving success for Belleview Biltmore Golf Club.”
• Eastpointe Country Club, Palm Beach Gardens, Fla. (Billy Casper Signature). Since Billy Casper Signature (BCS) took over the management of Eastpointe CC in November 2011, reports Matt Wilson, a BCS Director, a turnaround began that can largely be attributed to “the amount of resources that come with Billy Casper Signature and that simply cannot be matched by a single GM at a facility.”
Those resources, Wilson adds, “include but are not limited to professional marketing, strategic sales, human resources, information technology, risk management, agronomy, industry best practices, and a network of professionals at 150 other properties around the U.S.”
As part of BCS, Wilson reports, Eastpointe CC has seen:
– $1.5 million in revenue growth;
– $750,000 in membership dues growth; and
– $2.37 million in cumulative EBITDA, compared with $450,000 for the previous four years.
Additionally, $1 million has been spent on capital projects to catch up on deferred maintenance for existing infrastructure, Wilson says, in addition to facilities improvements that have enhanced the membership experience.
BCS added experienced professional department managers to provide new direction for their respective teams, Wilson reports, and the Eastpointe brand was re-established throughout the community, positioning the property as one of the best-valued private clubs in Palm Beach County.
In addition to the membership dues growth, Wilson reports, a series of successful membership-development initiatives have created a younger base and an avenue for dealing with attrition from an aging membership. These programs were “created, implemented and successfully operated while maintaining the integrity of the pricing of the existing membership base,” he notes.
Perhaps the most significant accomplishment after affiliating with Billy Casper Signature was the completion of a merger between Eastpointe CC and the Eastpointe Golf and Racquet Club in November 2015 (Eastpointe CC was retained as the operative brand).
“After nearly 30 years of operating as two separate clubs within the same community, with a history between the two clubs that was not a pleasant one and [marked by] animosity that reigned throughout the community, we commenced the merger,” Wilson reports. “Many times, the clubs had attempted to merge previously, but would ultimately fail to do so for various reasons—and primarily because of the personalities and emotion that accompanied the attempts. This, in turn, permeated throughout Palm Beach County, to a point where people didn’t want to join either club and realtors didn’t want to show property within the gates.”
But because of the successes that BCS had already brought about at Eastpointe CC (as listed previously), the opportunity to merge the two clubs once again presented itself, Wilson reports, and this time the sense of the benefits of such a combination prevailed to bring about a successful merger. And after a strong first season as a merged club, he adds, Eastpointe CC is “beginning to emerge as a serious player among the other high-end clubs throughout northern Palm Beach County.”
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