A smooth top-management transition has kept the industry’s largest operation out in front in its quest to continually reset the bar for innovative member and guest engagement.
If there was a comprehensive operating manual for the club business, several chapters would need to be written pretty much exclusively for the Ocean Reef Club (ORC) in Key Largo, Fla. Beyond its sheer size (over 5,000 members and nearly 1,000 employees in-season) and scope (98 different departments), few other clubs, or club managers, have to concern themselves with the operation of airstrips, medical centers, full-service gas stations, 144-room hotels, or the care and feeding of 600 undomesticated cats that have free run of the property.
Ocean Reef Club
Location: Key Largo, Fla.
ORC’s operation not only involves all of these aspects, and much more, it also encompasses separate private clubs for golf (Card Sound Golf Club) and racquet sports. So when Paul Astbury, ORC’s President since 2001, retired at the end of 2014, the announcement that Michael Leemhuis, CCM, CCE, PGA, would now lead all of what ORC entails spurred industry reaction that the move for Leemhuis—who had spent the previous 15-plus years as General Manager/COO of Congressional Country Club in Bethesda, Md.—would take him away from private-club management into something more akin to directing a small city.
While it’s true that even Congressional, as one of the largest private clubs in the business, still has less than one-third the annual operating revenues of Ocean Reef Club, Leemhuis is now quick to state, as he’s begun his second season in Florida, that the notion that he’s become a “mayor” is the “biggest misnomer” about his new position. And not only because much of what’s within the ORC gates, including the arts, cultural and medical centers and the private clubs within the club, have their own separate management structures and work as partners with Leemhuis and his staff to share amenities and resources.
“I still feel like a private club manager,“ says Leemhuis, who had made plans to retire from Congressional before he was lured by the challenges that the move to ORC would bring. “Sure, there are new considerations here created by the community and property aspects [Ocean Reef has close to 1,700 homes, docks and condominiums, and the vast majority of property owners are members of the club]. But it’s still very much a world that’s all about the members.”
And the world he came into at ORC, Leemhuis adds, offered instant comforts that allowed him to focus from the start on how to apply his experience and knowledge to further enhance member service and amenities. In addition to inheriting a solid, long-tenured management team that required “zero” changes at the department-head levels, Leemhuis also cites the benefits of ORC’s “strong approach to succession planning,” not only for his position (Astbury remained involved in a consulting capacity for projects that ran through last year), but also for governance and Board structure, and specifically the two-year term for the Chairman’s position.
“It is very valuable to know that I will be able to work with [current Chairman] Bob Schmetterer for two years, and then with Teresa Holmes, who will be our first woman Chairman, for two years after that,” Leemhuis says.
Taking the Long View
The two-year terms for Ocean Reef’s Board chairs are tied to an in-depth approach that has been forged in recent years to ensure the club’s long-term stability and direction, and to fully develop its unique brand. With roots as a modest fishing camp and small lodge first created by Morris Baker, a Minnesota real estate developer, in 1945, followed by a series of ups and downs under a succession of other ownerships, Ocean Reef Club became member-owned in 1993. A model was then established that puts eventual Board chairs on a 10-year governance path. Schmetterer, a former advertising agency CEO, started on his road to being ORC’s current Chairman with a Marketing Committee position eight years ago.
That coincided with the hiring of Richard Weinstein, a former sales executive with Carnival Cruise Lines, as Vice President of Membership & Marketing—a new position that was needed, Schmetterer says, because ORC was experiencing “an erosion of social members” and had hit a critical point that called for “clarification of what the club was all about.”
Weinstein describes ORC’s business as a “three-legged stool” built with equity members (capped at the number of eligible properties), social members, and conference business attracted by the club’s unique asset, its 144-room inn. Social memberships, he notes, have served as an important feeder for equity memberships as they become available, and the club’s long-term success has hinged on having 30% of new equity members come from that group.
In addition to being an important additional revenue stream, especially for offseason months, the conference business has also been counted on to help generate new membership interest, Weinstein adds. This part of the stool also supports retention, because half of the conference groups have historically had some member connection.
Just as the recession was beginning, however, the stool was showing some troubling unsteadiness, with social memberships having dipped to 1,800, well below their cap level of 2,350. Weinstein’s most immediate order of business upon assuming his new position was to develop a strategy that could be used to subtly market a very exclusive and private club, but at the same time effectively “advertise to a broader market what we’re all about, without making an open invitation for just anyone to come in.”
As a key and particularly effective part of executing this strategy, a full-color, high-gloss, magazine-style publication, called Living, was prepared, featuring all aspects of ORC amenities and activities. Its availability was promoted in small, low-key ads placed in high-end lifestyle and travel publications. “It served as a way to invite prospects in our target demographic to be our ‘guests’ through the magazine’s pages,” Weinstein says. Offering Living in this fashion has generated 2,000 requests per year, he reports, and helped to restock a database of prospective members that has been used to build social membership levels back up to waiting-list status. Living has proved to be so effective, in fact, that in seven years, only three somewhat-different “issues” of the magazine have needed to be produced.
Even more important than how the word about Ocean Reef was getting out was how the message about the club, and its image and brand, was refined and polished. Drawing on his advertising background, Schmetterer spearheaded a “census” initiative in 2010 that conducted in-depth market research designed to probe into the ORC membership’s profile and mindset, so unique selling propositions could be developed for the club. “We really didn’t know much about who our members were, how they got here, and how they used the club,” Schmetterer says. “The census approach went beyond a survey, with 80 questions that could be projectable to 100% of the population.”
The response to the census effort was “terrific and extremely illuminating,” Schmetterer says. And the findings it generated included these important insights:
• The decision to join a place like ORC is an involved process with a longer gestation period. “It’s not a one-step selling process,” says Schmetterer. “Prospective members need to be cultivated over a period of years, vs. a period of weeks.”
• The uniqueness of the Florida Keys, with its natural attributes (ORC is so named because it sits on an active coral reef), restrictions on high-rises, and added sense of safety and security, all proved to be special and strong attractions.
• When asked what other places they had considered before deciding to join ORC, 70% said “none”—and among the other 30%, most cited general, regional areas (the Bahamas, the Carolinas, Naples) rather than other clubs. “In all my years of marketing, I’ve never encountered a situation where 70% said they didn’t consider another specific option for such a major decision,” Schmetterer says.
• When asked where they would have gone, or would now go, if ORC didn’t exist, 25% answered “no idea.”
• Once they become members, everyone finds and forms their own version of club life at ORC; no single activity, even golf, projects to more than 50% participation. And “active” is an appropriate term to apply to the membership; only 28% reported that they were retired or semi-retired, and nearly two-thirds said they expected to continue to use the club more and “thrive and grow” with it in future years.
• Asked if they felt that ORC was totally unique, somewhat unique or pretty much the same as other clubs, 80% went with the first choice—especially notable, Schmetterer says, given that he’s “never seen a member application with less than two other clubs that they already belong to.”
Putting these findings together with the wealth of other intelligence gathered through the initial census undertaking, Schmetterer says the proper brand identity for ORC rose naturally to the surface on its own. “It was clear that the message we needed to convey was that what we have here transcends the normal notion of a club or even a gated community,” he says. “‘A Unique Way of Life’ is truly the proper way to describe our brand and vision—and that’s not just an ad guy making it up, it’s born out of reality.”
Getting the Green Light
Another key directive drawn from the first census (which is now ingrained as an important long-term planning tool for ORC; a new census was conducted last year) concerned capital spending. When the membership was presented with the choice of maintaining the club “as is,” “with some improvement,” or “in first-class condition continuously,” Schmetterer reports that 87% selected the latter.
The ORC management team has responded to that mandate in recent years through the development of new facilities such as its fitness center/spa (see photo, opposite page) and tennis and game center (complete with Vegas-style machines for automatic shuffling and dealing of mahjong tiles).
But because the Ocean Reef property has been built out over the years to the point where finding new space for structures can be problematic, the drive for “continuous first-class improvement” also extends as much, if not more, to the need to continually introduce innovative programming and fresh features within each of ORC’s operating departments.
For golf, in addition to continued course renovations and turf conversions led by Director of Golf Course Maintenance Juan Gutierrez (who cheerfully describes the challenge posed by the Ocean Reef topography of shallow soil over coral as “growing grass on rock with salt water—but it does drain well”), that’s meant developing events like the New Year’s Day “Hangover Open,” which draws 180 players and has been a “huge hit,” according to Director of Golf Scott Kirkwood, PGA. It’s also meant maximizing the Ocean Reef brand power in the pro shop; Kirkland says that “95-98%” of all men’s apparel, and 50% of women’s apparel, is now logoed, and the ORC flag can also be found on items ranging from iPad covers to blankets, beer steins and after shave.
The drive to expand programming and introduce new activities has turned ORC into much more of a year-round operation, reports Director of Sports & Recreation Mic O’Keeffe. “Summer was dead here, but new camps and other things we’ve started have changed life around the club, especially for social members,” O’Keeffe reports. “July is now our busiest month, start to finish, and from a [recreational] revenue perspective, it’s been equal to March and April combined.”
The spirit of innovation that pervades ORC has been especially evident in food and beverage, which has proved to be “off the charts,” Leemhuis says, compared to what he’s seen at other private clubs. The opportunities to create new dining venues and add to the club’s already-wide variety of menu choices and culinary themes has proved to be virtually limitless, Leemhuis has found, despite the limits on available space within the property. Much of Leemhuis’ focus since becoming ORC’s new President has been on helping Vice President of Food & Beverage Giovanni Melis and Executive Chef/Senior Director of Culinary Phillippe Reynaud renovate and rebrand existing outlets and introduce new items such as breakfast sandwiches. ORC also broke out its new food truck for the current season.
Already, Leemhuis says, the payoffs have been huge. The two-week holiday period at the end of 2015, he reports, “was by all accounts the best we’ve ever had.” The food truck was “hugely successful,” he says, with nearly every member experiencing it as it moved around the property and was promoted through tweets and a special tracking feature that was added to ORC’s mobile app. The truck, which includes an 18-foot kitchen and a drive-up window low enough to serve people in golf carts, did 1,400 covers for lunch and dinner in the 10-day holiday period, Reynaud reports, featuring “street food with a twist” and a variety of themes (Mexican, Southwestern, New England) that changed from day to day.
There doesn’t seem to be any danger of F&B innovation at Ocean Reef drying up anytime soon, as it’s impossible to go 100 feet while riding around the property with Melis and Reynaud and not have them point out a spot where they’d like to set up another new pop-up venue for sushi or a noodle bar or a soft ice-cream/gelato stand. A new cooking school/culinary arts center is also being developed, to help showcase special events like guest-chef and movie-theme dinners.
As new amenities and programs are rolled out for ORC members, they will be carefully blended with the traditions and history that the club has fully embraced. As Executive Director of Communications Molly Carroll notes, ORC, in dating back to 1945, is “ancient” among Florida clubs. And as Schmetterer adds, “A club without history is a resort”—and everyone in ORC management goes out of their way to avoid the “r” word when discussing their brand and devotion to member service (a focus further sharpened with the arrival of Congressional CC’s long-time Director of Golf, John Lyberger, who will now assist Leemhuis in the newly created position of Vice President of Club Operations).
Ocean Reef’s nods to its history and tradition are displayed throughout the property, including a special museum where an animatronic fisherman describes its earliest days. There is also the living history embodied daily by Director of Safety and Security Sonny Vasquez, who’s lived and worked on the property for 47 years and is truly the “mayor” of ORC (his colorful past includes time in Las Vegas as a bodyguard, hanging with the Frank Sinatra/Dean Martin “Rat Pack”).
Vasquez has not one, but two offices on site filled with framed photographs and mementos from the many celebrities who have lived on or visited the property through the years, including seven sitting Presidents. He’s recorded remembrances of all he’s seen and heard in two memoirs, which he plans to call “ReefVisions” and “ReefLections” (the first title, he says, was suggested by Richard Nixon).
But so far, Vasquez has kept all that he’s written under wraps, thinking it might not be a good idea to release his books until after his own final chapter is written. Given the vibrancy that he, and all of ORC, continue to display, the chances are good that their publication dates are still a long way off—and that there’s a lot more great new material still to come.