Facility budgets at club and resort properties may be emerging from the recessionary deep freeze. Projects tied to course-and-grounds and food-and-beverage improvements are at the top of the shopping lists.
As the new decade dawns, it’s bringing signs that a good number of club and resort managers may have to brush up on a basic skill set that’s become a little rusty for many of them during the last couple of years: how to spend money.
To be sure, no one is sitting down to a pile of blank checks. And in many geographic markets and industry segments, the business outlook is still dim enough that the company safes remain locked up tight.
But for other properties, a slowly recovering general economy has combined with specific needs that have grown to beome pressing enough, after a prolonged period of limited capital spending or all-out budget freezes, to loosen the pursestrings and add new items to what had been very short, or nonexistent, shopping lists.
In a recent C&RB online poll (see bottom), 40% of respondents said capital budgets have been increased for 2010, with 27% saying they are actually going to be able to try to make up for lost time as the new decade begins, as budgets that were slashed or frozen entirely for the last year or two are now being restored to pre-recession levels.
As indicated by the remainder of the poll responses, it certainly isn’t difficult to still find those who say their properties are far from being out of the woods, and that their capital spending is still being restricted to the essentials, or to nothing at all. But many individual club and resort managers contacted about their budget situations for the new year confirmed movement back towards a more normal annual investment pace, especially for items needed to continue to provide top-quality facilities and to add, or enhance, needed services and amenities.
“We had to cut 25% from our annual capital budget each of the last two years, but the plan, for now, is that we’re getting it all back [for 2010],” a general manager at one private club reports. “Our Board has recognized that we have to take care of some needs that are critical to maintaining our standards and that just can’t be held off any longer. And we’ve made enough gains during the past two years—both through our operational belt-tightening efforts and by improving several revenue streams and getting our membership numbers headed back in the right direction—that we can once again justify the increased expenditures.”
Preferred Shopping Aisles
Beyond routine replacement of equipment, furniture and supplies, those managers who say they are starting to prepare broader shopping orders seem to be focusing on three key departmental areas—course and grounds, food and beverage, and technology. There is also renewed interest in rounding out and bolstering the services and facilities that are seen as critical to positioning a property as a full-service, family-oriented value—specifically, fitness/wellness centers and spas, pool and tennis complexes and other outdoor gathering areas, meeting facilities, wine rooms/cellars, and other features that have gained appeal during the last half of the previous decade.
Spending for equipment to improve productivity and quality in two operating areas—course and grounds, and food and beverage—is expected to receive priority as capital budgets get restored, in step with the recovering economy, at club and resort properties. |
There are also signs of a pickup in full clubhouse projects, both new and renovated, particularly at clubs tied to residential communities—because while real estate sales remain sluggish, the amenities that can be offered through the club component of these communities have taken on added importance as incentives to attract those who are looking to buy.
For example, at Seabrook Island Club in Seabrook Island, S.C. (30 minutes from Charleston), a $31 million capital project that included a new clubhouse, beach club, golf practice area re-design and new community center for island property owners was completed in 2009, to complement facilities that already included two championship 18-hole golf courses (one designed by Robert Trent Jones, Sr.), a tennis complex, equestrian center, fitness center, swimming pools, marina and a full range of dining venues. (A full report on the improvements that have been made at the property, and on how all of the pieces are being put together to continue the growth of Seabrook Island Club, which was founded in 1991 and now has 1,700 members, will appear in the February 2010 issue of C&RB.)
Properties like Seabrook Island, the University of Texas Golf Club (see “From Land to a Brand,” C&RB, September 2009), and new resorts that came onstream this past year all report that persevering with their capital projects during the downturn did bring distinct benefits, in the form of lower material costs and more cost-effective availability of skilled labor. The extent to which these advantages will continue to be available as the economy recovers remains to be seen.
The other wild card for major projects will be funding, with available credit still likely to be tight and most private clubs remaining extremely reluctant, in the current membership environment, to try to raise needed capital through assessments, increased dues or restored initiation fee structures. In the absence of ample cash reserves, favorable lending relationships and sources, or just extremely generous or deep-pocketed owners or members, getting a major new capital project off the ground is likely to remain challenging for at least the foreseeable near-future.
But in the meantime, significant momentum for renewed capital spending is building in some key operating areas. Here’s what’s behind the activity that’s starting to make things percolate again:
• Course & Grounds—Golf remains a core offer for many properties, and the one that can least afford to be neglected for any length of time. Even in the absence of major course renovations or redesigns/expansions, there is an ongoing need to maintain capital budgets that are sufficient to provide and replenish the equipment, and related supplies and support, that is all needed to pay proper attention to annual turf issues, bunker reconstructions, tree removal and control, and irrigation system maintenance and improvement.
Properties that persevered with capital projects during the downturn benefited from lower material costs and more cost-effective availability of skilled labor. |
Properties are also rethinking their approaches to how courses can be presented in more natural, environmentally desirable conditions; adding more tee sets, to try to expand golf’s appeal to all levels of players; and, in some cases, reconfiguring layouts to provide “small-scale” options that are attractive not only to beginners or casual golfers, but also accomplished players who are pressed for time or want to focus on specific aspects of the game (see “Golf’s New Short Story”). All of these approaches can also create new requirements for specialized equipment and other capital needs.
Course and grounds equipment is also a highly competitive field, populated by extremely sophisticated manufacturers with active and productive research-and-development departments that continually generate valuable new technological innovations. As equipment wears out and leases expire, superintendents can’t afford to miss too many buying cycles or have insufficient capital available, if they’re to be in the best position to take full advantage of what improved technology can bring to their properties in the form of increased productivity and quality.
Interestingly, capital dollars are also being freed up so that some course and grounds departments can finally benefit from catch-up projects to add improved maintenance facilities, especially at properties where new shops had originally been scheduled to be built as part of clubhouse renovations or other major upgrades, but then were dropped when cost overruns dictated that something had to go.
But now, after making do in many cases for far too long with structures that gave “sheds” a good name (and were often the biggest eyesores on a property), more C&G staffs are finally getting homes that befit their importance and critical roles. These upgraded facilities are quickly returning the investment through increased productivity because of more orderly storage, reduced damage to equipment and supplies that had been poorly sheltered (if protected at all), extended equipment life, and perhaps most importantly, improved staff morale.
In some cases, in fact—such as the state-of-the-art, 18,500-sq. ft., $2.7 million facility completed last year at Town & Country Club in St. Paul, Minn.—these new structures are even becoming the source of new revenue streams. When the smartboard-equipped staff meeting and training room at Town & Country’s new maintenance building is not being used by Turfgrass Director Bill Larson and his staff, it is being made available for member meetings and functions, as is the porch with a nice view of the golf course that extends off the new building’s break room.
Capital projects for clubs tied to communities, such as South Carolina’s Seabrook Island Club, have helped to add appeal to real estate sales efforts. |
• Food & Beverage—One of the big positives to come out of the tougher times that confronted all clubs and resorts during the downturn—and in particular, private clubs—was the new emphasis and prominence given to food-and-beverage service as one of the best opportunities to draw members and guests to the property on a regular basis, and then to provide them with greater value once they were there. In many instances, this has led to an all-out drive to turn F&B into a profitable operation—with or (preferably) without minimums.
But this is a case where making money first requires spending money, and that’s prompted renewed interest in upgrading equipment and supplies for club and resort F&B operations, for both the front and back of the house.
In fact, with many properties going to two-line setups to separate a la carte and banquet needs as they remodel or expand their kitchens, that serves to double the amount of equipment required for all phases of the process: grocery intake and storage, food preparation, cooking, baking, and cleanup.
And at facilities that are too pressed for space to be able to accommodate parallel operations, there is new interest in acquiring specialized, reduced-footprint equipment, such as combi-ovens or ranges with oven bases, that can bring increased efficiencies by coupling functions like cooking, steaming and baking.
The increased emphasis on F&B has also led to not only expanded menus within any given dining room, but also a proliferation of different venues on a property that can cover the full range from formal dining to casual, and everything in between. Each of these settings brings its own mix of available dishes, and its own emphasis on freshness, seasonality, and regionality, that prompts frequent changeovers of the menu items being offered.
All of this lends itself to an expanded need for a wider array of specialized equipment, including items for fast-cooking (fryers, salamanders and griddles), bulk cooking (braising pans, convection ovens and steamers), and a virtually endless variety of other needs related to specific cooking techniques or ingredients (char-broilers, double-deck convection ovens, pasta cookers, tilt skillets, steam kettles and the like).
Properties that have taken their F&B offerings to the next level, with an emphasis on scratch operations, are also looking for additional equipment needed to help them make their own pastas, soups, sausages and the like, and to do their own baking.
As these efforts pay off with increased covers and F&B volume, additional needs are also created for refrigerators, freezers, walk-in coolers, work tables, cabinets and other storage units that can maintain order and efficiency amidst all of the increased activity. And more wait stations, dish drops and heavier-duty dishwashing equipment must be in place at the other end of the operation.
The strong trend towards more casual F&B has also created a concurrent need for bar-related fixtures and dispensing equipment—not to mention all of the flat-screen TVs that now seem to be getting hung in virtually every place within (or outside) a clubhouse where a member or guest can hold a drink.
Finally, with more club and resort chefs being elevated to celebrity status and showcased, both in the kitchen and out in the dining rooms, as part of an increased emphasis on F&B, extra budgets are being set for high-end furniture and other pieces that help to create impressive settings for chef’s tables, cooking classes, wine rooms, and other aspects of “F&B theater” that have become great attractions for members and guests.
•Technology—Recession-induced pressure to heighten operating efficiencies and tighten all aspects of club and resort management has shined a bright light on the value of technology and sparked interest in making significant investments in software and equipment. And the opportunities for technologically driven improvement are presenting themselves in many forms.
The critical need to retain existing members and guests, while also expanding the pool of prospects, has put a premium on communicating about a property’s benefits and features with more immediacy and more effectiveness. That in turn has prompted a flurry of upgrades and enhancements of Web sites and database management tools.
Expanded opportunities to position properties as ideal locations for private meetings and business functions has stepped up implementation of property-wide wireless capabilities and with it the installation of a full complement of state-of-the-art audio-visual and conferencing technology in clubhouse meeting rooms and other facilities.
Interest is also increasing in specialized software for the management needs of specific departments, such as course and grounds or food and beverage (see “Getting Technical” and “Taking F&B High-Tech,” C&RB, November 2009).
Then there’s the all-in play for the most serious capital investment in technology: making the commitment, as Oakmont (Pa.) Country Club has, to full systems integration, and embracing all of the development and training steps that it entails (see “All Systems Go” in this issue).
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