I am happy to explain to anyone who asks that the club and resort market is doing just fine. The club model is not broken; it is simply in a state of transition.
Beginning in the latter half of 2008 and continuing throughout the “great recession,” the mainstream consumer media did a pretty good job painting a dire scenario for the golf market. A lot of this negative press dovetailed with the crash of the real estate market and the challenges faced by second-home gated communities, most of which included a golf club.
To this day, when I tell people I publish a magazine for the golf and country club market, the almost-universal reaction goes something like this: “Wow, that’s interesting—but aren’t golf and country clubs really hurting these days?!” Evidently, perceptions do die hard.
The club market is highly fragmented, and as such, word of mouth is a primary method for keeping up on industry performance and trends. Networking is a good way for club managers to stay informed. Industry associations and related suppliers also provide a variety of club-focused statistical data, which is helpful. The opportunity to review tangible results is even better, and club managers (and interested third parties) gained access to yet another source of real-time club industry data about six weeks ago.
You will recall that KSL Capital Partners acquired ClubCorp in December 2006. At the time of the deal, I wrote that smart money follows smart business. Fast-forward to September 25 of this year, when KSL completed an initial stock offering sale of 18 million shares, transforming ClubCorp Holdings into a publicly held company traded on the NYSE under the ticker symbol MYCC. How appropriate.
Publicly held companies are held to reporting standards that offer a unique window to the workings, and strategic thinking, of a major industry player. ClubCorp is an owner-operator of a combination of 153 private golf, country, business, sports, and alumni clubs located in 25 states, the District of Columbia, and two foreign countries. To no surprise, the company describes itself this way: “We are a member-based leisure business and operate with the central purpose of building relationships and enriching the lives of our members.”
On October 18, ClubCorp conducted its first quarterly (Q3) earnings conference call with analysts and investors. These calls give company management the opportunity to discuss quarterly financial results and share their insight on the story behind the numbers. At the same time, investors have the opportunity to ask questions following the company officials’ remarks. To access a copy of the Q3 earnings call transcript, search “Earnings Call Transcript ClubCorp.” It’s a great read, and I recommend that you take the time to check it out.
As for perceptions, I am happy to explain to anyone who asks that the club and resort market is doing just fine. The club model is not broken; it is simply in a state of transition. Clubs with a weak governance model and operating structure remain at risk, although many of them don’t recognize it.
Progressive clubs, and smart management companies, are doing just fine. These are the clubs taking the steps necessary to reinvest in the business, grow their membership ranks, increase revenues, control costs and enhance member and guest satisfaction.
The ClubCorp story is a good example of how this is being accomplished. Their properties, and other clubs like them, will endure the next recession, whenever it comes. And, inevitably, it will.