You may have caught the lead news item in our October issue (“Surge Seen in Clubhouse and Course Renovations,” pg. 10) that highlighted the noticeable uptick in extensive capital projects clubs and resorts across the country have embarked upon recently. We attribute a lot of this activity to the combination of a grudgingly improved economy and pent-up demand for projects that were clearly necessary, but deferred, for the past few years.
Financing these types of initiatives remains a challenge for many clubs. As a banker plainly stated at our recent Design & Renovation Insights Workshop at Congressional Country Club on October 24th, “Lending to clubs is not easy.”
The banker went on to explain his take on what he referred to as the “Three Ms” of club financing: Membership, Membership and Membership. How many members does the club have? Is the trend up or down? Is there a wait list? Has the club been able to pass along dues increases?
Of course, other factors also come into play, including historical cash flow and the pro-forma look at the post-project projections, the quality of the management team, and the bank’s previous experience with the club.
Most strikingly, this banker said he also wants to know which of two goals the project under consideration is designed to accomplish:
- Maintain the competitive nature of the club in its market and “keep it ahead of the curve,” or
- Increase membership and save the club.
Pretty stark reality—and while banks may lend for either type of project, they clearly prefer the former to the latter.
A common thread inherent to remaining competitive in your market is how well you, your management team and your Board of Directors articulate and carry out the vision of what your club or resort now is, or intends to be.
My guess is that many clubs already have this vision, either as something they developed internally or in conjunction with a consultant or strategic planner. And hopefully your membership can also articulate this vision; after all, they should have played an integral role in its development.
So far, so good. But have you ever conducted an “audit” of how well the club is living this vision? A lot of clubs want to be “family-oriented.” Others want the focus on golf. Some are committed to outstanding service and high-quality F&B operations. The list goes on. Taking an assessment of how well your programs, service levels and operations deliver on your vision is smart business.
Let’s hope your audit produces a “clean opinion” on the state of club affairs.
History suggests that about 10% of the club market is undertaking some sort of extensive renovation or restoration project in any given year. Sooner or later, your club is going to be part of that 10%.
Having and living the vision set for your club will assure that your project—whatever it may be—will fall in the category of “keeping ahead of the curve,” rather than “saving the club.”
And it will also make your bank a very happy partner.
Dan Ramella, President