SOCIETAL TRENDS AFFECTING CLUBS

1
SOCIETAL TRENDSAFFECTING CLUBS
William P. McMahon, AIA Club Consultant March
29, 2007
2
Clubs will exist and prosper if they well serve
the needs of members.
3
McMahon has analyzed findings from 20 years of
club survey research to learn what younger and
older members want in clubs.
4
Overview of Trends

• Why are Private clubs are under so much pressure?
• Economy
• Increased Competition
• Population Demographics
• Lifestyle Changes

5
Membership Trends

• About 50 of clubs have fewer members now than in
  2001.
• Market peaked sometime in year 2000.
• Split in marketplace
• Higher end clubs are faring well lower tier
  clubs are struggling.

6
Average Number of Members
Country Club Average Reg/Full Mbrs 380
Country Club Average Total Mbrs 636
Does not include CA and FL
7
Membership Capacity

• 72 of country clubs are below their maximum
  number of allowable members
• 83 are seeking additional members
• 20 indicate they currently have a wait list for
  joining

8
Membership Capacity By Initiation Fee
9
Membership Trends

• Membership satisfaction runs close to 80.
• Most attrition continues to come from death,
  illness and relocation.
• Challenge is lack of demand from young members to
  replace prior generation.

10
Reasons?

• Too many golf courses, clubs and
  social/recreational outlets
• Dated Club Model - Failure to offer membership
  value to modern society
• Bowling Alone - Busy, time constrained society
  where joining in all organizations has declined
• Corporate Restructuring - Changing way in which
  business is conducted

11
Forces At Work
12
Golf Marketplace
13
General Trend

• Number of golfers in year 2000 26 million.
• Number of rounds have declined each year since
  2000.
• Only significant growth recently is among
  juniors i.e., Tiger Woods effect.
• Number of golf holes exceed demand in most
  communities.

14
Golf Goes Public
Private clubs are down by both and number.
15
Club Marketplace

• Many private clubs are no longer the only or best
  places to play golf in their area.
• Clubs that work
• High end/Old money
• Really special golf
• Full amenity, family club with enhanced programs
  and facilities
• Leadership must work to distinguish their private
  club from competition and alternatives.

16
Population Trends
Population in Millions
17
Up and Comers (under age 45)

• Athletic and recreational focus
• Casual lifestyle
• Family oriented
• Dual incomes
• Gender equality
• Building relationships
• Somewhat restricted incomes

18
Up Comers

• Only 15 of younger members are very satisfied
  with their club.
• Over 75 cite family activities as important
  reason to join (2 after golf).
• By a margin of 3 to 1, younger members report
  dissatisfaction with their clubs family programs.

19
Up Comers

• Rate casual dining as highest in importance.
• Over 40 dissatisfied with casual dining options.

20
Up Comers

• Approximately 66 cite golf as important lowest
  of three age segments.
• Much higher emphasis on other activities
• Fitness
• Swimming
• Tennis
• Junior programs

21
Prime Timers (age 46 65)

• Golf begins at 50
• Family almost grown
• Growing affluence
• More free time
• Hosting lifetime events
• Couple activities

22
Leisure Living (over age 65)

• Less strenuous recreational activities
• Retirement/fixed income
• Abundant free time
• Empty nesters
• Established patterns (resistant to change)
• Play much golf

23
The Generation Gap

• Lowest satisfaction exists among members under
  age 45.
• Barriers to satisfaction among young
• Limited access and appeal to family
• Level of formality and informality
• Lack of entertainment options
• Gender issues
• Lack of programming

24
Summary of Forces

• Survey data and focus groups indicate youngest
  segment of members is least satisfied.
• Approximately 65 of members surveyed joined
  their club between ages 36 and 45.
• Dissatisfaction among young segment is major
  inhibitor of membership recruitment and growth.

25
Whats Happening at Other Clubs?
26
Does your club have a strategic plan?
27
If you have a strategic plan, what year was it
developed?
28
Does your club have an annual Board retreat?
Country/Golf Club Average 26
Region Number of Reg/Full
Members Initiation Fee
29
How much was your clubs most recent dues
increase?
Country/Golf Club Average 6.9
Region Number of Reg/Full
Members Initiation Fee
30
Does your club have separate capital dues
reserved for making capital improvements?
Country/Golf Club Average 45
Region Number of
Reg/Full Members Initiation Fee
31
Does your club have separate capital dues
reserved for making capital improvements?
32
How much does your club allocate for clubhouse
maintenance repairs in your annual operating
budget?
Country/Golf Club Average 153,645
Region Number of Reg/Full
Members Initiation Fee
33
Does your club have an annual Board retreat?
Country/Golf Club Average 26
Region Number of Reg/Full
Members Initiation Fee
34
How many different membership categories do you
have at your club?
Country/Golf Club Average 7.5
Region Number of Reg/Full
Members Initiation Fee
35
How many members does your club have in all
categories combined?
36
Is your full/regular membership category
currently at its maximum cap?
Country/Golf Club Average 39
Region Number of Reg/Full
Members Initiation Fee
37
Is your club seeking additional full/regular
members?
Country/Golf Club Average 78
Region Number of Reg/Full
Members Initiation Fee
38
Does your club currently have a waiting list to
join in the full/regular membership category?
39
Does your club have a refundable equity component
to your initiation fee?
Country/Golf Club Average 35
Region Number of Reg/Full
Members Initiation Fee
40
What is your average annual membership attrition?
Country/Golf Club Average 6.4
Region Number of Reg/Full
Members Initiation Fee
41
Which of the following best describes your clubs
family orientation?
42
Does your club have a paid staff person in charge
of membership marketing?
Country/Golf Club Average 44
Region Number of Reg/Full
Members Initiation Fee
43
Does your club have some form of trial or
temporary membership?
Country/Golf Club Average 20
Region Number of Reg/Full
Members Initiation Fee
44
Does your club have a special membership program
to encourage children of members (legacies) to
join the club?
Country/Golf Club Average 67
Region Number of Reg/Full
Members Initiation Fee
45
Where American SocietyHas BeenAnd Where It Is
Going.
46
Where American Society Has Been

• Male-Oriented World
• White, Anglo Saxon, Protestant Founders
• Formal Lifestyle
• Very Wealthy Few
• Unionism to Protect Workers
• Primarily European Immigration

47
Where American Society Has Been

• Church Religion Important in Daily Life
• Accepted Moral Codes to Live By
• Higher Education Primarily for Wealthy and
  Intelligent
• Manufacturing Economy
• Energy Consumption Unchecked

48
Where American Society Is Going

• International Involvement and Competition
• Technology Advancement
• Higher Education for All
• Service Economy
• Third World Immigration (Latin America, Asia,
  Eastern Europe)
• Religion Morals Decline
• Casual Life Style Dominant

49
Where American Society Is Going

• Increased Wealth Available to Many
• Organized Labor a Burden on Society
• Improving Role for Women in Society
• White, Anglo Saxons Becoming New Minority
• Diversity in Population a Strength
• Environmental and Energy Concerns

50
Where Clubs Have Been

• Extension of Victorian Clubs from 1800s
• Wealthy Men as Primary Focus
• Wealthy Anglo Saxons Primary Members
• Social Business Prestige Associated with
  Belonging
• Golf as Primary Country Club Focus
• Business Clubs for Business Elite
• Favorable Tax Deduction for Membership

51
Where Clubs Have Been

• Elite Few Control Club
• Labor Intensive Operation, but Labor was Cheap
• Management Extension of Head Waiter Syndrome
• Corporate America Paying Tax Deductible
  Membership Costs
• Very Little Family (Wife Children) Use
• Dining Monopoly with Very Little Competition

52
Where Clubs Are Going

• Broader Appeal to All in Society (Diversity in
  Membership)
• Emphasis on Entire Family (Spouse Children)
• High Cost of Membership Must Provide Good Value
• Golf as Only One of Many Offerings in Full
  Service Clubs
• Health, Fitness Diet Trends

53
Where Clubs Are Going

• High Initiation Fees as Major Membership
  Deterrent
• Emphasis on Golf Declining as Did Tennis,
  Bowling, etc.
• Management Professionalism More Important than
  Ever
• Decline of Moral Values Make Clubs, Along with
  Private Schools, Last Bastion Against Degenerate
  Society.
• Who Wants Children to Grow Up Like Paris Hilton,
  Britney Spears or Tom Cruise.

54
Farmington Country Club Charlottesville, Virginia
55
Cascade Hills Country Club Grand Rapids, Michigan
56
Membership Survey Results Point To Future Trends

• New Members Under Age 46 Point to Future Club
  Trends
• Casual Lifestyle is Here to Stay
• Excellent Dining Required in all Styles
• Family Activities i.e., Swimming, Camps, Social
  Programs, Dining, Junior Programs, are More
  Important
• Health/Fitness/Spa Programs Growing

57
Membership Survey Results Point To Future Trends

• Less Emphasis on Golf, More Emphasis on
  Everything Else
• More Acceptance of Children by Older Members
• Equal Access for Women
• Lower Entry Fees
• Good, Attractive Clubhouse Facilities

58
Midwest Country Club Example

• Clubs Leadership Out of Touch
• Higher Profile Club Losing Members
• Great Club in Stagnant City
• Major Emphasis on Golf to Exclusion of All Else
• 10 Loss of Members
• Fully Assess Junior Members (Stick It to the
  Youth Mentality) for Golf Improvements
• Dining Program Never Changes
• Full-Service with Swim Tennis but No Fitness
• Mindless Raises of Initiation Fee Even when New
  Members not Joining

59
Midwest Country Club Example

• Clubs Solution to Membership Decline
• Raise Initiation Fee 10,000 in Addition to New
  12,000 Golf Course Assessment
• Develop Golf Course Master Plan to Spend More on
  Course
• No Thought of Adding Fitness
• Little Chance of Attracting Many Younger Members
  with Entry Cost Five Times Higher than Average
  Club in City
• 70 of New Club Members Join at Ages Under Fifty
• Clubs Leadership Hoping High Profile Golf will
  Support Club
• No Understanding of Future Societal Trends

60
Check List for Your Clubs Ability to Address
Future Trends

• Be sure Club Achieves High Satisfaction in all
  Offerings (at least 70 of Members Must be
  Satisfied or Very Satisfied).
• Monitor Number of Younger Members.
• Maintain at least 23 of members under age 46
  (within last 5 years, McMahons survey research
  shows a disturbing decline in younger members
  20 today verses 23 five years ago).
• Where is the youth going? They have money, but
  are not joining clubs.
• Monitor what Your Youth wants in a Club and at
  What Cost they can Afford.

61
Check List for Your Clubs Ability to Address
Future Trends

• Verify On-going Monitoring of Member Satisfaction
  and Quality Assurance Programs for Primary Club
  Offerings (Dining, Golf and Clubhouse).
• Have Current Strategic Plan with Clear
  Understanding of Clubs Purpose and Goals.
• Be sure Board Updates Strategic Plan Annually.

62
Check List for Your Clubs Ability to Address
Future Trends

• Monitor Good Value being Received for Cost
  Dont Reduce Quality to Appease Tightwads.
  High-quality is Essential for Club Success.
• Be Sure Management Team can Consistently Deliver.
• Continually Monitor Member Usage to Detect
  Problems or Changing Conditions.

63
Check List for Your Clubs Ability to Address
Future Trends

• Monitor your Facility Conditions to Change with
  Times.
• Budget and Spend Maintenance and Upgrade Dollars
  in Club Facilities Every Year.
• Minimum of 500,000 Annual Reinvestment.
• Complete Major Satisfaction Survey Every Five
  Years to Achieve Member Input.

64
Check List for Your Clubs Ability to Address
Future Trends

• In Best of Times, Like Today, Verify your Club is
  Growing Membership and Investing in Facilities.
• Annually Verify Managements Performance.
• Annually Verify Boards Performance.
• Complete Annual Competitive Analysis of Other
  Clubs, Recreation Centers and Restaurants to
  Learn what They are Doing.

65
CONCLUSION

• Societal Trends are Affecting Private Clubs
• Clubs will Prosper if they have
• Member-friendly environments.
• Good value for cost of membership.
• More full-service offerings.
• Service to youth as well as older members.
• Ability to change with times.
• Visionary, involved leadership.
• Strong management in all positions.

66

• Thank you for listening.
• Your questions are welcomed.