SOCIETAL TRENDS AFFECTING CLUBS William P. McMahon, AIA Club Consultant March 29, 2007.

SOCIETAL TRENDSAFFECTING CLUBS

William P. McMahon, AIAClub ConsultantMarch 29, 2007

Clubs will exist and prosper if they well serve the needs of members.

McMahon has analyzed findings from 20+ years of club survey research to learn what younger and older members want in clubs.

Overview of Trends

Why are Private clubs are under so much pressure?

Economy Increased Competition Population Demographics Lifestyle Changes

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.

628

380

606

445

738

473

0

100

200

300

400

500

600

700

800

National* California Florida

Total - AllCategories

MainMembershipCategory

Average Number of Members

* Does not include CA and FL

Country Club Average

Total Mbrs: 636

Country Club Average

Reg/Full Mbrs: 380

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

Membership Capacity By Initiation Fee

93% 93%

4%

83%

90%

13%

73%

89%

11%

66%

75%

24%

39%

69%

54%

0%

20%

40%

60%

80%

100%

$5,000 &Under

$5,001-$10,000

$10,001-$20,000

$20,001-$50,000

Over$50,000

Below Cap

Seeking Members

Wait List

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.

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

Forces At Work

Golf Marketplace

5,200

8,000

4,400

12,000

1,000

3,000

5,000

7,000

9,000

11,000

13,000

1990 2005

PrivateCourses

PublicCourses

General TrendGeneral Trend

Number of golfers in year 2000 = 26 million. Number of golfers in year 2000 = 26 million. Number of rounds have declined each year Number of rounds have declined each year

since 2000.since 2000. Only significant growth recently is among Only significant growth recently is among

juniors; i.e., Tiger Woods effect.juniors; i.e., Tiger Woods effect. Number of golf holes exceed demand in Number of golf holes exceed demand in

most communities. most communities.

Golf Goes Public

Year % Private

1900 90%

1950 60%

1960 50%

2000 30%

2010 20%

Private clubs are down by both % and number.

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.

Population Trends

Ages

12 to 29

Ages

30 to 49

Age 50+

2000 67 84 74

2010 75 79 95

Change +12% -5% +28%

Population in Millions

Up and Comers (under age 45)

Athletic and recreational focus

Casual lifestyle Family oriented Dual incomes Gender equality Building relationships Somewhat restricted incomes

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 club’s family programs.

Up & Comers

Rate casual dining as highest in importance.

Over 40% dissatisfied with casual dining options.

Up & Comers

Approximately 66% cite golf as important; lowest of three age segments.

Much higher emphasis on other activities: Fitness Swimming Tennis Junior programs

Prime Timers (age 46 – 65)

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

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

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

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.

What’s Happening at Other Clubs?

Does your club have a strategic plan?Country/Golf Club Average:

52%

Region Number of Reg/Full Members Initiation Fee

If you have a strategic plan, what year was it developed?

Does your club have an annual Board retreat?

Country/Golf Club Average: 26%


How much was your club’s most recent dues increase?

Country/Golf Club Average: 6.9%


Does your club have separate capital dues reserved for making capital improvements?



How much does your club allocate for clubhouse

maintenance & repairs in your annual operating budget?

Country/Golf Club Average: $153,645


Does your club have an annual Board retreat?



How many different membership categories do you have at your club?

Country/Golf Club Average: 7.5


How many members does your club have in all categories combined?

Country/Golf Club Average: 683

Region Initiation Fee

Is your full/regular membership category currently at its maximum cap?



Is your club seeking additional full/regular members?



Does your club currently have a waiting list to join in the full/regular membership category?

Does your club have a refundable equity component to your initiation fee?



What is your average annual membership attrition?

Country/Golf Club Average: 6.4%


Which of the following best describes your club’s family orientation?

Does your club have a paid staff person in charge of membership marketing?



Does your club have some form of trial or

temporary membership? Country/Golf Club Average:

20%


Does your club have a special membership program to encourage children of members (legacies) to join the club?



Where American SocietyHas Been

And Where It Is Going.

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

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

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

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

Where Clubs Have Been

Extension of Victorian Clubs from 1800’s

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

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

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

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.

Farmington Country ClubCharlottesville, Virginia

Cascade Hills Country ClubGrand Rapids, Michigan

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

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

Midwest Country Club Example

Club’s 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

Club’s 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 Club’s Leadership Hoping High Profile Golf will Support

Club No Understanding of Future Societal Trends

Midwest Country Club Example

Check List for Your Club’s 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, McMahon’s 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.


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 Club’s Purpose and Goals.

Be sure Board Updates Strategic Plan Annually.


Monitor Good Value being Received for Cost – Don’t 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.


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.


In Best of Times, Like Today, Verify your Club is Growing Membership and Investing in Facilities.

Annually Verify Management’s Performance. Annually Verify Board’s Performance. Complete Annual Competitive Analysis of Other

Clubs, Recreation Centers and Restaurants to Learn what They are Doing.

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.

Thank you for listening.Your questions are welcomed.

SOCIETAL TRENDS AFFECTING CLUBS William P. McMahon, AIA Club Consultant March 29, 2007.

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Transcript of SOCIETAL TRENDS AFFECTING CLUBS William P. McMahon, AIA Club Consultant March 29, 2007.