While no one has a crystal ball and can see the future or the long-term impacts of this recession on the private club industry, one thing is certain. It makes sense to be prepared and plan ahead. That is why NCA conducted a planning survey in January 2009 to take the pulse of the industry, gauge the overall economic impact and assess issues likely to affect clubs moving forward.
The two-part survey focused first on the overall economic impact for the private club industry. Findings were published in the May edition of NCA’s new e-newsletter.
Trends Receives Top Ranking
Of the issues and topics likely to affect clubs in the future, industry trends was ranked the highest subject in terms of its importance for all club types, followed by strategic planning, marketing and service standards. Protecting private and tax-exempt status were both rated highly, and both were ranked higher by city clubs than golf and country clubs. Also in the top 10 list were health care and energy costs and employment law issues. Issues rated slightly higher in importance by golf and country clubs included changing lifestyles, property taxes, unionization of employees, and water access.
Conference Brings Resources to Club Leaders
Based on the planning survey results, key issues identified by clubs were incorporated into specific education programs for the National Club Conference held in April. Sessions stressed the importance of planning ahead while taking a step back to examine the key issues affecting the industry and individual clubs. Presenters provided attendees with information and tools they need moving forward while navigating difficult economic times.
One such tool, the “Club/Association Planning Tool for Turbulent Times,” developed by RSM McGladrey and presented by Bill Boothe, Director of Club Consulting Services, and Tammy Tassitano, Partner and Managing Director Club/
Association Team Leader, debuted at the conference to help attendees assess club planning during the current economic downturn. The tool was designed for use by a club/association’s general manger/chief operating officer to facilitate a strategy meeting with the club/association’s board of directors. The purpose of the tool is to help clubs/associations deal with the effect of the current turbulent economic times on their business activities. There is no single best way to use the tool, since each club/association’s situation is different. It is recommended that the GM/COO distribute the tool to board members prior to the planning meeting, and assign a staff member to record notes, suggestions and responsibilities as the meeting progresses. The amount of time needed to address all of the items within the tool varies by club/association, with an average of four to six hours to cover all topics.
Topics addressed by the tool are business strategy, financial and risk management, operational effectiveness, and people. Each topic has a number of questions to encourage discussion and suggestions for these areas. The outline on page below provides an overview of the tool’s queries. For a complete copy of the “Club/Association Planning Tool for Turbulent Times,” visit NCA’s Web site www.nationalclub.org.
Club/Association Planning Tool for Turbulent Times
Developed by RSM McGladrey
Business Strategy
- Overall, which of the following major strategic directions has your club/association decided to pursue during these difficult economic times and why did you select it vis-à-vis the other strategic directions?
- Does the club/association have adequate plans in place to implement the change? For both the short- and long-term?
- What have you already done in response to the changing market conditions, and how effective has that been?
- What are you most concerned your competitors (public dining and recreational facilities) might do to change the competitive landscape? What advantages does your club/association have over your competitors that you can emphasize?
- Have you identified your club/association’s critical success factors? (What we do well that solidifies our relationship with members). How are we measuring our performance?
- Do you have systems and procedures in place to support your overall business strategy?
- Has the club/association identified strategic priorities, developed action plans to execute the priorities and developed financial and member satisfaction models to assess the outcomes?
- Stop the rumor mill.
Financial and Risk Management
- How quickly can you measure changes in your cash flow and financial position?
- Are you accurately forecasting cash receipts, expenses and labor costs?
- Have you reviewed your pricing structure to optimize it?
- Have you reviewed your service/amenity offerings to identify inappropriate cost/member benefit items?
- Does the club/association have adequate capital resources, including debt and equity, to survive the economic downturn?
- Are club/association investments adequately diversified to minimize losses in an economic downturn?
- Does the club/association have a process for identifying, assessing and responding to risks of fraud?
- Is the club/association subject to any new or anticipated accounting, statutory or regulatory requirements that could have a significant impact on the financial stability and/or profitability of the club/association?
- Has the club/association undergone an assessment to determine any exposure to unpaid federal or state income taxes, or state and local taxes (i.e. sales tax)?
Operational Effectiveness
- Is everything on the table and up for evaluation?
- What has the club/association done to reduce and control both operating expenses and capital projects? Has the club/association instituted controls to ensure that unnecessary spending is minimized?
- Is the club/association utilizing all equipment to its full service life? Can new equipment purchases be delayed or cancelled?
- Has the club/association considered using slower times for updating safety and other training? Has the club/association considered innovative ways of utilizing excess labor capacity?
- Are all contracts and utility rates being reviewed and assessed for potential cost reductions?
- Have alternative uses of available capacity been considered to maintain volumes of work? Have you considered sharing staff with other nearby clubs/associations?
People
- Staffing – Leadership team, staffing levels, top performers, financial IQ, temporary staff and outsourcing.
- Compensation – Reward system, retention plan, compensation program, payroll costs and overtime.
- Communication and Planning – Financial status and plans, employee buy in.
- Employee Relations – Have you considered the impact the downturn may have on your employees?
- Reduction In Force (RIF) Issues – Are there short-term steps that can be used instead of a permanent workforce reduction?
6. Stop the rumor mill.
Top Issues at Today’s Clubs
(1) Club industry trends
(2) Strategic planning for club’s future
(3) Increasing club use to generate revenue
(4) Maintaining service standards
(5) Rising health care costs
(6) Protecting private club status
(7) Employment law & HR issues
(8) Controlling energy costs
(9) Changing lifestyles (including family focus)
(T) Club Finances
(10) Maintaining tax-exempt status
SOURCE: National Club Association Planning Survey, January 2009