“The worst of times are giving way to the best of times,” espoused Henry DeLozier of Global Golf Advisors. At this year’s National Club Conference, which took place on April 30th in New York City, the outlook for the future of private clubs was decidedly optimistic. It would seem that the club industry is finally about to turn a corner.
For what feels the first time in almost four years, the club industry had some good news. “The outlook for the economy is good,” Paul Robertson, a senior portfolio manager at AllianceBernstein, announced as he began his presentation bright and early Monday morning. Robertson painted a realistic and “more than cautiously optimistic” picture of economic recovery—citing an increase of more than 1.9 million jobs since September 2011, a surge in retail sales of almost eight percent and upswings in construction and investments as key indicators of economic growth.
Though Robertson admitted that there are still some small risks to complete economic recovery, he cautioned club leaders not to bet against the business cycle, as “the inertia of recession is giving way to the dynamics of recovery.”
Key Macro-Trends
“We should be over the worst of the bad stuff,” DeLozier echoed in his presentation, “Strategic Issues for Private Club Leaders.” Looking forward, DeLozier identified five key macro-trends impacting the club industry—opportunities for clubs to grow and develop that have the potential to determine the industry’s future.
One macro-trend that will heavily influence club membership is the clanning effect. DeLozier defined clanning as “the desire to be among people like us in places like ours”—in other words, the desire to associate with like-minded individuals in a familiar environment. Sound familiar? It should, as it’s long been one of the driving principles behind the success of private clubs. This particular trend among prospective members creates a distinct opportunity for clubs to differentiate themselves within the marketplace and truly capitalize on their traditional raîson d’étre: the right to free association.
Clubs can provide members with an instant group of like-minded peers with whom they can bond, helping to assuage one of their greatest fears: loneliness. According to a 2010 survey by the AARP, 35 percent of Americans over the age of 45 were chronically lonely—up 15 points from 20 percent just ten years ago. DeLozier noted that, even in the greatest era of international connectivity to date, people are still afraid of isolation in their later years, and clubs have an opportunity to help people find a place where they feel connected to others like themselves.
The second key trend that DeLozier identified was consumers’ need to be able to trust the companies with which they do business. “Not so long ago, being reasonably trustworthy was good enough,” DeLozier noted. “But the problem with ‘good enough’ is that it never is.” In the coming years, members will look for clubs to go above and beyond in the honesty department, demonstrating that they’re truly worthy of their members’ trust.
DeLozier also highlighted the importance of value to American consumers. Though many shoppers may still be looking for a deal, what they really want is value. “What people mean when they say, ‘It was too expensive,’ is really, ‘there wasn’t enough value in it.’” Golf was cited as a prime example of an activity in which people are influenced most by the sense of value they received from playing the game—whether they had fun and thought it was time well spent as opposed to the cost or length of time spent playing. DeLozier emphasized that, as Warren Buffett said, “Price is what you pay, value is what you get.” All costs are simply relative.
The fourth trend is seen in the values that are important to people when choosing products and services, such as acting admirably and predictably. DeLozier named “servant leadership” as a key attribute of the private club industry and stressed that clubs should focus on “doing the right things right.” Being good environmental stewards is one way that golf clubs show their corporate values.
The desire for stability was also cited as a clear trend among today’s consumers and as a strong motivating factor for why people chose to join private clubs. DeLozier emphasized clubs’ ability to provide “safe havens for families” and underscored the importance of appealing to mothers by providing ample programming for children.
He also cautioned, however, that stability and tradition should not be used as excuses for clubs to resist change, and clubs should use a strategic planning process to help their clubs adapt to and grow within the constantly changing marketplace. “Irrelevancy is the enemy of private clubs,” DeLozier warned. “Clubs need to stay relevant in order to prosper.
Membership Development Strategies
The next presentation of the day, “Membership Development Strategies: What Works, What to Avoid, Tools and Tips” followed up on both Robertson’s and DeLozier’s presentations by focusing on how recent changes in consumer attitudes and lifestyles have created opportunities for clubs to better target their approach to membership development strategies.
Frank Vain, president of the McMahon Group and the session’s moderator, opened the session with in-depth reporting on the demographic and lifestyle shifts that most greatly influence the current and upcoming generations of potential club members. Vain cited key societal trends among those individuals between ages 36 and 45—the prime joining age for new club members—such as, substantial college debt, decisions to have children later in life, a more casual lifestyle, a focus on health, fitness and wellness, and the tendency to adhere to a different home dynamic in which women are the primary social decision-makers.
After his presentation, Vain opened up the floor to the panel of experts, comprised of Jeffrey McFadden, chief operating officer and general manager of the Union League of Philadelphia; Stephen Ready, president and CEO of VCT; and John M. Schultz, general manager of Carmel Country Club. The panel provided tips and ideas on how clubs can differentiate themselves in the marketplace, build the member experience, and generate membership prospects. For more information on membership development strategies and the panel presentation, please see the cover story “The Changing Club Members: Who They Are, What They Want, and How to Get Them” on page 10.
Congressional Outlook
After lunch, the conference resumed with a presentation by Congressman Michael G. Grimm (R-N.Y.), who presented his thoughts on Washington and his outlook on the upcoming election. Grimm identified two major problems contributing to the sluggish economic recovery: an unfriendly business environment that drives companies overseas and high levels of uncertainty that prevent the kinds of investment that would stimulate economic growth. Grimm also indicated that strong leadership was the key to creating an American business plan that would keep our economy strong.
Golf & Fitness Trends
In keeping with the theme of appealing to the next generation of club goers, the next conference session, titled “Recreational and Sports Trends for Clubs: The Key to Your Club’s Own Fitness,” focused on the importance of fitness programming to keep members active and engaged. Bradley Sullivan, senior director of member programs for the PGA of America, detailed the challenges facing the golf industry and new initiatives to increase player engagement and participation to help keep the game strong.
Sullivan identified key megatrends affecting golf play, highlighting the time compression that people face in modern society, an aging boomer population, the increased role of women and the shifting culture of the Millennial generation. Sullivan detailed new initiatives, such as Get Golf Ready and Tee it Forward, to help combat the decrease in golf play resulting from some of these trends. Sullivan also detailed a three-part plan to help bolster participation and strengthen the industry, which includes 1) retaining and strengthening core golfers by increasing golfer engagement, 2) engaging golfers whose participation has lapsed by driving value and 3) encouraging new players by connecting with young potential players and women by encouraging personalization and making the game more fun and approachable.
In the second part of the session, Joan Carter, vice president of CYBEX and president of the Union League of Philadelphia, and Dr. Paul Juris, the executive director of the CYBEX Research Institute, focused on the increased demand for fitness activities within private clubs and the key trends within the fitness industry.
Carter pinpointed the significance of personalization and creating fitness programs tailored to specific populations as major elements of popular fitness programs, and, in particular, the importance of creating program options for both seniors and children. She also emphasized other new trends, such as the integration of new technology, the popularity of group exercise and the widespread expectations for personal training options.
Juris likewise focused on creating special plans for older adults and empha- sized the importance of strength and functional training when developing these kinds of programs. Juris also detailed the importance of having varied fitness offerings that appeal to many different tastes, in order to ensure the ability to engage the broadest member segment.
Both Carter’s and Juris’ presentations underscored the importance of staff selection in the success of any fitness program and encouraged clubs to hire fitness personnel as salaried staff to encourage member loyalty to the club rather than to a personal trainer or contract employee. They also emphasized that though there may be several temporary fitness trends or crazes, the overall importance of health and fitness to the current generation of club members is here to stay.
The Legislative Outlook
As clubs prepare to face the changing dynamics of post-recession America, the impact of upcoming legislation and changes to the political landscape will be felt more keenly than ever. Brad D. Steele, NCA’s vice president of government relations and general counsel, gave conference attendees an insider’s perspective on the political landscape that will shape the upcoming elections and the legislative action that will have the greatest effect on the club industry in the year to come.
Steele predicted that the upcoming election cycle will be intense, and, though Republicans are likely to keep control of the House of Representatives, both control of the Senate and Presidency could still break either way.
As far as major legislative action was concerned, Steele focused on the impact and importance of the Patient Protection and Affordable Care Act (PPACA) for private clubs. He detailed new disclosure requirements, potential fines and related tax increases that could drastically affect club income levels once the new provisions go into effect. Fortunately, Steele also indicated that the courts could provide some solace for clubs in the form of a U.S. Supreme Court decision to invalidate the PPACA as early as this summer.
Building a Better Board
The education sessions concluded with a panel on “Best Practices for Club Leaders: 50 Ways to Build a Better Board” moderated by Dan Denehy, president of DENEHY Club Thinking Partners. The panel was comprised of Robyn Nordin Stowell, partner at Stinson Morison Hecker LLP; Robert C. James, executive director of Westchester Country Club; and Timothy Sullivan, partner at Thompson Coburn, LLP and former president of both Congressional Country Club and The University Club of Washington, D.C.
The discussion centered on key areas of club governance and board management. One key area of discussion was the topic of board member recruitment. The panel highlighted the importance of having an effective nominating committee to help identify strong talent before the nominating process, the need for a well- developed committee structure from which to farm board prospects and the particular experience and skill sets that help to make an effective board member.
The panel also focused on putting safeguards in place to prevent the board from being unduly influenced by dissident or overzealous directors. Panelists recommended setting a high threshold for write-in candidates on ballots, instituting a strong orientation program that emphasizes proper governance processes and procedures, and keeping board meetings confined to the content agreed upon in a pre-issued board packet to ensure that members aren’t blindsided by new issues. The panel also recommended mandating committee service for all board prospects to ensure that directors are familiar with the governance process before serving their terms.
The session also provided insight on GM-board interaction, the role of the club president and how to best use the talents of each board member to create the most capable and effective board possible. For more information and advice on best practices for board management, look out for NCA’s upcoming publication, The Board Member Toolkit.
The conference presentations helped club leaders gain valuable insight on the challenges that private clubs face in the evolving post-recession America. Finally, as clubs regain their footing and forge ahead with new initiatives and programs, the industry can finally see a brighter future on the horizon.
Jackie Abrams is NCA’s communications manager.