Making the right moves to prosper from the changes that will take place in the future can be very beneficial; the reverse is also true—placing the wrong bets can be costly. In the 1990s, a lot of smart people invested big money in golf because the oldest Baby Boomers were about 50 at the time. Since many of the rounds of golf played are by people over that age, it was easy to confidently connect the dots: The game of golf was going to grow. The opportunities seemed boundless—new courses and private clubs, major renovations, high-end daily fee golf and the like. A couple of major economic meltdowns and a generation of former golfers who moved onto other activities later have led to an environment where course closures have outpaced openings for nearly five years now. The total number of participants in golf is down, not up, and those who play do so less frequently than their predecessors. Well, so much for that set of predictions.
Just because forecasts fail—and by the way, McMahon was reminding leaders they were in the club business not the golf business throughout the golf boom—it doesn’t mean we should stop trying. There is risk in any action we take, but the evidence is increasingly clear that inaction is the biggest threat facing clubs today. Our environment is always changing, but there are periods where those changes are more significant and speedier. This is one of those times. The total number of clubs has declined over the last 20 years. The youngest Boomers are 50 and the world awaits the maturation of the Millennials. What is in store for clubs in the decade ahead? Let’s take a look.
Segmentation
Given where the U.S. is going economically, which at this time is a barbell economy with wealth more tightly concentrated at the top and a hollowed out middle, most clubs have little choice but to go upscale. Luxury retail, travel and experiential expenditures are through the roof while mid-market brands suffer. Look at retail. Apple, with its advanced technology, sophisticated design and high prices continues to boom while Walmart, the mid-market superstore has seen recent decreases in revenue and Dollar General is on the upswing. This is playing out in all sectors. You still need a reservation at Morton’s as Red Lobster goes into reorganization and fast food outlets continue to feed the masses their dollar meals. You get the picture.
The pendulum of wealth concentration swings back and forth over time. The forces behind the increasing disparity are global and therefore are not easily remedied by changes in the U.S. alone. We’ll leave the politics of it to others, but until such time as wealth is more significantly taxed or growth in the other industrialized economies stops dragging our middle down, we can expect that the highly educated asset holders in our capitalist system will continue to separate themselves from the pack. The new mantra, “Average is Over” effectively captures this reality. Those inclined to be club members want the best. They have money and expectations and they gravitate to those that show promise of fulfilling them.
The Essence of Membership
We often talk about how facilities and programs are core components of the successful club. They are all that today and we fully expect their influence will grow in the future. In order to be successful and sustainable, however, a club must first create and maintain a distinct culture. While club members are clearly enthusiastic about an activity like golf or tennis or squash and they want access to a special course or program, they are most enthusiastic about people. They are social beings that want to be part of a special association. They have a desire to be recognized as a member of this select group, and they want to build relationships with people who share their interests and values. Maybe the notion of exclusivity doesn’t hold sway the way it once did, but don’t be fooled, it’s still essential to the club brand.
Our survey and focus group research for McMahon’s Club Trends and our collaboration with NCA in the landmark 2013 publication, Navigating the Future identified the essential characteristics of future club culture. Members will be seeking things that endure: safety and security; recognition and friendship; health and wellness; and fun and enjoyment. The strategic pillars for all clubs lies in creating a safe and secure environment where known parties—fellow members who have gone through the same invitation and approval process—can comfortably interact with one another. Relationships are built on common values. This is why food and beverage is such an important part of any club. Often mischaracterized as an operating department with profits and losses, it’s at the core of relationship development. It’s where acquaintances become lifelong friends.
Members are also in a club because they want recognition and personalized service. In a world where service is increasingly dumbed down and civility erodes, people like to hear their name. They want a staff to anticipate their desires. They want to be known by the people that provide services for them, and they want to know these people also. It truly is an extension of the home experience that lies at the core of membership. This may be presented a little differently than in the past—more casual and convenient, say, and a little looser overall—but it must still be executed in a professional and comfortable manner.
The club of the future will also exude an aura of health and wellness. What sounds at first like a call to build a fitness center—an excellent idea for most clubs—is much more than that. It runs the gamut from the look and feel of the facilities to the types of food on the menu. It’s a caring and family-focused attitude. Members in the future will be busy people. Mom and Dad will both work and the kids will be highly programmed. The club will facilitate important gatherings and offer social and recreational activities for whole body wellness and enrichment. The members will care about what they eat and where it came from. And yes, they’ll want a full-service fitness facility.
Wellness is the logical next step above basic fitness services. It fits quite naturally in the private club environment. The home away from home setting makes it personal and convenient. Older members rehabbing joint replacements at their gated community club in Florida is a natural opportunity to incorporate physical therapy services. Traditional neighborhood clubs can find demand for these services also. Southern Hills Country Club in Tulsa, Okla., is widely recognized for having one of the premier golf courses in the U.S. The club also has a fitness center stressed by the demands from its members, and a physical therapist that sees patients two afternoons per week. Book ahead as appointments are hard to come by.
Members just want to have fun. This is where the programs and facilities come into play. You need the right venues to house the programs. In the modern club, this is where the special experiences take place. You can dine at “the rail” in the clubhouse at Desert Mountain, observing and interacting with the kitchen and service staff. The new wine room and culinary center at The Union League of Philadelphia offer access to experiences that aren’t easily replicated. The new clubhouse at Big Canyon Country Club in Newport Beach offers a wellness center and a casual dining experience that is better than anything found in the hot commercial operations in nearby Fashion Island. Your facilities and programs need to create a buzz.
Summing Up
Private clubs will continue to change in the years ahead because the funds to support membership are more likely to come from the individual rather than their business. This “at will” selection drives a pursuit of quality and value.
The action plan for your club is to make sure membership is still a process, and that new members are warmly welcomed into the fold and quickly become active users. Members need to have confidence that the people they encounter at the club are going to be interesting and engaging people who share their interests. There is also a need for social and recreational programing that is relevant to the different segments of the membership. The facilities must be the best they can be, and create opportunities for special experiences. And yes, the food and beverage program needs to be the glue that holds it all together.
Club Trends Summer 2014