We are entering a period of profound change in the United States. Demographic, lifestyle and economic factors are swirling in varied directions. The population is aging; the types of activities—social and recreational—that pique our interests are changing; and a smaller middle class is the barbell connecting the expanding underclass and wealthy. While the economic meltdown made the last five years extremely trying, the impact of these larger, secular forces will be even more substantial. They portend a change in values and desires that will trump economic cycles, no matter how turbulent.
One of the characteristics of private clubs is their rich histories and longstanding traditions. These need a nod now and then, but social organizations are ultimately judged on the perceived value of the experience they provide. We can be enriched by the past, but we are enlivened by the present. If a club is going to retain its vibrancy, it must recognize the macro and micro environments in which it exists and choose carefully between protecting the key drivers of its past success and evolving to meet true opportunities for the future.
A NEW AND DIFFERENT MARKETPLACE
Americans will look and act much differently over the course of the next twenty years. Look around, the Baby Boom generation, the driver of the social agenda since the early 1960s, is fading away. They are being ushered off the stage by the Millennials in many areas, but they’re still big players for clubs. The youngest segment turns 50 this year, prime time for many members, and as we have seen from the macro perspective, they also have lots of money. Their children, the Millennials, are surpassing them in size and soon, influence. By 2040, no single race or ethnic group will represent a majority of the U.S. population. The debate over gay marriage seems resolved, while marriage among heterosexual couples falls to historic lows. Those who do choose to get married do so much later, as the age of the average groom now pushes 30. In the meantime, the fastest growing household by type is people living alone.
From an economic perspective, we are increasingly a two-track society. The middle class continues to shrink, putting mid-priced providers out of position. Although perceived as bastions of the wealthy, many clubs once served middle and upper middle folks. This is one of the reasons the number of clubs is down by some 20 percent in the past 20 years and why 15 percent more may be gone by the beginning of the decade. The bottom has dropped. Luxury market spending is up substantially since the 2008 financial meltdown, while mid-market providers have struggled. From a positioning standpoint, the new mantra is this: average is over, or as we used to say, go big or go home. Top performers standout in a competitive marketplace, and clubs must strive to be special.
Last but certainly not least, technology is changing us. The new “wired” world affects what we do for a living and how we do it, the way in which we buy and sell goods, communicate and learn, entertain and make recommendations. The club world has what at best could be described as an uneasy relationship with technology. That had better change, and soon.
A MARKET-ORIENTED STRATEGY
From the Boomers to Millennials, it’s about real experiences, not perceptions or social standing. People are increasingly time-constrained. They are also increasingly casual and unpretentious. For the affluent that comprise club membership, the primary orientation will evolve toward health, fitness and wellness. Fewer families and fewer kids mean an increased child focus. And because of the scars from the financial meltdown, they want value. There are a lot of things people can do with their time and money; so many places to go and things to do. The club world needs to lay claim to its fair share, so it’s not left out in the cold.
Clubs must increasingly see themselves as a vehicle that can help members improve family-work-life balance. If you want a piece of the member’s day, create segment-tailored programs to draw them in. A card group here, lecture series there, tennis clinics for adults and quick start for the kids. Become family-centered. Provide parent-child experiences and take care of the kids so parents can use the club themselves. Finally, find ways to help men bond with one another, as they’re kind of lost out there.
Priorities are reordered. Members will be seeking things that endure like relationships, family, fun and enjoyment. Things like a safe and secure environment, a healthy club with excellent youth activities and programs will trump the old order of golf first. And in the age of the selfie, personalized experiences are all that matter. Anyone can go out to dinner, but can you provide one in the kitchen with a chef that knows your name, food preferences and your favorite wine? Dining will be casual and convenient. Oh, we’ll still play golf, but the sport will increasingly feature practice, fitness and training and the periodic 18-hole round. In all of this, never lose sight that you are in the luxury end of the hospitality market. The affluent segment that we serve wants the best dining, championship courses and impressive architecture and décor.
Changing lifestyles and cautious spending are also behind the increased demand for associate memberships (i.e., social, sports, tennis, house, etc.). These partial privilege membership categories will continue to grow in importance in the future. This reflects demand for social experiences over activity-driven membership. This lifestyle model will require closing the gap between dues level for full and associate categories, as these once “gravy” categories become core. These classifications also offer a slot that counters lowerpriced memberships found in for-profit or corporate clubs and can also be a stepping stone to full membership.
Clubs will also need to create a physical and cultural environment that is relevant to the times. In many cases this will mean relaxing rules and regulations to fit with more informal lifestyles. It will also be increasingly important to design programs to appeal to women. These will be different from the stereotypical card room and 9-hole golf groups of the past. The women our industry needs to attract and serve will be interested in social and family activities and also in entertaining clients and engaging with other women. The industry will also need to become more open to lifestyle choices compared with the present, such as same-sex couples and unmarried partners.
FACILITIES FOR THE FUTURE
The focus of club leaders must be on creating a lifestyle club with high-quality, next-generation facilities capable of offering the interesting experiences members want. We say it over and over, but the promise of club membership is access by a limited number of people to a premier physical environment. Clubs cannot lose sight of the fact that they operate at the high-end of the hospitality marketplace and the facilities must be capable of signaling this position and delivering the experiences. A true competitive advantage exists when the physical facilities are capable of delivering contemporary programs while also reflecting the club’s rich history and traditions.
Clubs would do well to consider more accessible recreation options. Some are obvious, like the resort-style pool or the expanded fitness center and some aren’t. Who saw that pickelball craze coming or the unbelievable demand for paddle tennis? Squash for kids? There is a lot of talk in the golf world about adopting a lighter attitude toward rules and play. That may prove to work out for some, but is probably not top of mind to the dedicated club player. Rather, opportunity seems greatest in improving the practice facilities and incorporating some level of golf fitness and training programs to serve the truly passionate. This allows the club to address some of the time sensitive aspects behind the decline in play, while still being different and special.
TYING IT ALL TOGETHER
Club dining has long been associated with formality, even stuffiness. The declining attitude toward formality in contemporary life is palpable, yet club board rooms are filled with debates about the jeans policy. Clubs should respond with more relaxed styles and concepts, while excelling in quality. The opportunity is significant. If the club is one of the members’ favorite places to eat, the level of camaraderie and enjoyment increases substantially. The path to a happy membership can indeed be through their stomachs.
SUMMING UP
The U.S. is entering a period of dramatic demographic change that will create a new frontier for clubs. On the opportunity side, it will feature a global economy that rewards the highly educated, asset holders in our society— the typical club member. At the same time, this group will be busy, in-a-hurry people, being pulled in many different directions. They will have the money to enjoy the club experience, but they must be convinced that it will be worth their time and energy to jump in. This must include ways to connect with other members, among and between genders, as a family and among children. These values won’t go away and the desire for them just might burn brighter in the new world.
Club Trends Fall 2014