“A decade from now, the hearts of some of our largest cities will no longer be defined by gleaming skyscrapers surrounded by well-manicured corporate plazas.”
– Kate Ascher, Milstein Professor of Urban Development, Columbia University
The nomenclature varies across the country –Uptown Charlotte, Center City Philadelphia, Lower Manhattan, Downtown Milwaukee—but no matter the name, cities, particularly the urban core, are hot. Most trend watchers expect that growth in city living will speed up substantially in the next decade. In his book, The Great Inversion and the Future of the American City, author Alan Ehrenhalt explores the evolution that has taken place in our cities over the past 30 years and predicts major changes in the years ahead. The title of the book refers to an expectation that the traditional residents of cities in the latter part of the last century, immigrants and minorities, will move to the close-in suburbs and be replaced by a new generation of city residents, namely the wealthy and young in the future.
This shift is already happening. Cities like New York City and San Francisco are already struggling with affordable housing as demand from new moneyed city dwellers for renovated properties in lower income neighborhoods has displaced the former residents. The inversion is already taking place in large cities like Chicago and Philadelphia and it’s rolling into others. This is the case even in cities like Detroit where those who moved into the city only a few years ago were true pioneers. City centers are increasingly places where the affluent live or want to live. The key driver of this trend is the Millennial Generation, an 80-million strong army of highly educated twenty-somethings who have a decided preference for city life. They are being joined in many places by their parents, an affluent group of similar size, many of whom are looking to enjoy their retirement years in a hip and fun urban center.
Philadelphia is a great example of this dynamic change. The largest city in the U.S. at the time of the American Revolution, it remained number two in population in every census from 1790 to 1950, when its population peaked and a 60-year period of declining population began. This downward spiral reversed in the 2010 census and has accelerated ever since. Now number two in urban dwellers, the city features a bustling central core featuring sleek office buildings, great restaurants and entertainment districts and renovated places to live.
The resurgent American city is different from the one that existed from the 1950s to the turn of the century. The commercial centers once filled with corporate and legal headquarters across America are fast becoming mixed use developments and residential neighborhoods. Instead of a corporate cluster of offices and a smattering of restaurants, hotels and museums, the new version is the place in the region to work, live and play. The top reasons people are moving to cities include access to culture and endless entertainment options, convenience of public transportation, the vibrancy that flows from top quality restaurants, access to the best stores for shopping and attending sports events at new stadiums and important fundamentals, like plentiful jobs and excellent medical care. Success is begetting further success and it is likely to build throughout the next decade.
These changes are of course great news for city clubs. The addressable market is expanding rapidly. After years in a virtual wilderness and losing share to country clubs, city clubs will increasingly be the club of choice in their community.
City Club Evolution
The fact that more people will be living downtown in the future doesn’t mean people will flock to the nearest club and begin signing up for membership. Clubs must do their part to develop a relevant membership experience, which will mean evolving their business model to by in sync with the lifestyles of the people who are attracted to the new city vibe. The club must be an outstanding place for networking and business development, gain access to an extraordinary culinary and social experience and to exercise and participate in fun and games. It must become each member’s oasis in the city as they move throughout their day, stopping by to have a coffee and spend some time in the business center, working out in the gym, catching a drink after work, or listening to an engaging speaker. It is access to this rich tapestry of activities that will attract people to membership and keep them paying dues.
The modern city club must compete for their members’ attention in the dynamic new environment surrounding it. In the latter half of the last century, our cities were increasingly restaurant and entertainment deserts. That is no longer the case. In order to stand out in this vibrant new setting, club leaders must focus on creating a lifestyle club with high quality, next generation facilities, not history and tradition. New members will be seeking things that endure, like relationships, which flow from sharing experiences that build trust and friendship. Having relevant programs and facilities will make the club better for today’s members, attract new members to replace ongoing attrition, and have a positive impact on member engagement.
The clubs that are making the necessary adjustments are flourishing. The Wisconsin Club in downtown Milwaukee is a great example of a club that has aligned its services and attitude with the pulse of the city. In order to tie the club to its increasingly active neighborhood, the club runs five shuttle buses to concert, theater and sporting events downtown seven days a week. While some formal spaces remain, the casual portions of the club are humming. Interestingly, members continue to be drawn to the club for the same reason they were over the club’s last 125 years—they want to network with others. Instead of doing that over the bygone “three-martini lunch,” it’s more likely part of an evening out on the town facilitated by pre- or post-event food and drink at the club.
Perhaps there has been no more dramatic evolution than that of the Union League of Philadelphia. Since the late 1990s, the club has moved from being a fading male bastion of republican politics to the premier private club in the U.S. While holding true to the core values expressed in its motto, “Love of Country Leads,” the League features outstanding art and architecture, the finest dining experience in the competitive Philly restaurant market, excellent meeting facilities and services, guest lodging and now a classic golf experience and a seasonal restaurant operation at the nearby Jersey Shore. How’s that for evolving to build value?
Clubs will also do well to be involved in their city. As people rallied around to resurrect the City of Detroit, the leaders of the Detroit Athletic Club took steps to see that many of the major decisions that were going to be made on the city’s future happened within the walls of the club, so it is not accidental that the new downtown sports stadiums are a short walk from the club. The club has also given back to the city in many other ways, including a multi-million-dollar art installation on Madison Avenue, a key entry road into downtown. This is branding and community alignment of the highest order.
Of course, smart money is flowing into these growing downtowns and they will take market share from clubs that fail to invest and evolve. Examples include organizations like Equinox, purveyors of a hip lifestyle fitness and wellness club with excellent facilities, trainers, teachers and services. Predominately coastal at this point, they are on an expansion track. There is also a whole class of new clubs popping up like Soho House and the Core Club in New York City, the Battery in San Francisco and a couple of cool new ones in development in Silicon Valley. Designed to stand in contrast to the old school clubs, they feature contemporary design, relaxed rules and a casual attitude that make them very attractive to the young professional set. Of course, we can’t even begin to touch on the restaurant and entertainment scene in these growing cities, but it is extensive and attractive to the same people clubs are looking to bring in. City club leaders must push back against this competition, not cower from it.
Big Picture Themes
In order to benefit from the opportunities that will be presented to them in the years ahead, city club leaders must be prepared to adapt and change. They will need to imbue in their organization an attitude that is much more flexible than in the past and poised to act and react quickly to myriad opportunities. This includes re-inventing their physical plant and potentially expanding their footprint by acquiring additional property and exploring mergers and acquisitions.
There are also some large scale societal themes and desires that city clubs must consider to pay heed to if they are going to be relevant. Here are some of the top ones to consider:
Commit to Culinary Excellence
The core of every club is the food and beverage experience and this is where the most change in the city club of the future will likely occur. Club dining has long been associated with formality, even stuffiness, but there is a declining attitude toward formality in contemporary life. Clubs will need to respond with more relaxed styles and concepts. It is important to note that the desire for casual, faster and easier is not at all a desire for lower quality or a cheapening of the experience. In fact, it is just the opposite.
The city club must commit absolutely to culinary excellence and put food at the center of the club’s mission. At the foundation of this experience is hiring an excellent, passionate chef who continually adapts and revises the menu to reflect the latest trends. This is sort of a “pay for play” requirement that puts the club in the game against the hot urban dining market. In order to then stand out, the club must distinguish itself through personalized service. This requires club leaders to continually be on the lookout for top talent and to train them well. They are in fact your brand as the day-to-day experience is delivered through their hands. Your members have plenty of places to go and they will only find value in the membership if they are treated in ways that they can’t find around the corner.
This food and beverage operation will play out in a casual and lively sports bar and grill, rooftop and other outdoor experiences, gathering spots like Starbucks and food-on-the-run options. The food operation should also tie to wellness themes and support member interest in ingredients, dietary information and ethnic selections. The chef and his team must have a personality and offer staff-led experiences like cooking classes and interactive events like chef tables, display kitchens and farm-to-table events.
The culinary experience also ties to beverages, where interest in wine and mixology has never been greater. Wine clubs, tastings and lockers are all ways to play into this. Mixology and beverages are also booming, with craft beers, bourbons and whiskey and handcrafted drinks all part of the scene.
Help Members Maintain Work-Life Balance
People are nearly overwhelmed by demands from work and by the multitude of services and experiences available to them. They will increasingly be seeking out places that provide a refuge from these challenges and overindulgences. Clubs can be that refuge. They offer the real-world interaction that people need and want in an increasingly hectic and fragmented world. This has raised the demand on programming to a new level. The club must have the staff and creative thinking to continually develop and continually reinvent its programs so they are fresh, fun and engaging.
The Staff as Your Brand
The city club is increasingly an HR-driven experience. As with food and beverage, you need to seek out and hire the best people that you can. Give staff a proper orientation so they understand and help maintain your culture and train them to be successful. We expect clubs will need to expand their middle management ranks as a tactic in overcoming the shortage of front-line service personnel. This must be a bright and energetic group that loves the excitement and energy of a vibrant hospitality organization. Introduce programs that build loyalty and understanding among the team, such as employee appreciation days, community projects and opportunities for them to interface with the board and other member leaders.
Be Real
There is a growing demand for authenticity among consumers that clubs are in good position to serve. While some companies are looking to create a story around their product, clubs typically have a long and storied one they can emphasize. The Wisconsin Club is succeeding because it has 125 years of history and a modern experience. The Union League wraps a very rewarding experience in more than 150 years of history. Resurrect your history and regularly feature it in your communications, but give members exposure to current activities.
Make it Easy
In today’s fast-paced life, people are seeking out businesses that make life easier for them. From your membership plan to nanny apps and payment systems, your club must be easy to join, use and understand. Do away with as many old fashioned rules and fees that limit use and exploration among the membership. Make it easy for members to learn a new sport or try a new program. Invite them in and keep them aware of opportunities through excellent communications.
Health and Wellness
The strongest desire in society today is the pursuit of health and wellness. The same dynamic spurring the growth in cities—the yin and yang of both an aging society and a fast growing young population—is driving this interest. The aging Baby Boomers, those same pre-retirees and retirees downsizing to the city and their kids, the rising Millennials, want to live longer and healthier lives. In many ways the Boomers are playing catch-up and for the kids, exercise is simply a way of life. It is important for club leaders to understand that the core reason to embrace fitness and wellness is not to solve for a lack of it in their community but to spur interactions and socialization among the membership. It is wellness in the fullest sense of the word.
Outlook
City clubs have before them an historic opportunity. According to The Kiplinger Letter, 83 percent of Americans live in an urban setting now and this will increase to 89 percent by the year 2030. The core of the metropolis will be places where people live, work and play. These 24/7 communities are being driven by intense demand from young people and this will be augmented by the return of families and growth in older residents. Those who take bold steps to match their club culture to the exciting new marketplace will grow and thrive in the years ahead.
Club Trends Winter 2016