As private clubs continue to rebound post-recession, competition has increased within the industry. Clubs are tweaking and adding programs and services to retain and recruit members. With that comes increased responsibility to be aware of major trends happening outside of the club. Here are key nationwide trends that may impact your club and the industry.
Economy
In 2017, the economy is expected to continue to experience modest growth. According to “The Kiplinger Letter,” the U.S. GDP will rise from 1.6 percent in 2016 to 2.1 percent this year. Inflation will increase from 2 percent in 2016 to 2.5 percent in 2017 and interest rates will receive a bump as well.
President Trump’s administration has created enthusiasm in the stock market, as there is new hope for tax cuts, deregulation and increased infrastructure spending. As a result, Kiplinger expects returns on stock at 4 to 6 percent. With pro-growth Republicans controlling of the White House, Senate and House, the prospect for lower individual and corporate tax rates has grown.
Wages will rise as well, from 2.5 percent in 2016 to 3 percent in 2017. Despite the increase, families remain uncertain about their financial standing. From 2014 to 2015, median household real income grew 5.2 percent, reports the U.S. Census Bureau. However, a survey from Pew Research Center reveals that families still feel financial strain. The survey reports that more than half of households had experienced a financial shock—a significant unexpected expense or shortfall. The typical household spent $2,000 on its most expensive shock. In part due to this financial variability, 45 percent of surveyed households said they felt financially insecure and another 52 percent said they felt unprepared financially for unexpected costs.
Alternate Sources of Earned Income
Some individuals have looked for ways to earn income outside of a traditional occupation. According to Pew Research Center, 24 percent of Americans have earned income via digital platforms in the past year, whether being paid through technology like apps, selling products online or renting out properties online. These alternate jobs, or “gigs,” include online tasks users perform in their free time as well as physical tasks that can be scheduled around their primary job. Supporters of these jobs say they provide freedom and flexibility to the workforce, while detractors believe this “gig economy” represents the increasing financial instability workers face.
Demographics
American demographics continue to shift toward a younger, more diverse population. According to “The Kiplinger Letter,” four states (Calif., Hawaii, N.M., Texas) already have nonwhite majorities. Currently, 14 percent of the U.S. population is foreign born, a near record, reports Pew Research Center.
Millennials
Millennials represent the largest population in the U.S., according the U.S. Census Bureau, which defines millennials as individuals born between 1981 to 1997. Forty-three percent are nonwhite, making this group the second most diverse behind Generation Z, their successive generation. Millennials are coming to age in many key areas, but have delayed major decisions like buying a home, marriage and starting a family.
Pew Research Center data reveals that only 28 percent of millennials were married in 2014. This number is down from the comparable age of Generation Xers of whom 38 percent were married in 1998 and of baby boomers, of whom nearly half (49%) were married by 1980. The median marriage age during the 2010s is 30 years old, according to Goldman Sachs Global Investment Research, while in the 1970s that number was 23. Also, home ownership among millennials remains low, falling from 39 percent to 32 percent from 2005 to 2015, caused in part by a weak labor market and significant student debt.
For those who have moved out of their parents’ homes, many continue to flock to urban areas. However, a significant number are heading to noncoastal cities instead of typical coastal towns. According to analysis by Apartment List of U.S. Census data, eight of the top 10 cities that millennials moved to from 2005 to 2015 were noncoastal cities. The top three were Charlotte, N.C., Houston and Austin, Texas. Coastal cities like New York and Los Angeles saw their millennial populations decline during this period (5.1% and 15.8% respectively).
Top 10 Cities for Millennials to Move
Charlotte, N.C.
Houston
Austin, Texas
Seattle
Virginia Beach, Va.
Omaha, Neb.
San Antonio
San Francisco
Tulsa, Okla.
Denver
According to Gallup, only 29 percent of millennials are engaged at work. Twenty-one percent of millennials have changed jobs in the past year, and half of this demographic strongly agrees that they plan to be working at the current job one year from now. For nonmillennials that number is 60 percent. Overall, millennial turnover is estimated to cost the economy roughly $30.5 billion annually, making the need to retain their talent critical.
Engaging Millennials in the Workplace
According to Jim Harter, chief scientist of workplace management and well-being at Gallup, millennials consider work to be more than a job. These employees want to know their value extends beyond monetary compensation.
Managers are key to keeping millennials motivated, says Harter. They account for more than 70 percent of the variance in team engagement. Therefore, companies should expect high-quality managers to perform more like “coaches” and not like “bosses.”
Building engagement starts on a new employee’s first day. Managers should establish clear expectations and provide necessary resources and opportunities for the employee’s development. The key to effective engagement is choosing the correct person to become a manager, harnessing their ability and developing their talent.
The payoff is valuable. Engaged staff leads to less turnover, absenteeism and workplace accidents and increases retention rates and work quality. Together, the short-term benefits can yield up to 21 percent higher profits.
Generation Z
Generation Z is the group of people born after millennials from 1996 to 2012, as defined by XYZ University, a firm which helps organizations grow their presence among younger generations. Gen Z ranges from children in elementary school to college.
Gen Z was raised entirely in the digital era, and continues to increase their digital consumption as they grow older. They filter digital content quickly, preserving their most valuable resource—time. Although a critique of this generation is a low attention span, Gen Zs are able to tune in to content they deem important. Gen Z puts their time above other factors, like quality and whether something is “quick and simple,” which previous generations have emphasized.
Forty-seven percent of this group is an ethnic minority, making Generation Z the most diverse generation demographic in U.S. history. As such, they value inclusion and tolerance among various racial, ethnic and religious groups.
Gen Zs are forward thinking. Sixty percent already have savings accounts and they prioritize a stable job, college and saving money over things like travel, exercise and spending time with friends and loved ones.
Graying America
Although the millennial and Z generations have already significantly impacted American demographics, the country’s population is skewing older. Advancements in medicine and better information about health have helped people to live longer, and as baby boomers continue to retire, the country is slowly trending to having more elderly people than children.
In 2014, 15 percent of the population was 65 and older, while 23 percent was less than 18 years old, according to the U.S. Census Bureau. By 2030, these demographics will each have a 21 percent share of the population, and by 2060, those 65 and older will outnumber children 24 percent to 20 percent.
About half of Americans age 65 and older have not moved from their homes and many have no plans to move, reports the Joint Center for Housing Studies of Harvard University. Together, the aging of the population and lack of mobility for the elderly have caused the rise of naturally occurring retirement communities (NORCs). These highly concentrated older populations have shifted the demands of these communities to emphasize health care and public services. Programs have developed to provide assistance to NORCs, such as socializing, transportation and care. Home health care practitioner is the fifth-fastest growing occupation in America.
Lifestyle & Technology
According to Pew Research Center, 65 percent of Americans owned a smartphone in 2015—nearly double the 35 percent who owned a device in 2011. As technology continues to permeate American’s daily lifestyles and habits, it is increasingly difficult to separate emerging lifestyle choices from technology.
Social Media
Among adults, 68 percent use Facebook, reports Pew Research Center. This figure is seven points higher than in 2015. Nearly two-thirds (62%) of online adults age 65 and older use Facebook—up from 48 percent in 2015. Women use the social media platform at a higher rate than men (83% to 75%). Among all users, 76 percent said they use Facebook daily.
Currently 32 percent of adults report using the photo-based platform Instagram—up from 27 percent in 2015. Among all age groups, 51 percent say they access the platform daily. Only 24 percent of adults use Twitter, remaining virtually identical to its 2015 usage rate. Forty-two percent of all age groups say they are daily visitors. A quarter of adults use LinkedIn, an online network for employers and professionals. Among all LinkedIn users, 23 percent access the platform daily.
Internet of Things (IoT)
Devices such as smartphones, smart watches, intelligent thermostats and other gadgets that are all interconnected via the web make up the Internet of Things (IoT). They can communicate with each other, receive updates and give commands to linked devices.
On a larger scale, there will soon be “smart cities” says Mark Krell, analyst and Moor Insights & Strategy, a global technology consultant. Technology like smart lighting, smart transportation and smart parking, on-demand trash pickup and other amenities have become top of mind for some residents, increasing the need for city planners and tech leaders to adapt innovations to large scales.
Inside homes, devices like Amazon Echo and Google Home gained popularity. These voice-operated speakers allow users to request information like the weather, play music and even make purchases—all with the sound of their voice. During the past two years, Amazon sold 5 million Echo units, according to Consumer Intelligence Research Partners. Streaming continues to dominate the home entertainment market, says Krell. And while the number of products connected to the Internet increase, so too will the demand for bandwidth, creating concerns for all these products to work together seamlessly on today’s networks.
In the hospitality industry, IoT is being implemented effectively in certain settings. Virgin Hotels offers an app that allows guests to control their room’s thermostat or control the TV. Marriott has experimented with real life “Like” buttons next to certain technologies. The buttons allow user to provide real-time feedback on hotel services.
However, with these and other technological advancements comes increased focus on cybersecurity. Recent hacks have given industry observers some cause for concern. As the technology continues to evolve and permeate society, so will the need to ensure it is safe and protected.
Food and Beverage
Some diner preferences are shifting, from more formal dining options to more casual, modern and social places to dine and relax.
Fast casual restaurants continue to increase in popularity. Research from Euromonitor International reveals that fast casual options were the fastest growing food service segment in the restaurant industry. Sales in this market grew 10.4 percent from 2014 to 2015. As part of this casual dining trend, coffee shops also saw an increase in sales during this timeframe.
Healthy Dining in Unconventional Areas
Consumers continue to shift their dining preferences to healthier options. According to Technomic’s 2016 Health Eating Consumer Trend Report, a third of those surveyed consumers said they are eating healthy items more frequently than in 2014. Another 37 percent of respondents said they are more likely to eat at restaurants that offer healthy items, even if they don’t order a healthy option.
Healthy snacking is on the rise. Already, all snack sales account for 40 percent of the $370 billion U.S. packaged food market reports Euromonitor. This market is expected to grow by 2 percent for the next two years, and millennials are driving the growth. On average, millennials eat 3.1 snacks per day, Generation Xers eat 2.3 snacks per day and baby boomers eat just 1.5 snacks per day.
Why do millennials snack so much? Mintel research shows that 17 percent of millennials snack to relieve stress, 27 percent to combat boredom, and 39 percent snack for an energy boost to remain productive. This group views snacks not only in terms of physical health but also as aids to emotional and psychological vitality; they want snacks that make them feel good in more ways than one. Millennial parents are also passing along healthy snacking habits to their children. A third of young parents said they only give their kids healthy snacks.
Alcoholic beverages, too, are becoming healthier. According to The Wall Street Journal, gluten-free, natural, vegan, low-calorie, low sugar and other healthy drinks are populating bars as producers cater to shifts in consumer demand. These drinks include flavors like chickpea brine, almond milk and natural fruit juices. The U.S. market for gluten-free food and drinks rose from $4.9 billion in 2013 to $11.6 million in 2015, reports Mintel.
Some companies are creating nonalcoholic drinks as the demand grows for “boozeless” beverages. Mintel research shows the global market for no-/low- alcohol beer grew from $8.37 billion in 2010 to $9.96 billion in 2015, a 19 percent increase. The world’s largest spirits producer, Diageo PLC, is investing in its nonalcoholic spirit called Seedlip. Anheuser-Busch is planning to have no-/low-alcohol beer make up 20 percent of its sales by 2025.
Bowls
Food bowls became a popular trend worldwide in 2016 according to Baum + White, a consultancy firm that publishes an annual fine foods trends report, and is forecasted to become a stable and continuing trend in 2017. Bowl recipes artfully display individually prepared ingredients in an array of color, well-balanced nutritious properties and flavor. Chipotle helped introduce the trend and now famed chefs like Jose Andres have helped grow its presence by offering bowl entrées in their restaurants.
Bowls are versatile as well, allowing chefs to provide a variety of options—often vegan—in one dish. Offerings range from bowl breakfast and brunch options to Mediterranean-, Latin- and Asian-inspired bowls, and healthy, low-calorie options.
7 Child-Friendly Food Trends
Healthy meals – Menus are including more healthy kids’ menu items
Whole grains – Whole wheat is increasingly being incorporated into menu items like pizza, pasta and sandwiches
Gourmet items – Chefs are introducing children to more complex flavors
Entrée salads – Chefs are serving more salads that appeal to kids
Fruit/veggie sides – More menus are featuring healthy fruit and veggie sides that help children eat healthy
Ethnic-inspired dishes – Favorites like pizza and chicken nuggets are still popular to kids children, but kids are showing interest in foreign flavors as well like Mexican and Asian dishes.
Oven-baked foods – Chefs are shifting from fried menu items to more healthy baked items
Source: National Restaurant Association What’s Hot Survey
NRA’s What’s Hot Top 20 Food Trends
1. New cuts of meat
2. Street food-inspired dishes
3. Healthful kids’ meals
4. House-made charcuterie
5. Sustainable seafood
6. Ethnic-inspired breakfast items
7. House-made condiments
8. Authentic ethnic cuisines
9. Heirloom fruit and vegetables
10. African flavors
11. Ethnic spices
12. House-made sausage
13. House-made pickles
14. Ancient grains
15. House-made/artisan ice cream
16. Whole grain items in kids’ meals
17. Protein-rich grains/seeds
18. Artisan cheeses
19. Savory desserts
20. Gourmet items in kids’ meals
Source: National Restaurant Association What’s Hot Survey
Fitness
The U.S. health and wellness industry continues to grow. According to the International Health, Racquet & Sportsclub Association (IHRSA), from 2009 to 2015, the U.S. market grew between 22 and 25 percent in areas such as total health club members and health club visits. In 2015 this industry generated $25.8 billion in the U.S., the most in the world. The U.S. is home to 36,180 health clubs, ranking first in the world and up 5 percent from 2014. There were 55.3 million health club members in the country in 2015, an increase of two percent from 2014.
Allocation of total new fitness equipment spending
Cardio machines: 45.9%
Resistance/strength training machines: 12.6%
Barbells and related equipment: 8.9%
Dumbbells: 8.9%
Accessories: 6.2%
Flexibility equipment: 4.3%
Balance equipment: 4.2%
Functional-training hardware: 3.9%
Suspension trainers: 1.7%
Other: 3.6%
Source: IHRSA Health Club Equipment Report: Spending, Utilization, and Programming Trends
Flexibility in Choice
The fitness club industry is growing, and so is the competition with this market. In 2014, Americans spent 78 percent of their total spending for workouts at fitness clubs. By 2016, that number dropped to 73 percent, reports Cardlytics, a marketing and financial solutions firm.
Many workouts now take place in the home. Commercial home workouts have been around for decades; however, with the advent of streaming, several companies are taking advantage of the opportunity. Daily Burn is one such service that allows users to stream more than 600 workouts ranging from 15 minutes to an hour from experts and trainers ranging from 15 minutes to an hour. The cost for Daily Burn is less expensive than many gyms, with a price tag of $15 per month for its basic package. Beachbody on Demand is a similar service which only costs users $100 a year. The program has more than 800,000 customers.
Cardlytic data shows that first-time users of on-demand workouts spent 37 percent of their total fitness budget on such services. They spent nearly 40 percent at traditional gyms. The pervious year, these users spent nearly 67 percent of their fitness budget at the gym.
Other programs, like Clubpass allow users to visit a set number of participating gyms and fitness boutiques for a monthly fee. The program is already in 31 American cities and ranges from $25 to $135 per month. Since the company’s launch in June 2013, Clubpass reports more than 30 million class reservations.
Boutique studios provide competition to traditional health clubs as well. According to the IHRSA, almost half (42%) of U.S. fitness clubs are boutique studios—twice the number than in 2014. These studios offer a specific type of programming such as cycling, yoga, Pilates, personal training, CrossFit and other specialties. Boutique studios provide a social, trendy experience for gym goers to engage in a specialized workout. Such boutiques include SoulCycle, which offers indoor cycling workouts and forecasted $150 million in revenue in 2016, Orangetheory Fitness, a high-tech group fitness concept that allows participants to view their heart rate in real time, has expanded to more than 400 locations since its 2009 inception.
Top 10 Fitness Trends for 2017
1. Wearables
2. Body weight training
3. High-intensity interval training (HIIT)
4. Quality fitness professionals
5. Strength training
6. Group training
7. Exercise is Medicine
8. Yoga
9. Personal training
10: Exercise and weight loss
Source: American College of Sports Medicine
Golf
The outlook for golf is brighter than it has been in recent memory. According to Forbes golf business writer, Erik Matuszewski, golf is continuing to rebound post-recession and participation has bounced back to the same level before the game’s popularity surge. Although some courses are still closing as the market stabilizes, many high quality courses have continued to open, such as Mossy Oak in West Point Miss., designed by 2016 Olympic architect Gil Hanse.
New Players Welcome
The game is strengthening among younger players. Youth participation is up, including 62,000 young women who were introduced to golf last year by the LPGA. In 2010 that number was just 4,500. About 28 percent of millennials play golf, although at half the rate as other previous generations, reports the PGA Tour. Over the past five to six years, youth participation has increased by 500,000 participants to more than 3,000,000 youths total, reports the PGA of America.
New formats continue to innovate and tweak the game. Short courses are becoming more popular as the industry adjusts to time-constrained players. At the 12th Abu Dhabi HSBC Championship, the European Tour introduced walk-up music to the first tee on the tournament’s final day. The experience drew a positive response and could be expanded in Europe in 2018. Also, TopGolf, which combines a driving range with a fun bar and restaurant scene, continues to grow with 28 U.S. locations. The operation has introduced many newcomers to the game and serves more than 13 million guests annually.
Technology is also helping change how the game is played. The new Quick.golf app gives golfers more flexibility on when and how they play, saving time and money. The web app notifies golfers which holes are available at participating courses; the golfers play the specified holes and are then charged for playing only those holes.
Environment and Sustainability
The environment has been a growing focus for Americans and businesses. Seventy-nine percent of Americans say they are environmentally conscious, reports a Trulia-sponsored poll conducted in March 2016 by Harris Poll. They also are interested in expanding green sources of energy and stopping the growth of traditional energy. According to a Pew Research Center survey, 89 percent of Americans support expanding solar panel farms and another 83 percent support expanding wind turbine farms. A little more than half of Americans are opposed to efforts to expand fossil fuel production.
Most consumers are willing to pay more for products from businesses that are perceived as environmentally friendly. According to Nielsen’s “2015 Global Corporate Sustainability Report,” 66 percent of respondents say they are more likely to pay more for a product from an eco-friendly organization—up from 55 percent in 2014 and 50 percent in 2013. Also, according to the recent “Resident Preferences Survey,” conducted by the National Multifamily Housing Council, residents are willing to pay nearly $400 more per year to live in an apartment building with a green certification.
Indoor Sustainability Initiatives
When it comes to lodging, some travelers may be skeptical of the motivations behind hotels’ sustainability claims, noting that the innovations are intended to cut costs more than help the environment. Some hotels, however, have gone the extra mile to ensure they protect the environment. One method is IHG Green Engage, an online tool that allows hoteliers to benchmark their properties against others in the industry in areas of sustainability.
Some ways hotels are on the cutting edge of sustainability include the Westin Princeville Ocean Resort Villas in Princeville, Hawaii, which donates the proceeds from its recycling program to charities and a scholarship fund. Holiday Inn Express has donated old equipment like its coffeemakers to Goodwill Industries, which saved 300,000 pounds of waste according to IHG. At the Seaport Hotel & World Trade Center in Boston, the grease from food waste is collected by a company and then converted into home heating fuel. The Intercontinental New York Barclay in New York City is entirely wind-powered, has a rooftop garden and a bee colony. The hotel has partnered with a local organization that intends to plant more than a million trees within the city, as well as a local high school to help tech students about tourism in New York City.
Outdoor Sustainability Initiatives
Outdoors, environmental stewardship continues to take place. Pebble Beach Resorts was awarded the 2017 International Association of Golf Tour Operators Sustainability Award for Resource Efficiency. The resort supports many environmental initiatives, and two of its major projects were recognized. The first is a wastewater reclamation program that allows all Pebble Beach courses to have access to reclaimed water for irrigation—a $67 million endeavor. The other is a new solar power initiative that is designed to offset 73 percent of the energy expended at the Pebble Beach Golf Links maintenance facility. The project includes a 25-year carbon footprint reduction and is expected to save $900,000 over that time period.
The Golf Course Superintendents Association of America gave their 2017 President’s Award for Environmental Stewardship to Josh Heptig, superintendent at Dairy Creek Golf Club in San Luis Obispo, Calif. Continuing a trend in other industries nationwide, Heptig sought to create a zero-waste golf facility. Some of the changes were small, such as adding blue recycling bins to the course. Others were more complex, such as Heptig’s compost tea brewer, which creates a liquid turf fertilizer using earthworm food waste. Heptig also introduced birds of prey through installing owl boxes and raptor perches to control the population of rodents and other pests, and sheep were brought in to help eliminate invasive plants and protect native plants.
Legislative & Regulatory Landscape
The election of President Trump has significant implications for the nation and club industry. During the past eight years under the Obama administration, rules and regulations were tightened on clubs and businesses, incurring new costs and lost opportunities. The Trump administration has made significant pledges to reduce regulation on the whole as well as specific rules that impact clubs. Early in his presidency, Trump has already taken action to help businesses and as a result, clubs.
Overtime Exemption Rule
During the presidential campaign, Trump called for the removal of the now-stayed Department of Labor’s (DOL’s) Overtime Exemption Rule, which would more than double the minimum weekly salary an employee must earn to be considered exempt from overtime. The Trump Administration has already taken significant steps to withdraw the rule.
Pro-Business NLRB
Trump has also taken the first step in making the National Labor Relations Board (NLRB) become more pro-business by appointing a Republican as the new acting chairman of the NLRB. Through this change, the Board will begin to shift from the restrictive policies from the previous board. Trump will also have the duty of filling two vacancies in the NLRB, which will likely be filled by more pro-business candidates than in the past.
WOTUS
The president has also spoken out against the Environmental Protection Agency’s Waters of the United States (WOTUS) rule, would require golf courses to receive a federal permit to apply chemicals and fertilizers to all course land. The rule will likely be modified to better balance the public interest with the industry’s day-to-day operating needs.
Affordable Care Act
The president and Congress have made commitments to make significant changes to the U.S. health care system. Already both the executive and legislative branches of government have begun to the steps to repeal the Affordable Care Act, easing financial and administrative burdens on businesses. Full implementation of a repeal would likely take place in 2019 and 2020.
Immigration
Early into his presidency, Trump signed an executive order banning the entry of citizens from seven countries, Iran, Iraq, Syria, Sudan, Libya, Yemen, and Somalia to the United States for 90 days. As of this writing, the order has been halted. However, the administration has committed to increasing security surrounding immigration into the country, drawing more attention on foreign labor issues. Businesses and clubs should be mindful of any changes to America’s immigration policy and laws that may impact their workforce, as well as the moods and attitudes of foreign workers as new rules are proposed and implemented.
Deregulation
Overall, Trump has committed to reducing regulations on businesses. President Donald Trump has signed two executive orders to help accomplish this.. Although the details of how these orders will be implemented are not yet known, these actions represent the president’s commitment to scaling back regulations on businesses. Throughout the Obama administration, new regulations were enacted that continue to interfere with clubs’ ability to operate effectively.
Coupled with the Republican Congress, it is likely that businesses and clubs will be deregulated. The new president’s efforts to reduce regulations benefit businesses, allowing them to function more autonomously and to better address their specific needs.
Forecast
Clubs have rebounded since the recession and are continuously looking for new ways to grow and compete, not only with each other but other industries as well. Enabled by a pro-business and pro-club legal environment, clubs should understand and consider responding to larger trends to sustain and increase the industry’s growth.
Club Trends Winter 2017