We all have those moments in our personal and professional lives. The ones that get frozen in time. For me, one of the most significant happened at the intersection of Green Island Road and Diamond Causeway on Skidaway Island, just outside of the main gates of The Landings in Savannah Ga. At the time, I was just seven months into my new role as Executive Director at The Landings Club after a nearly 20 years with The Ritz-Carlton Hotel Company and having never worked in a leadership capacity at a private club.
What led me to that fateful moment was an education session at an industry conference in Las Vegas. I attended the event hoping to learn everything I could about the nuances of private clubs. During one presentation, the message really clicked for me. After the conference I contacted the presenter, Bill McMahon of the club planning firm McMahon Group, and asked him to come to Georgia to take a look at our facilities. I wanted to get his thoughts on how we could best influence the future health of The Landings Club.
After a three-hour tour of all our properties which we call campuses, we arrived at the afore-mentioned intersection, and I asked him a simple but direct question. “What is the perception of our club among industry professionals?” He answered honestly… “The perception is that The Landings Club is industrial strength, long in the tooth, and a place that chews up and spits out guys like you!” His comments were good-natured, but there was an underlying truth spoken that got my attention. In retrospect, I am grateful for his candor because it narrowed my focus and provided the context I needed to calibrate our efforts.
The Club
The Landings Club is a very large residential club with six golf courses and an abundant array of other lifestyle amenities. While the board and senior staff understood that dated assets were affecting our position in the marketplace, resources were limited to make the needed improvements. Further, we believed there were foundational issues in the operation itself that needed to be addressed before we could address the physical plant. We still had three years left on an assessment from the renovation of our Deer Creek golf course and a fitness center expansion. When we took those on, the implied promise to the members was that we would not pile a second assessment on top of the existing one. Of course, the great recession of 2008-2009 negatively affected our financial position and membership ranks, so we were left to focus on what we could focus on—the way we operate our club—and make the best of what we had.
Our focus from 2011 through 2013 was on building system capability; everything from how we recruited, selected and trained staff to how we managed and rewarded performance. We had to make changes in leadership, eventually turning over our entire senior team. While all these efforts were difficult, but they increased our stability and, we hoped, our credibility with the membership. All through the process, I worked with supportive Board and Committee members who guided me through the political minefields associated with our industry. As our club’s operational execution got better, our financial position improved and with the conclusion of our capital plan, we knew the time had come to address our physical assets.
The Plan
Some of our physical assets were addressed through resources accumulated in our annual operating plan. This is the result of former Club President Vicki McElreath and our Strategic Planning Committee insisting that our annual operating results fund at least 75% of the depreciation of capital assets, which allowed us to reinvest and update existing assets. We were able to start renovating clubhouses, rebranding each of them with distinct dining concepts so that our four primary dining venues would complement rather than compete with one another in terms of concept, level of formality and price points. With those changes completed, overall annual a la carte dining revenue increased at an average clip of 10% and grew 50% to 100% in the rebranded outlets.
All of this was good, but we still had some major facility challenges we knew could not be solved by our existing financial model. Over time, in collaboration with club presidents, we engaged industry icons to give our board and senior leadership team broader perspective in industry trends and best practices. Through those sessions we concluded that some of our assets were liabilities that were diminishing our competitive position. We engaged McMahon Group to begin the process of exploring what we should do with our second largest and oldest facility, the Marshwood Clubhouse. It was a living time capsule of the 1970s, 15 years past its most recent renovation. After we calculated the cost of renovation, Board President Tim Lindgren asked the obvious question: “What would it cost to scrape it and build new?” Our advisors suggested that would indeed be the better path if we wanted to get the most value for dollar spent. They also suggested that we think about the entire club, not just Marshwood, and conduct a member survey to gain a better understanding of how to improve our relevance for current members and our position in the marketplace for future members.
The resulting surveys and focus groups set our sights on three of our five primary campuses, the first being Marshwood. There was resounding agreement that Marshwood had outlived its useful life and no longer represented what members wanted or what the market was demanding. The second target facility was our Oakridge Fitness Center. While recently expanded to 48,000 square feet under roof (including two indoor pools), the facility had quickly become dated and overcrowded. Peak days registered between 800 and 1,000 check-ins and while the facility was good, it didn’t reflect the aesthetic values we believed were important to our club. Third, it was clear that our Franklin Creek campus, home to 20 of our 32 tennis courts, needed work. Our outdoor family pool was inadequately sized, dated and in need of renovation. We also believed our Tennis Café on that campus was poorly located, undersized, and uninspiring. We believed the changing demographics of our club would support a fast casual concept which we envisioned as a stylistic blending of Panera, Starbucks, California Pizza Kitchen, and a pool bar. Finally, demand for Pickleball and Bocce was increasing, and it was obvious that our makeshift courts reflected poorly on our club.
The Transformation
We worked with the McMahon team to respond to the gaps identified in the focus groups and survey. The initial plan was bundled, meaning members were given the option of voting for all three projects or none, and when the votes were counted, we experienced the sting of defeat; only 44% of our membership supported the original $22 million plan. We considered unbundling and revoting the plans separately but chose to take a breath and use member-led committees to study and rework the plans as needed. Building on the initial work done by the McMahon team, board member Chuck Koepke took the lead. The resulting plans were more extensive in scope and were to be voted on separately. If all were approved, the total price would be more than $26 million. We expected one or two plans might not pass so we were pleasantly surprised when all three were strongly supported by the members with an average margin of 70% to 30%. This was an important moment in our club’s life and looking back I believe this was a make-or-break moment.
Early on in the process, we were warned that we would probably lose between 5% and 10% of our membership if the vote was not unanimous. The McMahon team explained that this was common, but clubs that persist and complete aggressive capital plans typically recover those memberships quickly and gain another 5% to 10%. We were also advised that failure to reinvest was likely to trigger a death spiral that would devastate our future. With this as context, our team and the Capital Project Committee worked from 2017 through May 2020 with Kuo Diedrich Chi Architects and Choate Construction Company to complete all three phases.
As predicted, we experienced an initial drop in membership from 2,900 memberships to 2,800. Once structures started to come out of the ground giving members a sense of the scope and impact of the projects, membership began to recover and today we are approaching 3,200 total memberships: 50/50 golf and nongolf (Athletic or Social). Our position has been radically altered in many ways. Experientially, we’ve elevated the perception of The Landings Club and changed how our members use our club. We were once monolithically focused on retirees, but today, we have
truly become a multi-generational club.
Build a Budget to Support the Mission
The title of this article refers to The Landings as a “Paradigm Pioneer” because it was one of the earliest and largest communities to increase value of real estate by adding resort style elements, most notably golf as the centerpiece. We were at the cutting edge of this movement in the first 30 years of our life, but by 2010, we had lost our luster and our value proposition was primarily built on low price rather than quality of assets and a compelling member experience.
In the early years of our relationship with Club Benchmarking, Founder Ray Cronin posed a most provocative question: “Do you budget to support your mission, or do you adjust your mission to support your budget?” There was a time when the latter was true. We were in survival mode until we started to understand that private clubs are different and need to offer something members can’t get outside of the gates.
With that understanding and the support of visionary volunteer leaders, The Landings Club is now in a much different place than it was a decade ago—even three years ago. There are many contributing factors to that success, but the transformation began when our leaders cast a vision and set out to bridge the gap from where we were to what we aspired to be. As we look at the competitive landscape, our own highly critical self-assessment versus other clubs in our region, it demonstrates that we have changed the net value of our assets—how we execute and how we are perceived.
The most glaring example is the growth in food and beverage revenue. In 2011, total à la carte revenue was $3.4 million, driven from three of our four full-service clubhouses, a pool bar and two snack bars. In 2021, we are likely to eclipse $13.5 million (plus $2.8 million in catering) generated by eight distinct dining venues. Members no longer travel off island to dine. They support their club, not because they feel obligated or because they need to consume a dining minimum, but because they genuinely want to.
Our member education is largely based on sharing Club Benchmarking data which supports the concept that members must think like owners, not customers. Educating the members helped us accelerate member dues (operating and capital) to allow accumulation of the capital needed for reinvestment in our club and support more robust programming and better execution of an expanded operating model. Yes… we increased prices, which was risky because price plays a role in how we as humans judge a product’s value. When the cost goes up, so do expectations. To measure our members’ perception of value, we partner with the Gallup research firm to survey a revolving segment of our membership every two months. One portion of the survey asks members to respond relative to their level of agreement (from strongly disagree to strongly agree) with the following: “The Landings Club provides good value for what I pay.” Typically, value questions in member or customer surveys are usually scored lowest because, let’s face it, we all want a deal, and we want to pay less for it. We are affirmed by the fact that each year since 2017, the mean score, top box responses, and percentage of favorable responses on our surveys have grown at a statistically significant rate.
Club Benchmarking research has proven that the healthiest clubs are those that increase member equity—not just on the balance sheet but also their emotional equity aka attachment to the club, and I believe these two ideas are inseparable. The Landings Club is in a healthy position now, but our goal is to stay focused on the “next thing” to grow member equity and emotional connection so that The Landings Club remains a leader among residential clubs for the next 50 years!
Steven Freund is Executive Director at The Landings Club.