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Eyes on 2022: City Club Outlook

As we prepared for 2021, the first COVID-19 vaccines were being administered, there were high hopes of a 70% vaccination rate by late spring, and we forecasted that the nation would be well on its way back to “normal.” The optimistic view was by the Fourth of July, families and friends would be gathering again.

City clubs were struggling; although open, it was not business as usual the first two quarters of 2021. The pandemic raised the possibility that more workers could move anywhere, prompting a remarkable flow of urban residents out of major American cities with a high share of jobs that could be done remotely. As a result, city club activity and business decreased dramatically. Banquet and function business was virtually non-existent, and member business was limited to take out or very restricted sit-down dining.

What we did not anticipate: vaccine rates would stagger, booster shots would be needed, and some would be hesitant to be vaccinated. The havoc wrought by the Delta and Omicron variants wasn’t foreseen, but with these perplexing challenges came a compelling opportunity for city clubs to both persevere and recalibrate their core business models to emerge triumphant as they and all private clubs weathered this ongoing storm.

Our projections for city clubs in 2022, informed by surveys of more than a dozen geographically diverse and relevant city clubs in the country, break a discouraging trend from the first 17 months of the pandemic—thanks in part to city club leaderships’ adaptability and innovative approaches to sustaining the vitality of their clubs. Despite the many unknowns clubs continue to confront, the key to their revitalization hinges on member engagement and experience to brew that special sauce: member loyalty. As a result, the 2022 outlook for city clubs is positive, with club leaders’ sentiments ranging from “cautiously optimistic” to “surprisingly excited.”

Although off to a slow start in 2021, city clubs became “The Little Engine that Could.” In the words of Mitchell Platt, MCM, CCE, general manager of the Cosmos Club in Wash- ington, D.C., “We are building back, not only better, but responsibly, carefully and ratably.” As an example, instead of hosting Sunday brunch every week, the Cosmos Club provides brunch once a month. Not only does this create more demand but it saves on labor, which is currently a sparse and expensive commodity.

Another area of innovation has been seen in the repurposing of club guest rooms. Mathew Allnatt, general manager of the Jonathan Club in Los Angeles, has converted 40 of his 80 guest rooms into rentable office space. Value was created for members who have left their office space in downtown LA because of COVID-19. The club created revenue-generating space that offers all the comforts and amenities of the club in a healthy, safe environment.

Steve Cummings CCM, CCE, general manager of The Harvard Club of Boston, eliminated a full floor of event space and converted it into the Member Commons. This space offers private co-working space, phone booths, small gathering spaces, PCs with printers and an amenity station. This trend of members viewing clubs as a safe haven amid the pandemic is demonstrative of a broader phenomenon: Humans crave connections with others. It is how we learn, progress and live a more fulfilling life—all things where city and university clubs excel.

While there was a time when urban areas resembled ghost towns, the revitalization of many downtown areas is enticing members to return. Now refocused on careers, members are looking for authentic places where they can belong and spend their time—and that could be a mix of work and leisure as the remote economy blends with the traditional.

Connections and networking were the reasons many clubs came into existence, but for many members, those are not the main reasons they visit the club. As many clubs become remote work centers, fitness studios or just relaxation zones for members, clubs can pitch themselves as places for employees to mix leisure time and focused work. Plenty of workers and companies are embracing this new “paid time on.” Given the likelihood that for many workers, there will no longer be a five-day workweek in an office, industry experts forecast that people will keep mixing business with pleasure. Members living and working hybrid lives will welcome the chance to get away to a luxury environment where they can do deep, concentrated work while regaining a sense of balance.

Clubs realized what they should have always known: More member focus creates loyalty. Offering amenities and services for which members are willing to pay equates to increased dues and ultimate success.

Cultivating club culture enables the club’s ability to flawlessly execute member expectations, positively affecting member loyalty as well as club reputation and profitability. Invest in your members, and they will invest in you.

During the third quarter of 2021, cities across the country saw theatres reopen, along with museums and sports venues. The population began to dip its toe in domestic travel. City clubs saw room nights start to come back in part due to reciprocal use and, although not back to pre-COVID-19 numbers, they are trending in the right direction. With few exceptions, in the fourth quarter of 2021, member dining revenue in surveyed city clubs is equal to if not exceeding 2019 revenues. John Dorman, CCM, ECM, general manager of the University Club of New York, shared that member dining à la carte is higher than pre-pandemic in 2019. He credits this success to the safety members feel at the club.

Further, membership growth is strong, with a fair number of members who had resigned also returning.

As 2022 matures, the overall outlook for city clubs is positive. Will the business model for these clubs, which worked so well pre-pandemic, return 100%? Probably not, but then again, the challenge of the pandemic has created innovation and reimagining, offering city clubs the opportu- nity to “build back better” well into the future.