Reversing the Death Spiral
Full service Club in emerging market losing Members and creating large pockets of differed maintenance and capital while losing over $500,000 per year. Aka ‘The Death Spiral.” Located in one of the largest growing areas in the Houston market, we found a property in need of a new direction. The Club was fully equipped with aging amenities, a poorly kept 18-hole championship golf course with a great layout, 7 tennis courts, swimming pool and dilapidated gym. The food service experiences were not consistent nor in-line with what the Members were looking for and the efficiencies were poor on top of it all. Turn-over in all departments was at an all-time high and the Members were responding with down-grades and high level of attrition. The department head teams were not in tune with the Club’s overall vision and were kept in the dark on the financial struggles of the Club. New competition entered the market in the form of new private Clubs with much better experiences as well as new restaurants and entertainment venues further leading to the concerns of the ownership. Real Estate in the community was on the rise and the economic indicators were all positioned for growth but the Club was in TROUBLE!
We began by holding ‘town-hall’ type meetings with the Members and Community to determine the areas that they would want the Club to prioritize. We met first in mass then with small groups to focus on micro areas of the Club such as golf and tennis. We created an investment strategy to respond to the community and demographic research that we completed and began the process of re-growing the Club. We followed-up with all groups to keep them in the loop of communications and our goals, timelines and strategy which assisted with large levels of acceptance. Over the following twelve months, we created a state of the art fitness facility and new outdoor social/dining venue, adding value to all Member categories. We completed a successful dues roll-back program in the overpriced tennis category and began putting infrastructure in place to have a long term impact on the quality of the golf course and overall golf experience. We confirmed our position by tracking usage which increased in all areas of the Club exponentially. We also began to see the Clubs Membership grow to a healthy level and the downward trends seemed to take a complete halt. By the end of the first year, we had increased Membership levels by 20% moving from 500 to 614 net Members in just our first year. We continued our investment and focused our efforts on Club experiences. We repurposed some underutilized spaces in the Club to add a Kids Klub babysitting facility and created an array of interactive programs to continue to improve the retention of our Members. Throughout year two, we continued to see improved retention as well as continued growth. As our Members ‘voted with their feet’ we are creating more casual, social spaces in the Club and relevant food and beverage menus to bring the fellowship to an all-time high. Our Membership at the end of year two is over 750 and growing. We see the future of this Club to be bright as it has now become positioned as the most desirable Club to belong to in this growing vibrant Market!
Aging Not So Gracefully
A large, multi-course club in Texas experienced significant attrition over the years, and was struggling with an outdated and deteriorating infrastructure. Membership sales and club usage were declining and a new, modern competitor was opening in the market. The club was caught in a "Catch 22" in that it could not attract the new members it needed to fund the improvements it needed to attract new members. Over the years, a number of different approaches had been tried, some causing more problems than they cured: consolidating membership categories, cutbacks in services and operating hours, and radical reductions in membership fees. The bottom line: the club looked and felt tired, the members were no longer proud of the club, usage was declining, and the club was no longer able to meet the needs of the local community. If the financial trends continued to decline, the club's very existence would be in jeopardy.
When we completed our analysis of the club's membership history, one trend jumped off the page. Most of the attrition was occurring among those who had been members for less than two years. The club wasn't providing sufficient value to keep the members it was able to attract through severely reduced initiation fees.
Our comprehensive market study disclosed that of the more than 80,000 people in the immediate market, almost 25% were children under 15. The average age of the club members was much higher than the parent demographic, and this trend had been missed. Armed with this data and substantiation from focus research gathered from club members, club staff, and community members, we were able work with the club's management team to devise a strategy for repositioning the club. It was important that in achieving this, we did not alienate the existing members.
To meet the needs of the young family market, the first phase included the development of a new fitness center and tennis complex and the replacement of the antiquated pool area with a modern water park. By "selling the future", the club staff was able generate enough membership commitments to trigger construction of this exciting new amenity. Because it was a multi-course club, the staff was able to devise a "family friendly" golf program which wouldn't interfere with serious golfers. Our team developed new social programming especially for families, including activities and camps for kids and a new kids' clubhouse. Plans were developed for separate dining areas designed specifically for families and for adults.
The reaction was terrific and membership sales improved dramatically. The revenue generated allowed for the phased remodeling of the main clubhouse and much appreciated upgrades to the practice area, player development center, and golf courses. Each phase was triggered by achieving preapproved membership levels. The club buzzed with activity and gained a new lease on life!
Controlling Their Own Destiny
This spectacular private club hosted an annual stop on the PGA tour and had a national reputation. It had a very affluent membership and was surrounded by million dollar homes. The members were very loyal to the club and were fiercely protective of its image. The club's operating standards were very high and as a result it had a large operating expense budget. The club was substantially below its targeted membership level and struggled to generate enough revenue to cover these expenses.
At some point in the past, it had been decided to allow limited outside play. While this decision solved the revenue problem, it caused a significant level of consternation within the membership. Some members went so far as checking bag tags and confronting un-accompanied guests. It became a frequently and hotly debated issue at board meetings.
After analyzing the club's financials, the patterns of outside play and the financial impact of the guest fees, we met with the club staff and the board. Fortunately, the club's management team was strong and had kept excellent records. While they were reluctant to give up the golf revenue, they respected the member's wishes. The membership was very clear about what they wished for: a truly private club. Working together, we were able to craft a workable solution. If the club would be able to acquire a full complement of members, the outside play would be unnecessary.
We initiated an approach that allowed for the elimination of a specific number of outside rounds as each new member was added. When the target was reached, all outside play would be eliminated. To gain the members trust, the number of outside rounds and the number of members added were reviewed at each board meeting. We developed an exciting membership program to help the members to sponsor new members. The members embraced the program enthusiastically, and the club achieved true private club status.
Truly Going Private
Following a contracted study and in an effort to increase the tourism infrastructure of one of their renowned beach destinations, a Mexican State government sought the development of an additional 36 holes of championship golf. Site selection and architects both became critical ingredients for the government to accomplish its objective of "attraction" level golf and for the developer to create a viable stand-alone business. A perfect site was identified: 186 hectares overlooking the destination with views of the ocean. However, as with many suburban areas in Mexico, the identified site was "ejido" land.
Ejido land is not private property and no title exists. In an over-simplified explanation, an ejido is a collective group of people that live and work on a determined piece of property as a community wherein the community controls the destiny of the land. Until ejido land is converted to private property, non-ejidos cannot acquire "ownership."
Since the constitutional reforms of 1992, ejido land now can be converted into private property and sold to third parties, including foreigners. A formal offer was made to the ejido association, followed by assemblies, meetings, one-on-one discussions, and quite a few BBQs. The Association accepted our offer. The ejido further agreed to enter and complete the following two procedures: PROCEDE or "Program of Certification of Ejido Rights" and "Dominio Pleno."
Six months and three days later we became the first US Corporation to "privatize" then acquire ejido property in this State. Mexico developers from Los Cabos through Puerto Vallarta down to Acapulco sought our expertise after this unique accomplishment.
A prominent group of Mexican developers desired to build a golf course and real estate development on a tourism resort destination island located off the mainland of Mexico. The problem was that this area was one of the most environmentally sensitive areas in the world. NO ENVIRONMENTAL PERMITS HAD BEEN ISSUED IN 17-YEARS.
A joint effort was organized wherein the architect and construction company worked hand-in-hand with SEMARNAP and the Insitute Nacional de Ecologica (INE) to mitigate the environmental impact of the development (impacto ambiental). The end result was the 1st Environmental Permit issued in 17-years. The permit included 56 conditions, jointly drafted, to assure environmental safeguards. The golf course opened and was immediately inducted into the Audubon Society. The Audubon Society's charter is to conserve and restore natural ecosystems, focusing on birds and other wildlife for the benefit of humanity.
A major real estate development company was developing a 360-home development in the Dallas/Ft. Worth metro area. The development included an upper-end golf course as its centerpiece. A traditional management company had been retained to manage the business. After 4-years and a 70% build out, the development company was still subsidizing the golf course approximately $750,000 per year. A change in the company's status and a downturn in the economy brought focus on the golf course as a stand-alone business. The executives of Triumph Golf were contracted to perform an efficiency analysis report.
Based on the report, we were contracted to "Consult to Self-Manage" and the existing management company was released. Certain department heads had potential, including the Manager, while one department head had to be replaced: Right People/Right Place. Following the development of a Market Position Statement, we analyzed every cost, reviewed payroll and aligned incentives with desired outcomes. We modified hours of operations and F&B offerings, and amended green fees and F&B pricing. We redefined membership categories And implemented new membership programming. Every facet of the club was treated as unique.
The end result was a $500,000 cash improvement during the first 9 months of our involvement, with projections showing positive net cash by year three in a difficult economy. Member satisfaction was also on the upswing and member involvement was at a new high.