Not Business As Usual
- July 8, 2016
- Agronomy, Business Planning, Capital Planning, Developers & Homebuilders, Insight, Private Clubs, Strategic Planning, Strategy, Success
Developers – like golf course builders – have changed in very basic and impactful ways. The results will be widespread, diverse and unlike the housing boom cycle that was so generous for golf course builders.
The concept of a “developer” has changed. Private club boards and individual golf course owners are today’s developers. The result is smaller projects with highly focused intentions, such as new tees and bunkers, renovated greens and / or dedicated drainage and arboreal projects.
Many of the large-scale residential developers and builders have shelved past methods for community development and, as a consequence, golf courses were assigned different priorities and preferences. Golf remains a lifestyle priority for many of the largest homebuilding companies. These companies are re-sorting the timeline for golf courses, which have been a drag on internal rates of return. Smaller and less expensive amenities, such as fitness facilities and Starbucks-type venues substitute wellness and socialization as the highly attractive early-in-the- project amenities.
The shift in thinking is worrisome to many golf course builders and tests their collective commitment. However, GCBAA members have now experienced the greatest housing booms in the history of the planet – and, with it, one of the greatest growth surges in new golf course development. Likewise, builders have survived the worst economic declines since the Great Depression. Such dramatic highs and lows provide wisdom, insight and a heckuva roller-coaster ride.
What does the future hold for golf course builders?
GCBAA builders must develop new and more efficient methods in order to unlock emerging opportunities.
Understanding that they now operate within a new business paradigm, golf course builders must implement several key changes in process:
1. Be small and act BIG. Golf course builders must be ever more resourceful solution providers for developers of all types. The shift to smaller projects directed by servant leaders and club volunteers means that GCBAA members need to refine their project management and redundant communication skills. Only on certain projects will GCBAA members be dealing with college-educated engineers and project supervisors.
2. Recognize that funding will be a point of pressure for clients and of opportunity for builders who can be good shepherds of project resources.
3. Support where and how golf fits into the overall plan. Golf remains important to more than 24 million people, according to the National Golf Foundation’s April 2016 update. Golf remains “sticky” with its core audience segments and churns roughly 3 million golfers per year. Three million into the game and roughly the same number who leave golf for reasons such as time and economic constraint.
Opportunities are emerging for GCBAA members.
Most opportunities are local in nature, smaller in scope and budget, and more demanding due to lack of experience for “developers”. The opportunity lies in the fact that GCBAA builders can fill important needs.
New projects will surface in states such as Arizona, California, the Carolinas, Florida, Georgia, Nevada and Texas. Almost 80% of the top 50 new residential communities from 2015 launched within these states.
Solutions must be on a smaller scale and ready-to- demand. Most developments will source capital from local resources such as member assessments, local banks and wealthy individuals. Builders who can be nimble, responsive and on-budget will prosper.
Four big takeaways for golf course builders.
1. After a significant market correction, golf remains a primary amenity and land-planning solution for most property developers. And, golf retains advantageous “pull” for 40- to 70-year age cohorts of high household income and educational attainment. New types of “developers” have emerged; they are club committees and boards of directors;
2. It is NOT business as usual. Most successful builders will have changed their methods and systems while continuing to rely upon experienced, expert and proven people;
3. The opportunities that are attainable requires that small companies act big by sharing procurement expertise and network reach. Big builders must use their strengths of access to capital and people to act small by being on-point and highly accessible; and
4. Advanced customer relationship management is essential for every golf course builder – whether the developer is a club or a homebuilding company. Get to know everyone and see that you are known to everyone.
This article was penned by GGA Partner Henry DeLozier for The Golf Course Builders Association of America.