2021 Predictions on the Shape of the Next Normal

When we were introduced to COVID-19 in March 2020, no one had any indication that ten months later the number of cases and its toll on society would continue to rise. The introduction of a vaccine is promising, but the road ahead remains filled with uncertainty as to when the next normal will arrive – and what shape that normal will adopt.

Since its inception, GGA Partners has traveled the globe working with private clubs, golf courses, investors, real estate developers, resorts, municipalities, and financial institutions. This has provided unique insight into the state of golf, private club, and leisure businesses from many different perspectives.

We have observed that even before the coronavirus pandemic, significant change was underway across the private club landscape. As we prepare for the “new normal” the thought leaders at GGA sat down to predict what they believe is coming in 2021 and beyond.

1. COVID-19 accelerates change already afoot in governance

According to Senior Partner Henry DeLozier, the change brought on by the pandemic is going to necessitate even more rapid change in governance, which GGA has seen clubs struggle with this past year.

“In corporate America, the concept of stakeholder capitalism was at the forefront in 2020 and that has transcended to the private club space,” commented DeLozier. “We’re hearing members across the private club spectrum questioning why they do not have a larger voice in their club and how board selections, as well as decisions, are being made.”

Private clubs that do not have current and effective governance will suffer from decreased member satisfaction and a constant churn of its membership base.

2. The capability to communicate effectively and efficiently will be key

Linda Dillenbeck, GGA’s director for the firm’s communications practice, stated that there continues to be a need to assist clubs in their efforts to communicate effectively and efficiently.

“It is basic human nature that people do not like change,” said Dillenbeck. “To minimize the disruption of pending changes, it is incumbent upon the management team and board of directors to clearly communicate the what, how, and why of their decisions then allow members to voice their opinions. This provides the level of two-way communication members are demanding.”

In addition to communications about club finances and capital improvements, clubs need to improve the use of the data they have collected to provide tailored communications to members. For example, notices about evolving restrictions on golf events should only be sent to those who play and those about activities for families with children don’t need to be sent to empty nesters.

Beyond member communications, clubs that will be successful in 2021 will be those which can retool and refine their external communications to ensure the message of what truly makes the club unique is presented clearly.

3. Greater work flexibility will impact club utilization in new and challenging ways

Report after report has trumpeted the tremendous increase in rounds played during the pandemic. According to GGA Director John Strawn, that is in large part due to work-from-home adaptations which are providing greater flexibility in how and when employees complete their daily tasks.

“People have more control over their work lives,” said Strawn. “Golf experienced fewer restrictions during the pandemic and that has brought out many new and fringe players leading to full tee sheets at both private and public golf courses.”

Full tee sheets are causing negative feedback from those who play more frequently as there is a belief that those not paying full dues are taking coveted tee times. To solve the problem, Strawn predicts clubs will need to revisit their strategies and ultimately their business models more frequently to ensure they are meeting this new and different demand effectively. Flexibility will be critical until the long-term impact on golf demand is better understood.

While clubs continue struggling to ensure fair and equitable access to the tee or courts while accommodating increased demand, Senior Associate Andrew Milne added that clubs should expect that best practice solutions may shift regarding reservations and tee sheet management to include lottery systems and Chelsea systems to ensure dissatisfaction among members is minimized. Understanding that new reservation management approaches may change the value proposition for members, a clear plan and message acknowledging this, and for measuring and adapting the approach as the future becomes clearer, will be important.

4. Clubs must better understand what women want from their club

According to the National Golf Foundation, while only one in five golfers are women, females represent a disproportionately higher percentage of beginners (31%).

Women ease into the game for a variety of reasons; to spend time with their family, to compete, to be outdoors, and to enjoy the support, community, and socialization. As these women age and consider joining a club, they will choose the clubs that shape programs, staff, activities, and offerings to blend the female competitive group with the group that is more interested in the social community.

“We’ve known for some time just how important the role of women and the family dynamic is regarding the decision on whether to join a private club,” commented GGA Director Murray Blair. “For clubs to succeed in 2021 and beyond, they will need to understand how women are impacting the decision-making process and implement the necessary adjustments to make them feel welcome, whether they play golf or not.”

5. Operational efficiencies gained during the pandemic will carry forward in 2021, and their challenges will too

Among the most remarkable takeaways from 2020 was the ability for clubs to adapt their operations and service offerings swiftly and effectively in the face of facility closures, variable human resource availability, and rapidly changing restrictions for public health and safety.

Contactless payments, varying tee time intervals, and pace dispersion tactics are pandemic-inspired efficiencies which GGA Associate Andrew Johnson predicts will continue.

Adding to the list, GGA Director Ben Hopkinson expects clubs will become more efficient at managing grab-and-go meals, take-out dining, and mobile ordering, following the best practices of companies like Uber Eats and DoorDash.

New ways of operating have also brought about new challenges, some of which will persist into 2021 and require even more new solutions to be generated at clubs and courses.

GGA Senior Associate Andrew Johnson expects that the increased costs associated with COVID-19 mandated protocols such as labor for sanitation and cleaning, as well as elevated maintenance expenses due to increased rounds, will remain through 2021.

Clubs that effectively determine what increased interest and golf participation means for facility accessibility, program creation, membership categories and associated privileges will find increased membership satisfaction and interest from new prospects.

6. The pandemic’s impact on club finances will remain uncertain, expect to see more measurement, flexibility, and experimentation

Despite successful adaptations in club operations and economic relief opportunities afforded by governments and municipalities, the full extent of the pandemic’s economic impact will remain varied across club types depending on business structures and market areas.

GGA Senior Manager Martin Tzankov, remains concerned about the financial position of many clubs and believes the brunt of the economic impact has yet to be seen.

“The reliance of clubs on dues increases and capital assessments has been particularly apparent this year and may have stretched the value proposition too far for some,” stated Tzankov.  “2021 will show the clubs where a clear and present value proposition is being presented to members, who in turn, will continue to pay the cost of belonging.”

GGA Partner Derek Johnston believes there are clubs that will be able to increase pricing and sustain the increases in the long-term and there are clubs that will overshoot the mark. Johnston expressed concern that some clubs may move joining fees too high, too fast; golf businesses may move their green fees too high, too fast; and some may move away from tee sheet management practices too quickly.

“Nobody knows what’s coming.  If clubs have experienced less attrition than in the past, it may be due to members being unwilling to give up their safe sanctuary, but when things begin to stabilize post-vaccine that may not persist,” he explained.  “I believe that a portion of the historical attrition hasn’t been abated, just held back.  There will be increased attrition over the next 12-24 months and there may not be the same demand there to replace those who leave, especially as other social and lifestyle pursuits become more widely available again.”

2021 will be a time for clubs to experiment.  A measured, flexible approach to joining fees and dues will be a prudent approach this year.

7. A club’s success will in part be driven by its sum of parts in 2021

Craig Johnston, a partner and head of GGA’s transaction advisory practice, emphasized that the success of clubs during and following the pandemic will in part be driven by its sum of parts. Johnston explained “A private club may include a fitness center, retail store, several restaurants, a golf course, and a marina. The pandemic has impacted the utilization and thus success of all those ‘parts’ differently, and therefore the overall success of the club will largely be dependent on the club’s product or shall we say parts mix.”

“Every club is going to be different depending on its type of business and the operations which comprise it, the extent and variability of pandemic-related changes means that comparatives are going to need to be refined,” continued Johnston.  “Clubs that understand and appreciate the challenges and successes of the various parts of their business will be in a better position to realign and optimize heading into the ‘new normal’.”

8. The movement of people and relocation of companies will reshape markets

Our news feeds have been full of stories about high-profile people and companies moving out of California into Texas, as well as the movement of bankers to Florida from New York. If looking at this as a trend, you might imagine seeing increased need and greater attrition among clubs in the California and New York markets and, conversely, excess demand for clubs in markets like Texas and Florida.

According to GGA Manager Alison Corner, it will be important for clubs to understand the movement of people – not just the movement away from major urban centers and into the suburbs, but also the movement of companies and the actual physical locations of corporations – because they may have drastic impacts to how certain club and leisure businesses perform over the next 5 – 10 years.

Clubs that are mindful of these relocation trends will help themselves to recognize and either seize new opportunities, or mitigate future risks.

Stop Thinking ‘Retention’, Start Thinking ‘Relationship’

Retention is something of a time-selective phrase in club management.

Its definition has, arguably, become too closely rooted in taking action (usually) at the time of membership renewals to ensure as many existing members continue their membership as possible.

While that is a plausible (and at times necessary) position to take, the side effect is that it can begin to build a perception among members that you only care about them when it is in the club’s financial interest to do so.

So how can you go about changing that?

By facilitating meaningful relationships. From the moment they join, for the life of their membership.

The relationships your club cultivates for and with members are essential in developing and maintaining relevance – a key factor in positioning your club to achieve high levels of member satisfaction, retention, and recruitment.

Create the Social Links

Your priority in the early stages should be to integrate the new member into the social fabric of the club.

It’s easy to slip into thinking a member’s perception of the club’s value to them will revolve around the golf course or particular amenities and services you provide. But these tend not to be key factors in deciding whether to stay or leave, especially if they can experience them elsewhere.

What really sets your club apart is the existing membership base: the internal club networks and friendship groups that have established over time. This is the one thing that no other club can imitate. The more you can nurture and facilitate these inclusive and accessible networks, the stronger the emotional connection you can begin to create between new members and the club.

With that in mind, here are some useful ways to help facilitate the kinds of relationships that will instill loyalty and exceed the expectations of new members:

  • Invite them along to new member events (where they can get to know other new members).
  • Identify other like-minded members or members of a similar age to engage or play a round of golf with the new member.
  • Encourage or create opportunities for their family members to engage with the club at an early stage, through new member events, social events or simply by inviting them along to experience the club.

Develop the Connection to Expectations

Fast-forward the clock. These new members are no longer new members and have settled into life at the club. Hopefully, by this stage, they will have established meaningful relationships with fellow members and will be enjoying all aspects of membership.

Now is not the time to become complacent.

As Michael Gregory, GGA Director of Private Club Services, points out, “If you’re not exceeding the expectations of a member, then they are an ‘at risk’ member.”

But how do you keep exceeding expectations? Here’s some thoughts to consider:

  • Assess their satisfaction through a general member survey, or even through a dedicated survey for those of a similar member profile.
  • Identify areas of improvement through the survey and act on them. There is nothing worse than providing a forum by way of a survey but not following through on what your members are telling you.
  • Monitor individual engagement with the club, and look out for any profound changes of usage and utilization. Where there are changes, take the time to understand these and go the extra mile where it’s appropriate to do so.

Deepen the Sense of Belonging

Once members notch up 10 years or more, it’s safe to assume the club has become an integral part of their social life and, hopefully, their family’s too. They have likely forged a number of friendships, become attached to internal networks, and continue to enjoy the services offered by the club.

In this case it would likely take a significant event or set of circumstances to cause their departure.

However, as with any member, this should not reduce how attentive you are towards to this group. This is a group that will likely engage most with the club and have a greater sense of belonging, but also carry a greater influence – and this can be positive and negative.

So how do you manage this group effectively?

  • Have them play an active role in welcoming new members to the club. This will continue to enrich their relationship with the club, bestow a sense of trust in them, and retain a feeling of freshness.
  • Make them feel special. Organize specific events or social opportunities such as father / son or mother / daughter competitions, themed nights or games nights geared towards enhancing the emotional connection they have with the club.
  • Give them a voice – at this point in their member lifecycle they have a wealth of experience to draw from. Ignoring their suggestions can result in the emergence of vocal minorities, so give them every opportunity to serve on committees/boards and take an active role in the programming at the Club.

Retention is something managers focus on when renewals come around; relationships are something they develop year-round. If you can switch your focus to building and developing the relationships your members have with and at your club, you can continually exceed their expectations and create a sense of belonging that they will find difficult to live without.

 

This article was authored by GGA Manager Ben Hopkinson

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