Mid-Year Predictions for the Second Half of 2021

At the start of the new year and in the spirit of planning, the thought leaders at GGA Partners sat down to predict what we believed to be coming throughout the year and shared our 2021 Predictions on the Shape of the Next Normal. Now, halfway through 2021 with the spring season in the books and summer underway, we reconvened GGA leaders for a mid-year check-in on predictions for the latter half of the year.

1. Ensuring fair and equitable access to amenities remains top of mind, especially on the golf course

A trending topic throughout the industry is golf’s demand surge and how long it will sustain, much has been written on this point and those who are closely watching rounds played metrics anticipate a clearer reading by the end of the summer.

Stephen Johnston, GGA’s founding partner, expects that private clubs will see the surge continue to elevate rounds played by members which will likely increase issues relating to compaction of tee traffic and accessibility.  He predicts the benchmark regarding average number of rounds per member to be higher by approximately 10% following the pandemic and also increased golf course utilization by members’ spouses and family members.  Both factors will create a greater demand for tee times at private clubs.

Johnston believes some clubs may need to consider permitting round play by fivesomes instead of foursomes, potentially catalyzing logistical challenges such as a greater need for single-rider power carts in order to maintain speed of play at the same rate as foursomes with all players using power carts. For club managers and course operators, this entails an increased need for current and detailed evaluation of the benefits of membership and the relationship between playing privileges and the practical ability to book a tee time and get on-course.

2. Effective demand management is key and will shift from agile, flexible approaches to new operating standards as demand stabilizes

During the pandemic and throughout 2020, many golf, club, and leisure businesses recognized the increased need to more accurately and routinely measure the utilization of amenities, adapting operations management to react quickly to change.

Craig Johnston, head of GGA’s transaction advisory practice, anticipates an evolution in this one-day-at-a-time, agile monitoring approach into a new and more formalized standard of operating procedures.  “At the start of 2021, we said we would see clubs provide flexibility and experiment with various operational changes,” he explained.  “With the pandemic feeling like it’s steadily moving toward the rear-view mirror, members will be expecting clubs to begin instituting the ‘new normal’ operations and the data compiled by clubs in the first half of the year will be critical to deciding on the new normal.”

Johnston believes that membership demand will continue to be strong through the second half of the year and that it is likely utilization will reduce marginally as members begin travelling again for work and social obligations.  Even with a marginal reduction in utilization, demand for private club services will remain strong and will continue to put pressure on capacity and access in most clubs.

Senior Partner Henry DeLozier encourages club and facility operators to embrace short-term continuations of high demand while keeping an eye on the future and the non-zero probability of a demand shift in the coming years.  “Clubs must create pathways to sustain demand while navigating utilization volume.  It is unwise to place hard or irreversible limitations on capacity while clubs are at historic maximums for demand and usage,” cautioned DeLozier. “Clubs will do well to establish a clear understanding of demand and utilization to enable innovative programs which serve to fill periods of low demand in the future.”

3. Ongoing uncertainty about the pandemic’s long-term impact on club finances will increase the review and reevaluation of club financial projections to ensure sustained budget flexibility

While data regarding utilization, participation, and engagement throughout the summer months continues to be captured and consolidated, business leaders should not delay their financial planning and instead get to work on reevaluating finances and updating their future forecasts.

“Now is the time to review, evaluate, and reset club debt levels,” emphasized Henry DeLozier. “Clubs need to recast financial projections based upon elevated joining/initiation fees arising from high demand.”

In support of alacrity in financial planning, DeLozier notes that labor shortages spurred by the pandemic will increase payroll-related costs at a material level. He also predicts that comprehensive risk review is needed at most clubs to evaluate possible impacts arising from cyber-crime and/or declining club revenues during 2022.

Beyond internal shake-ups in utilization or operations, club leaders should be anticipating external impacts that could impact their financial plans.  A hypothetical example raised by DeLozier is if the U.S. economy were to become more inflationary.  In such a circumstance he believes clubs would see an increase in the costs of labor and supplies which would necessitate increases in member dues and fees, a deceleration of new-member enrollments as consumer confidence dips, and a slight slow-down in housing demand.

Right now, uncertainty remains with respect to the virus as well as the resulting economic impact from the pandemic. From a financial standpoint, clubs will do well to advance their forward planning while retaining budget elasticity.  “It will be imperative for clubs and boards to build flexibility into their budgets and agility into their operations,” added Craig Johnston.

4. Existing governance practices, policies, and procedures will be revisited, refurbished, and reinvigorated

A litany of new ways of operating and governing the club arose as a result of the pandemic, some of which suggest an efficacy that can be sustained in a post-pandemic environment.  Essential to assimilating these adaptions into new standards of procedure is a review of existing governance practices and the documentation which supports them.

“At a time when boards can measure the full range of financial performance metrics, updating club governing documents is a primary board responsibility,” noted Henry DeLozier.  “Board room succession planning must be formalized to prepare clubs for the inevitable downturn from record high utilization.”

In considering the nearly overnight adoption of technology tools to enable remote meetings and board-level deliberations, partner Michael Gregory noted a substantial increase in the use of technology tools that go beyond virtual Zoom meetings.  “The pandemic has allowed clubs to test online voting,” he explained.  “For many clubs, once things return to normal, their bylaws won’t allow for the continued execution of online voting unless they make changes.”

“We have seen the adoption and implementation of online voting to be a huge success for the clubs who have tried it for the first time,” said Gregory. “Members love it, it’s easy, it’s convenient, it leads to higher participation from the membership, and many clubs are in the process of changing their governing documents to allow for online voting as a result.”  The challenges and opportunities of employing online voting are detailed in our piece on taking club elections digital, which features a downloadable resource that can be shared among club boards.

5. In human resources, expect to see deeper reevaluations of compensation structures and employee value propositions

Weighing in from across the pond, Rob Hill, partner and managing director of GGA’s EMEA office in Dublin, predicts that club leaders will face bigger challenges in human resources throughout the remainder of 2021.

The first of three particular items he called out is a reevaluation of compensation.  “Making decisions about employee pay is among the biggest challenges facing club leaders in the wake of the coronavirus shutdown,” stated Hill. “As they begin compensation planning for the rest of the year and into 2022, these leaders not only have to consider pay levels, but also the suitability of their mission and operating model to thrive in a post-pandemic world.”

Citing his recent experiences in the European market, Hill shared that club leaders are challenged with finding new ways to operate smarter and more efficiently, while also looking for innovative ways to implement sturdy, low-cost solutions that their employees will love.  Which leads to his second point, that there will be a renewed emphasis on what employees love and how clubs, as employers, can provide an enhanced value proposition for their employees.

“As employees get back to work onsite, employers are finding that what their people value from the employment relationship has changed,” Hill explained.  “Where pay has been viewed as largely transactional in the past, clubs may need to provide new types of benefits, especially programs that provide more flexibility, financial security, and empowerment to retain and motivate their people.”

Lastly, there is likely to be considerable movement of talent over the coming year brought on by employees’ new work-life ambitions and financial imperatives, said Hill, “As demand for their skills and experience grows, the very best talent will seek out employers that demonstrate they view employees not as costs but as assets and reflect this in their approach to compensation.”

Recalling our start-of-year prediction that the movement of people and relocation of companies will reshape markets, partner Craig Johnston added, “The relocation of people continues to be a prominent trend and one that is likely to continue in the second half of the year.”  For club employers, it’s not just the changing physical locations which impact the cost and supply of labor, but also the expectations of employees as they seek out competitive new roles and work experiences.

6. The repurposing and reimagining of club facilities, amenities, and member-use areas will continue

The pandemic pushed to the fore the need for clubs to adapt their facilities to match changes in the ways members use and enjoy their clubs.  A combination of practical evolutions for health and safety and circumstantial evolutions drawn from widespread ability for members to work remotely created increased desire for clubs to offer more casual outdoor dining options and spaces to enable members to conduct work while at the club.

Partner Stephen Johnston believes these sentiments will continue to near-term facility improvements at clubs.  “With more flexibility in the workplace and members working from home periodically, there will be a need at the club for members to do work or take calls before their tee time or their lunch date,” he said.  “It has been evident for some time that members generally prefer to enjoy outdoor dining and since, throughout the pandemic, it has become apparent that guests draw greater comfort in outdoor experiences, I see a greater demand for outside patio and food and beverage service.”

As society begins to reopen and communities begin to stabilize, time can only tell precisely how clubs will continue to evolve their operations, whether that be scaling back pandemic-relevant operations or doubling-down on new services and efficiencies.  Evident in our work with clients are significant efforts to reorganize club leaders, reevaluate operations, and retool plans for a successful future in the new normal.  Here are a few highlights of efforts clubs are making for the next normal:

 

  • Reinvigoration of governance processes and engagement of leaders to ensure alignment between boards and club strategic plans.
  • Renewed surveying of members to keep a pulse on how sentiments have changed from pre-pandemic, during pandemic, and currently as communities stabilize.
  • Enhanced adoption and application of electronic voting as clubs reevaluate membership structures, governing documents, and operating policies amidst “displaced” members.
  • Reconfiguring of budgets, capital plans, and long-range financial models.
  • Refinement and advancement of membership marketing strategies, tactics, and materials.
  • Tightening relationships between facility planning, capital improvements, and member communications campaigns.

Webinar 5/5: The Most Underrated Club Metrics

Jonas Club Software & GGA Partners to Co-host a Webinar Revealing the Most Underrated Club Metrics

Markham, ON Canada – Join Jonas Club Software and GGA Partners, the trusted advisors to the golf, private club, and leisure industries, in a special webinar event, discussing the most underrated club metrics that clubs should be paying attention to in 2021. With private clubs undergoing so much transformation in the last 12 months, many clubs are experiencing trends of rapid change and, as a result, require a plan to monitor membership like never before.

Focusing on metrics to help club management make more informed decisions, the session will cover metrics focusing on membership demographics, risk, spending and utilization. The session will be co-presented by Trevor Coughlan, VP of Marketing and Mark Darling, Product Manager – MetricsFirst, of Jonas Club Software, and Derek Johnston, Partner and Martin Tzankov, Senior Manager of GGA Partners.

The session will take place on Wednesday, May 5th, 2021 at 1:00 P.M. ET.

If you would like to attend this 45-minute session, registration is available for free by visiting: https://attendee.gotowebinar.com/register/6315081732484665869.

Register for free →

 

About Jonas Club Software

Jonas Club Software helps clubs thrive by focusing on the creation of exceptional experiences. These experiences are delivered through industry-leading services, integrated applications, innovative technology, and long-term partnerships with the clubs we serve.

Over 2,300 clubs in more than 20 countries, with memberships ranging from 20 to 20,000, utilize Jonas Club Software technology. With applications ranging from Accounting to Retail Point of Sale, Tee Time Management, Court & Class Booking, Dining Reservations, websites and Mobile Apps, Jonas Club Software is the standout choice for clubs driven to offer exceptional member experiences. For more details visit www.jonasclub.com.

 

About GGA Partners

GGA Partners™ is an international consulting firm and trusted advisor to many of the world’s most successful golf courses, private clubs, resorts, and residential communities. We are dedicated to helping owners, asset managers, club and community leaders, investors and real estate developers tackle challenges, achieve objectives, and maximize asset performance.

Established in 1992 as the KPMG Golf Industry Practice, our global team of experienced professionals leverage in-depth business intelligence and proprietary global data to deliver impactful strategic solutions and lasting success. GGA Partners has offices in Toronto, Ontario, Phoenix, Arizona, Bluffton, South Carolina, and Dublin, Ireland. For more information, please visit ggapartners.com.

 

Media Contact:
Trevor Coughlan
Vice President, Marketing
Jonas Club Software
Trevor.Coughlan@jonasclub.com
1-888-789-9073

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.

Four HR Questions Club Boards Should Be Asking

When was the last time your club audited its human resources? Alignment between a club’s strategy and its employee offering is essential in order to enhance the overall club lifestyle, culture, and experience for members and staff.

To determine whether it’s time to reexamine culture, Partner Derek Johnston lays out 4 questions private club boards should be asking. 


Among the most reverberant takeaways from the coronavirus pandemic is the importance of people to businesses. Global business leaders and executives at leading corporations have indicated that the shift toward talent as the most important source of corporate value has continued. The pandemic also seems to be leading an increasing number of talent-forward companies to take an “employees first” approach.

But this is nothing new for large-scale global businesses. Indeed, the third week of August marked the one-year anniversary of the influential Business Roundtable’s statement on corporate purpose – which puts employees, customers, their communities, and the environment on a par with shareholders.

“Human resources” is trending

It’s also nothing new for club businesses. Our continuous research on club industry trends has shown human resource management and labor challenges to be a persisting trend, one which club managers have reported to be rising in importance – before the coronavirus.

In 2019, human resources was ranked the 6th most-impactful private club trend (out of 27) in a global survey of club managers. And, in a separate Canadian club industry survey, it was identified as both a key risk and primary hurdle to modernizing club management while topping the list of areas which managers say are under-supported from an education standpoint.

The early-pandemic question as to whether COVID-19 impacts would accelerate the business community’s move to stakeholder capitalism, or slow it down as companies focus on short-term financial pressures, seems to have answered itself.

For clubs, the people-related challenges previously reported by managers have exacerbated, with topics like employee willingness to work, labor anxiety, staff recruitment and turnover emerging as key strategic questions which club leaders are currently wrestling.

Widespread COVID-19 impacts like club closures, layoffs, and furloughs certainly haven’t helped ease concerns. With significant changes afoot in staffing, retention, human resource availability, and operational adaptations, clubs are presented with a unique opportunity right now – the chance to reevaluate and perhaps reset their culture.

Got culture?

In clubs, culture IS governance. Sound governance is a strategic imperative primarily because it enables, supports, and nurtures effective strategy. And, as the Peter Drucker saying goes, “Culture eats strategy for breakfast.”

This is extremely important for club leaders.

It’s important because it means that no matter how strong a club’s strategic plan is, its efficacy will be held back by team members, staff, and employees if they don’t share the proper culture.

When the breaks are going against the business, as they are for some right now, the people implementing the club’s plan are the ones that make all the difference. While strategy defines direction and focus, culture is the habitat in which strategy lives or dies.

Now is the perfect time to reexamine your club’s culture to ensure staff square rightly with the club’s strategy. In other words, to ensure that your people are the best fit for accomplishing the club’s goals and objectives. Someone who was right for a specific role pre-pandemic may not be right for the same role now. Your business has changed, and some people may need to change too, either themselves or their roles.

How can club leaders reexamine culture?

The first place to start is by understanding what you’re currently doing for employees. Club leaders require a comprehensive understanding of the club’s current approach to human resource management so that they can determine the alignment of people and culture with the club’s goals.

When was the last time the club audited its human resources approach, policies, procedures, and performance? Ensuring alignment between the club’s strategy and its employee offering is essential in order to enhance the overall club lifestyle, culture, and experience for members and staff.

To help you get started, here are four HR questions private club boards should be asking:

1. How does our current organizational structure sit relative to best practice and what recent COVID-related changes should we make permanent or revisit?

Review your club’s current organizational structure, including both employees and contract workers, against best practice structures at comparable clubs locally, nationally, and globally. This review should focus special attention on the roles and responsibilities of human resources within the organizational structure with the goal of highlighting key gaps or divergences from best practice. Often times in clubs, an overly flat organizational structure tends to create ‘siloes’ that breed inefficiencies and bloat staffing levels.

2. Are we both efficient and competitive in the compensation and benefits afforded to employees?

Complete a comprehensive benchmarking exercise which compares compensation and benefit levels of all key staff and for the club as a whole to comparable clubs and other businesses with whom you compete for talent. The focus of this exercise should go beyond salary and hourly wages, factoring in relevant club financial and operating data, benefits packages, member and employee feedback scores, and other market-related information.

The goal is to identify current and accurate reference points for evaluating current compensation and benefits against best practice. There is a high degree of likelihood that there are opportunities in your current compensation and benefits structure to better align incentives and shift compensation to top talent, which tends to support increased productivity and reduced head count.

3. Are our personnel positioned to help us achieve the club’s goals and objectives? Are we helping them achieve theirs?

Assess your club’s performance tracking and review processes. The goal here is to analyze current performance evaluation processes and procedures to ensure alignment with the club’s overarching goals. This requires the board and executive committee to have a focused, clear, and comprehensive understanding of the club’s mission, vision, core values, and objectives.

For maximum benefit, to both member and employee satisfaction, it is incredibly important that performance is measurable and incentivized. The trick is determining the right way to track and measure performance and tie it to the right incentive.

4. Are our staff equipped with the tools they need to succeed? Are they empowered to do so?

Evaluate your club’s current recruiting, onboarding, training, and ongoing relational efforts. This will likely require management meetings and staff interviews to learn about the current approach and unearth any ideas or recommendations your team may have to suggest.


The success of every private club is dependent on the quality of their staff. Recruiting the best talent, integrating them into the envisioned culture, training them for success, ensuring their satisfaction, and ultimately retaining them is an important goal. The outcome from which tends to have a positive financial impact on the club and on the member experience.

After all, an investment in people is an investment in culture and clubs will benefit from this investment.

Looking Outside the Boardroom

Board members are an important source of experience and knowledge. But when making strategic decisions on the future direction of the club, that expertise can easily be hampered by a lack of access to valuable data and actionable information.

GGA’s Bennett DeLozier explains how to connect your board with the critical insights they need from outside the boardroom.

Scenario: you’re a manager, it’s sunny, you’re in a board meeting, fluorescent lights buzz overhead.  The group is brainstorming capital improvement projects ahead of next season.  The topics of budget, capital reserves, assessments, competitor offerings, and attracting new members swirl around the room.

Someone claims that what members “really want” are new amenities, another counters that new amenity supporters are mostly younger members in restricted categories, a third comments on the price of dues for this group.  Opinions begin to diverge on membership pricing, someone mentions member satisfaction, people start using the word ‘should’, and a healthy, productive conversation turns to conjecture.

In this situation, a common reference point can bring everyone back on task. You’re confident you probably have data points on all of these topics somewhere in your office or in your inbox.  You’re scrolling, scrolling.  Before long, the meeting adjourns with decisions on hold, and you leave with a list of research tasks and staff projects to tackle in advance of the next one.

Board Members Need Information

While this scenario may be an overdramatization, it’s not terribly uncommon.  This is what happens when intelligent, capable people face important decisions without actionable information.  It deters strategic thinking and is taxing for the manager and staff.

Board members are usually smart, business-oriented people and they expect to have empirical discussions just as they have done in their own line of work.  Their job is to strategize, and a strategy is only as good as the information which informs it.

The most effective club managers gather, consolidate and deliver a war chest of information to the boardroom in order to facilitate better, easier, and quicker decisions.

The Right Kind of Data

A word of caution: not all data is good data and managers are wise to beware the data ‘dump’.  So, what does the right kind of data look like?

  • Data that is current. In a perfect world, the provision is real-time data and predictive analytics.  Data should be updated as frequently as possible and be on-hand for timely, relevant insight before annual planning exercises and performance monitoring activities take place.  In some markets, data that is 12 months old is out of date.
  • Data that comes from multiple sources. A combination of internal club data and external market data are required to be informed at both a micro and macro level.  Data from the club’s management and point-of-sale systems or reports from department heads alone doesn’t cut it.
  • Data that is useable. In presentations and speaking engagements we’ll often joke about the graveyard for strategic plans: in a three-ring binder on your credenza collecting dust.  Cheeky, but true.  Data should be readily available and accessible in a digestible manner.  Having to look for it, go get it, wait for it, or set-aside-15-minutes-for-everyone-to-skim it usually means your data isn’t seaworthy.
  • Data that works for you. Transferring the right kind of data to your board requires you to have a framework for gathering, analyzing, and succinctly documenting all the research and information that is Your data framework should not create more work for you. In other words, you need technology to gather, centralize, and process that information into synthesized insights.

What kind of information do boards want?

They want consolidated internal data to inform them about the club’s financial and operational performance, as well as member satisfaction, habits, preferences, and attitudes.  They want external data which informs them about competitive offerings, prevailing market trends, industry standards, and helps them contextualize the club’s performance relative to others.

Most importantly, they want to know about progress – where the club is now relative to where it needs to be or where members want it to be.

Why don’t boards have this type of information?

Simple. Because their manager hasn’t given it to them.  Usually the manager hasn’t given it to them for really good reasons: they don’t have the time, resources, money, or – in some cases – the culture to support data-driven decision-making.

To be clear, managers should not be expected to have the ability to answer every question which comes their way.  However, they should be expected to successfully guide the process of strategic decision-making at their club.  Here are six tips to make you more efficient and effective at connecting your board with critical insights:

  1. Survey members on satisfaction every year, if not more regularly. Be deliberate and selective with attitudinal surveys, capital improvement surveys, and club votes, but be adamant about doing a satisfaction survey every year.
  2. Know your market inside and out, literally. Knowing your internal market means helping your board know the club’s performance and members.  Knowing your external market means keeping your board apprised of competitors, industry standards, trends, and best practices.
  3. Maintain a constant grasp on the state of your club’s operational and financial data. Being able to reference, provide, or recite details about the club’s finances and operating performance is one of the most effective ways to enhance your command presence in the boardroom.
  4. Keep your data organized and ready to go on short notice. Get yourself in a position where you’re prepared to deliver an informed response to any questions which come your way or threaten to derail a productive discussion.
  5. Report on performance metrics before you’re asked. Be proactive about regularly updating your board on current status, changes, and evolutions within the club.  As the saying goes, they don’t know what they don’t know.
  6. Build upon your data and monitor how it changes over time. This will provide your board with a sense of progress and will serve as a powerful cache of information when it comes time for your annual performance evaluation.

Key Benchmarking Standards in the Golf Industry

How to Leverage the Information to Improve Operations

Benchmarking standards are commonplace in most industries. These standards are set and updated based on defined and evolving business models and shared information. The core objectives for creating and using benchmark standards are performance measurement and improvement. The golf industry has lagged other industries in the widespread adoption and use of benchmark standards.

The good news is that change has been brewing for years and is picking up speed. The NGCOA Canada is helping to lead the charge through its various benchmarking and performance tracking initiatives, including the Revenue Tracker and Rounds Played & Weather Reports, which provide comparisons of an individual course’s results to their competitive set, provincial and national averages along with Performance Intelligence which provides course specific benchmarks and feedback.

With the various categories of courses, and corresponding operating models (private, semi-private, resort, public, and municipal courses), executing benchmarking and performance tracking initiatives is no small feat.

In order to effectively use benchmarks, there needs to be standardization. This typically requires the use of Key Performance Indicators (“KPIs”) that enable meaningful comparison from business to business and across markets. The KPIs for each type of course are different.

As an owner or operator, this means you need to be recording, tracking and updating KPIs in a manner consistent with the industry (category) standard as a baseline starting point. Therein lies the greatest challenge the golf industry is set to overcome.

In recent years, it has become evident that benchmarks and KPIs have significantly helped golf course owners and operators measure and modify their operations to improve financial performance. Financial performance is not just net income, it includes managing the balance sheet (working capital and debt) and ensuring the maintenance of physical assets.

PUBLIC, SEMI-PRIVATE AND RESORT FACILITIES

Public and semi-private golf course operations have a singular focus – maximizing the yield on a finite inventory of available tee times. As the market for golf continues to evolve, a focus on maximizing gross margin from non-golf related revenues will also become more important.

Some of the most important benchmarking standards for public and semi-private courses relate to rounds of golf, revenues per round, and labour and other expense ratios.

The following are a few examples of important KPIs by category:

Rounds and Revenue

Naturally, a key measure of performance is rounds played. Beyond revenue, rounds played, and average revenue per round, critical indicators required to understand performance include:

  1. Tee time utilization: rounds played compared to rounds available; and,
  2. Rounds played yield variance: how much does each round yield, on average, compared to the highest yielding round.

These indicators allow operators to quickly understand if their pricing model is effective, or if it needs to be adjusted to drive utilization and yield simultaneously higher. While each course and market are different, if your tee time utilization is below 40% and your average revenue per round yield is below 70% of your highest yielding round, significant adjustments should be considered to improve performance. A healthy course will typically run at a utilization rate of 50% to 65% of weather adjusted available tee times and average revenue per round as a percentage of peak revenue per round between 70% and 80%.

Other helpful metrics include utilization and yield statistics measured on a per round basis for other ancillary revenue sources such as carts, driving range, food and beverage, and merchandise. Resort properties will also measure green fee revenue per room, after adjusting for occupancy sales; and total rounds played by guests of the resort versus non-guest play.

Cost of Sales

The cost of sales metrics are generally more straightforward and easy to come by, with costs more consistently recorded and tracked. Generally, food and beverage cost of sales as a percentage of food and beverage revenue average between 26% and 36%, while merchandise cost of sales as a percentage of merchandise revenue average between 65% and 75%, depending on the mix of hard and soft goods sold.

Labour and Other Expenses

Labour expenses are the largest category of expenses for golf courses, generally ranging from 52% to 58% of total expenses.

Expense metrics which go beyond simple dollars and cents, are generally harder to come by due to the wide variety of operating models, departmental structures, and local market conditions for labour and other products and services.

That said, typical labour metrics include the following:

  1. Labour related costs as a percentage of revenues and costs. For instance, food and beverage labour expense as a percentage of food and beverage revenue generally averages between 38% and 50%.
  2. Full-time equivalents by department. According to the most recent NGCOA Canada Compensation & Benefits Report, the average full-time equivalent head count at public and semi-private facilities in Canada is 18.2.
  3. Actual key employee payroll and benefit costs. Public and semi-private facilities employ an average of 52 employees, with significant variances in the mix of staff (permanent, seasonal, full-time, and part-time) by region and type of facility – you are encouraged to consult the report for a detailed breakdown of compensation by key position.

Other operating expenses are typically evaluated against a unit of measure. For example, greens expense per maintainable acre and clubhouse expense per square foot.

Advertising expense is measured as a percentage of total revenue, as are other variable expenses such as bank charges and credit card fees. From a capital expenditure standpoint, public and semi-private golf courses should on average spend between 3% and 5% of total revenue on maintaining existing capital items.

PRIVATE MEMBER CLUBS

Private clubs sell and market more than just golf, they promote a lifestyle and social hub. Instinctively, not-for-profit private clubs focus on break-even operations, member satisfaction and maintaining assets.

In order for a private club to be successful, all aspects of the operation must meet members’ expectations, and as a result, measuring utilization and service levels of all club facilities is quite important. In addition, most people do not want to belong to a club that appears run down; as such, an important KPI is expected capital maintenance costs and the funding of those costs through entrance and capital maintenance fees. Below are a few examples of private club KPIs:

Revenue

The key focus from a revenue perspective is annual dues, maintaining a stable membership count, guest fees, power cart revenue, and food and beverage revenue. An example of important revenue KPIs for a private club are shown below:

  1. Full Member Equivalent: total annual dues divided by a full member’s annual due.
  2. Satisfaction, participation and utilization: critical statistics to measure and benchmark.
  3. Natural attrition rate from existing membership: typically average between 5% and 8% of total memberships.
  4. Membership Conversion Rate from Inquiries: generally average between 8% and 12% of qualified inquiries.
  5. Revenue per membership by department, source and membership type.
  6. Average guest rate (achieved) compared to the peak guest rate, typically averages between 65% and 75%.
  7. Average number of guest rounds per membership, typically ranges from 5 to 12.
  8. Average tournament patron rates, typically ranging from 80% to 90% of the peak guest rate.
  9. Rounds per membership, typically ranges from 35 to 48.
  10. Utilization of tee times by membership category.
  11. Golf Cart Utilization: golf cart usage as a percentage of total rounds, which typically ranges from 35% to 50% depending on walkability of the golf course.

Cost of Sales

Similar to public golf courses, cost of sales as a percentage of revenues are some of the more readily available metrics. Typically, food and beverage cost of sales run higher for private clubs, between 35% and 42% of food and beverage revenue, while merchandise cost of sales typically average 75% of merchandise revenue.

Labour and Other Expenses

From an expense perspective, most private clubs have excellent controls in place to keep expenses in line with the approved budget.

  1. Labour expense ratios as a percentage of total expenses are usually slightly higher at private clubs ranging from 55% to 62%.
  2. Full-time equivalents and headcounts are also typically higher at private clubs, averaging 48.3 FTEs and 101.9 employees.

All other KPIs related to expenses are generally based on a unit of measure of as a percentage of revenue. For most operations, controlling expenses is important; however, for private clubs this may not be as important as meeting member satisfaction. Defining what is important needs to be a ‘first step’ for each operator.

HOW DO YOU LEVERAGE KPIs?

A requirement for effectively using benchmark standards to improve your specific circumstances is the application of experience to compare and contrast your results with that of the standard, investigate discrepancies and develop focused improvement plans.

Most owners and operators want to be as efficient as possible without lowering their expected standard of excellence. The use of benchmarks allows operators to both measure performance and adjust operating procedures to improve performance and meet the goals of the club.

Although benchmarks are typically used to measure historical performance, they can be used to make alterations on a timely basis if reviewed appropriately and to provide direction for adjustments moving forward.

For example, certain utilization KPIs can be evaluated daily, weekly or monthly. For a public course operator, it is essential that their information system be ‘real time’, so KPIs can be calculated, and if needed, communication to the general public adjusted in a timely manner (yield management). The use of KPIs and benchmarks need to be part of the toolkit for management and the owner.

Furthermore, more sophisticated operators have set up specific dashboards with differing KPIs for different levels of management and/or ownership. The dashboards are produced on a periodic basis, either daily, weekly or monthly depending on the audience.

This information is then used to adjust operations on a timely basis or adjust marketing and communications to patrons in order to enhance utilization of the facility.

From a management perspective, KPIs and utilization statistics can be used to align labour costs with activity. In addition, some operators use KPIs to evaluate staff performance and determine bonus calculations.

The most important are KPIs that allow for timely revenue enhancement and service improvements that improve patron/member enjoyment. If you are not using KPIs, you are at a disadvantage and are missing a key tool in your management toolbelt.

STAY COMPETITIVE

In summary, benchmarking standards help each operator remain competitive within their market segment. KPIs can also become a motivating influence for staff and management. Simply tracking your results compared to budget is not good enough. Operators need more dynamic information which allow for the development and implementation of timely tactical solutions.

Industry benchmarks are key to a successful operation – without them your operation is at risk.

This article was penned by Derek Johnston for NGCOA Golf Business Canada

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