Tag: Board of Directors

The Challenge of Club Governance: An Interview with Damon DiOrio, CEO, Desert Mountain Club

Date:

Damon DiOrio, CCM, CCE has long been recognized as one of the top general managers in the private club industry, stemming from his 14 years leading the Charlotte Country Club and five years as CEO of the prestigious Desert Mountain Club in Scottsdale, Ariz. In a recent conference call with more than 100 university professors who teach hospitality, DiOrio was asked to identify the greatest current challenge in the club industry. He was quick to reply, “Club governance.” We wanted to know why. Here is what he told us.

Club Governance (CG): Damon, with all the other challenges facing clubs today—labor shortages, supply chain issues, inflationary food and fuel costs—why have you singled out governance as the greatest challenge?

Damon DiOrio (DD): To a large extent, it’s a matter of what we can control. While labor shortages and inflation present significant challenges, they are conditions beyond our control, and sophisticated club executives will implement tactical operational changes to successfully navigate through these issues. Establishing an effective governance model is a far greater challenge as many clubs have a history of poor governance, which can thwart an effective leader’s ability to effect positive change. My point, therefore, is to encourage club leaders to address a challenge within their control and work toward improving governance structures and policies that enable the club GM/CEO to effectively lead their operations.

CG: Why do you believe club leaders need encouragement?

DD: Mainly because developing an effective governance model requires challenging the status quo, which is based on decades of policies that are not best practices but have been institutionalized into a club’s culture. Changing entrenched club traditions is a systemic process that requires courage and strong leadership to challenge. While I generally appreciate the value of traditions in defining the brand of a club, when they stand in the way of good governance and positive results, they deserve to be reviewed and, in most cases, changed.

CG: For example?

DD: To start with, the election process. Choose board members on their merits and the skill sets needed to provide a well-rounded and diverse board. Then, use an uncontested process involving robust vetting by an independent, objective nominating committee. Too many clubs rely on contested elections that can result not only in reducing the candidate pool, but also in electing board members on their popularity, seniority or agenda.

CG: OK. Assume a club has put the right people on the board. Then what?

DD: Now you want the board to speak with one voice—in writing. It does that by developing policies, which are housed in a document we call the board policy manual (BPM). The BPM communicates how the board will carry out its fiduciary duties. It clarifies the role of the board, its members and officers, and the GM/CEO. It also describes the various club committees, their roles, and their proper alignment. Our board members are caring and successful professionals, but they are volunteers. Having solid policies in place provides stability and continuity.

CG: Speaking of committees, what advice do you have for club leaders on how to get the most of their committees?

DD: First, look at the functions where a committee can assist in proposing policies, advising leaders and bringing the benefit of multiple perspectives. There are generally two types of functions and therefore two types of committees: board committees like finance, audit and membership, and operations committees like golf, greens and grounds and house. The tradition among clubs is to have all committees report to the board, but having operating committees report to the board invites the board to micromanage functions to which it should hold the GM accountable.

CG: So do you have committees report to you as the GM/CEO?

DD: Absolutely. The house and golf and agronomy committee both report to me. We have seven golf courses at Desert Mountain and the golf and agronomy committee provides useful advice, player insights and the vision of the golf experience they desire to our key directors. For example, I recently asked the committee to help us define our outside tournament strategy, including a recommendation for a USGA Championship request. This type of strategic guidance is welcomed and appreciated.

CG: Golf is such an important part of the Desert Mountain community. Does your board worry about not having the golf & agronomy committee report to them?

DD: No. The board holds me accountable as the CEO for the condition of our golf courses and the quality of our golf program. It also gives me the authority and resources to get the job done. The golf & agronomy committee provides feedback and suggestions, and at the end of the day, it’s my responsibility to deliver the finest golf experience to our members.

CG: Is your title of CEO commonly given to general managers?

DD: No, but I highly recommend clubs consider it. Successful businesses are led by capable CEOs. They are not managed by committees or by boards of directors. Yet too many clubs hold on to governance models based more on traditions than operational efficiency. More than the title, a business mindset and model help shape expectations for all stakeholders and can help pave the way for a cultural shift. As a successful CEO you are expected to forge a safe, positive and healthy culture; engage state and local officials; be a philanthropic leader in the community; and protect the history and culture of your organization for decades to come.

CG: What would you say to someone who argues that running a club as a business will result in a more staid, impersonal culture rather than a more collegial community?

DD: I would say, “Come to Desert Mountain!” We see no conflict between a caring culture and an efficiently run operation. Just the opposite. We diligently promote a warm and welcoming culture, highlighted by personalized service and name recognition. Our people—members and our staff—are our top priority. But along with our commitment to community is our commitment to stewardship and that means using our authority wisely to govern effectively and to manage efficiently.

CG: Any final thoughts on the challenge of governing a private club?

DD: Only to remind club leaders that while they are forced to react to challenges like inflation and labor shortages, they can be proactive in addressing their governance model. There are plenty of good examples of clubs employing sound governance principles and practices. Search them out, adopt them and use them to develop a robust governance model, which will provide the tools to succeed in meeting all manner of challenges.

This interview was conducted by GGA Director, Frederic Laughlin for the National Club Association‘s Summer 2022 Issue of Club Governance. 

The Intricacies of Benchmarking Data

Date:

For years, we have proudly conducted industry research in collaboration with private club association across the globe, including the Club Management Association of Canada (CMAC), National Club Association (NCA) and the Club Management Association of America (CMAA). Regardless of the survey, one notion has consistently remained: analyzing research data to derive insight is complex.

The primary purpose of our most recent survey initiative in collaboration with CMAA, 2022 A Club Leader’s Perspective: Emerging Trends & Challenges (CLP) is “To explore the perspectives club leaders have about the industry and their club’s performance.”

The CLP research is not intended to provide comprehensive benchmarking for use in evaluating individual club performance, but rather to provide an overview of trends in the industry from the perspective of club leaders. And these perspectives are derived from a diverse cross-section of clubs, including a variety of club types, in different markets and with different business models. For instance, almost 20% of the 2022 CLP survey respondents represented for-profit clubs, which at times structure their business models differently than non-profit, member-owned clubs.

Why is this important?

Our firm routinely conducts comprehensive benchmarking and operational reviews for clients, and while we recognize the value of self-reported data, we do not rely on survey responses from any of our trends surveys or other industry surveys. For benchmarking to be effective, it requires in-depth financial analysis at the trial balance level, understanding of the key physical characteristics of a club’s facilities, understanding of the club’s operating hours and service offerings, and understanding of staffing, including head counts, full-time equivalents, salaries, wages, and benefits, with comparisons only drawn to truly comparable clubs. There is rigorous analysis required in conducting benchmarking.

Comparisons of aggregated data without detailed analysis and without context provided to club leaders by experienced professionals with respect to what the results mean to their club given their vision for the club, their members’ expectations and their unique market circumstances are not benchmarks and should not be relied upon to make strategic decisions.

Our work with club industry associations is incredibly illuminating and we are committed to continuing conversations with club leaders now and in the future. We fully support the use of perspective research to ignite discussions and to help highlight important topics of focus. After receiving a few inquiries related to 2021 Food & Beverage (F&B) performance as reported by the CLP Report survey respondents, we felt that additional context and clarity on this topic would be valuable.

Before delving into the F&B survey data in the CLP Report, we want to reaffirm that our research team conducted extensive analysis of the survey results, and the results reported in the report reflect the responses received. Nonetheless, readers will note from the scatter plot of responses provided in the report, that there are assumed outliers that we classify as highly likely to be inaccurately reported data by some survey respondents. While certain results reported by club leaders did not appear to be appropriate, we did not adjust the responses and reported the results as provided. The use of a median in the analysis is important given the likelihood of potentially inaccurately reported data in surveys of this nature. That said, given feedback we have received, we conducted further analysis into the survey data and developed additional context for our readers.

Digging Deeper into the Survey Data

The raw survey responses, as reported, produced a median total annual profit on F&B of approximately $70k, equating to an implied median profit margin of 7% in 2021, with 64% of respondents indicating that their club generated a profit.

Further consideration and applying both our best discretion and professional judgement to the data, we estimate that approximately 10% of the respondent data was likely not entered appropriately, either due to a possible misunderstanding of the question or a transcription error.

If we were to exclude these data points from the analysis, the median total annual profit on F&B is closer to break-even, with just over 50% reporting a profit. It is important to note that this does not consider potential improperly reported extraordinary loss data points, which is more difficult to ascertain and appears to occur less frequently in the data.

Food and Beverage Profitability Trends

The CMAA Finance and Operations Study provides a good frame of reference for food and beverage profitability: 

 

  • CMAA Finance and Operations Survey Trend – Food and beverage net profit/loss held a consistent (flat) trend from 2017-2019, with the average performance being a net loss ranging between 10-13% of revenue. This sample of respondents is more heavily represented by non-profit club structures as compared to the CLP survey respondent profile of clubs. In 2020, the pandemic driven challenges drove the median net loss on revenue to 37%. 2021 results will be included in the release of the 2022 Finance and Operations report.

When compared to our internal GGA Partners database of historical trial balance level client financial results and 2022 budgets, which includes both for-profit and non-profit clubs:

 

  • GGA Database Trend – Net profit/loss held a consistent (flat) trend from 2017-2019, with the median performance being a net loss ranging from 3-6% of total revenue. In 2020, the pandemic driven challenges drove the median net loss on revenue to 25%. In 2021, the median net loss remained consistent at 25% of total revenue. We expect performance to continue to improve in 2022 and generate a median net loss in the range of 8-15% of revenue, based on our review of 2022 budgeted income statements among our client base thus far.

Purpose at the Core of Strategic Decisions

“Is it possible to make money on F&B? Or are we better off subsidizing the operation to improve the experience for members?” For years, our clients have asked these questions. Food and beverage operations at private clubs create a challenging business model by nature and should not be compared to the restaurant operation down the street (even though members often make this comparison). However, to say definitively that your operation should not make a profit is also ill-advised. Many of GGA’s clients generate a profit within their F&B operations, however, this is a strategic decision (dependent on several market factors) and more prominent within for-profit structures.

Your budgetary philosophy on F&B is a strategic decision for your club and should be based on what members want, and what the market allows from a price elasticity and competitive positioning perspective. Our member survey work frequently demonstrates how important and impactful F&B operations at private clubs are. Often, there is a strong statistical correlation between members’ satisfaction with F&B and overall satisfaction with the club. As a result, when a non-profit club’s annual dues and overall business model can support an expanded food and beverage offering, elevated service levels and discounted menu pricing, many clubs make the strategic decision to manage their food and beverage operation to a loss, in favor of an elevated member experience and overall satisfaction with being a member.

While there is considerable skill required to execute a food and beverage business plan, the formulation of that business plan is largely a mathematical exercise that can be viewed as a sum of the parts. In a non-profit, member-owned club, the ‘parts’ are what the members, through the board of directors and as part of a well-formulated strategy, determine and communicate to management. These ‘parts’ include:

    1. The number of food and beverage outlets to operate.
    2. The hours of operation for those outlets.
    3. The level of service required and thus the staff requirements during operating hours.
    4. The quality of the products procured and offered for sale.
    5. The pricing strategy for how the club prices its food and beverage products it sells.
    6. The number of events the club plans to host.
    7. The source of events, whether member, member-sponsored or external third-party events, and pricing strategy deployed.

For those that may have read the F&B related CLP survey results with concern, we strongly recommend you ensure there is a comprehensive strategic plan in place at your club. This requires a clear understanding of the food and beverage experience that club members desire, and the operational and capital costs required to deliver on those expectations. The decision must then be made to determine how (or if) the club can deliver on the F&B experience in a manner that is financially sustainable. The feedback we received on the F&B results in the CLP research report underscore the necessity for strategic planning that incorporates financial forecasts and key financial targets, through which the board of directors guides management to operate, along with the importance of succession planning for board members, ensuring a knowledgeable and informed leadership group.

For any questions or for assistance in benchmarking your operation and setting the most impactful strategy for your club, please contract us at info@ggapartners.com.

Access the 2022 A Club Leader’s Perspective: Emerging Trends & Challenges report.

Read now

 

Mid-Year Predictions for the Second Half of 2021

Date:

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.

The Three Keys to Effective Governance

Date:

Governance in private clubs can too often resemble what is seen on the evening news: factions, resentment, distrust, skepticism, cynicism. In troubled times, sound governance is essential.

In our continuing Whitepaper Series, Senior Partner Henry DeLozier highlights the three keys to effective governance and proactive steps leaders can take to address and improve it at their club.

 

 

Read our Governance Whitepaper

Four Factors That Impact Innovation

Date:

At GGA Partners, we have watched the pandemic create innovative opportunities and innovation in clubs unlike what we have seen in many years.

In our continuing Whitepaper Series, Senior Partner Henry DeLozier reminds managers and club leaders how critically important innovation is, especially during these pandemic times.

 

 

Read our Innovation Whitepaper

In Pursuit of Innovation

Date:

GGA Partners Releases Innovation Whitepaper as Part of Thought Leadership Series

‘In Pursuit of Innovation’ aims to provide managers with guidance to unlock creativity

TORONTO, Ontario – GGA Partners, a global consulting firm, has released In Pursuit of Innovation, the fourth in its series of thought leadership whitepapers. This authoritative guide explores how surviving in today’s competitive landscape depends on the ability of clubs and organizations to unlock their creative potential and offers up several guidelines to allow freedom of thought and imagination.

In Pursuit of Innovation highlights the way companies must continuously transform in order to survive and how a constant pursuit of innovation will guard against failure, whether gradual or sudden.  The paper clarifies exactly what constitutes innovation, where it comes from, and how club leaders can practice innovative thinking to unlock a culture of creativity.

“Our experience with thousands of private clubs over nearly three decades shows us that without innovation clubs become stale, membership falls until it eventually flatlines, competitive advantages diminish, members become dissatisfied, and talented staff look elsewhere,” explained GGA Partner Henry DeLozier, one of several authors of the piece.  “Innovation can come from anywhere inside an organization, and we think it should be encouraged from all corners, from the folks raking bunkers to the person answering phones to the accountant balancing the books.”

Innovation happens at the intersection of problems, opportunities, and fervent minds but must be deliberately sought, practiced, and encouraged at all levels. “It’s normal in any business to want to maintain the status quo. It’s comfortable, it’s safe, and it’s easier than making changes,” said DeLozier. “In reality, the status quo only works for so long. If you’re going to grow, you must innovate.”

In Pursuit of Innovation illuminates four common roadblocks to an innovative culture and identifies the steps necessary to unlock a culture of creativity.

In addition to innovation, GGA Partners has published new whitepapers on strategic planning, branding, and governance which are accessible via the firm’s website.

Click here to download the In Pursuit of Innovation whitepaper

 

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. For more information, please visit ggapartners.com.

Media Contact:

Bennett DeLozier
GGA Partners
602-614-2100
bennett.delozier@ggapartners.com

2021 Predictions on the Shape of the Next Normal

Date:

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.

New Partnership Promises to Deliver Vibrant Future for England Club Managers

Date:
CMAE England Engages GGA Partners to Develop Strategic Plan

WARWICKSHIRE, England (October 27, 2020) – CMAE England has announced the engagement of GGA Partners™, the international consulting firm working with many of the world’s most successful private clubs, resorts, golf courses and residential communities, to facilitate the development of a five-year strategic plan for the association.

Established in 1992 as North America’s KPMG Golf Industry Practice, the independent firm has provided industry-leading advisory services to more than 3,000 clients worldwide. GGA has been recognised as “Strategic Planning Firm of the Year” by Boardroom Magazine and brings an unmatched financial, marketing, and operational focus to each of its strategic assignments. This extensive expertise was critical for CMAE England in their choice of strategic planning partner.

“CMAE England is founded on a dedication to club management excellence, education, knowledge-sharing, supporting career progression and on our powerful network of club professionals,” explained Chairman of CMAE England, Tristan Hall. “The board believes it is time to reaffirm these values, and the strategy employed, to deliver a vibrant and sustainable future for the Association.”

“In securing the services of GGA Partners, we have retained the very best strategic advisory team in the industry to guide and inform this critical process,” said Hall.

Distinguished in its ability to build enduring value, GGA’s work will continue beyond the development of the strategic plan to ensure its strategy drives significant improvement. As a result, CMAE is pleased to announce that GGA Partners™ has made a multi-year commitment to support the association as a Corporate Partner.

Rob Hill, Managing Partner of GGA’s EMEA Office, said, “GGA and CMAE are passionate about the value of informed decision-making and strategic planning. We appreciate the privilege of being asked to serve CMAE England in shaping its future and to demonstrate our support for the professional development of club leaders throughout England”.

GGA Partners™ has offices in Toronto, Canada; Phoenix, USA, and Dublin, Ireland. For further information about GGA Partners™ visit: ggapartners.com.

 

About CMAE England Region

The Club Management Association of Europe (CMAE) England Region is a non-profit making professional association with members involved in the management of sports clubs (golf, tennis, sailing, rowing, rugby, football, cricket), health & fitness clubs, leisure, city and dining clubs located throughout England. The CMAE provides a forum for the encouragement, development and recognition of education and professionalism in Club Management. For more information, please visit cmae-england.uk.

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. For more information, please visit ggapartners.com.

 

Media Contacts:

Bennett DeLozier
GGA Partners
+353 44 33 603
bennett.delozier@ggapartners.com

Debbie Goddard
CMAE England Region
+44 (0)24 7669 2359
info@cmae-england.uk

Leveraging Differences in the Boardroom

Date:

GGA Partners Releases New Whitepaper on Private Club Governance as Part of Thought Leadership Series

‘Leveraging Differences in the Boardroom’ Now Available for Download

TORONTO, Ontario – International consulting firm GGA Partners has released Leveraging Differences in the Boardroom, the third in its new series of thought leadership whitepapers. This authoritative guide explores the benefits of clubs with diverse boards and suggests several steps to take when recruiting with diversity in mind.

Leveraging Differences in the Boardroom evaluates the consequences of unintentionally insular board composition and challenges the idea of “sameness” in the boardroom, which limits the ability of a board to effectively perform its duties and threatens a club’s health and longevity. The paper illustrates how multiple perspectives contribute to greater success in governance and argues for adjusting the profile of a club’s leadership to better serve members and prospects.

“We often see board members with similar professional, cultural, and ideological backgrounds and perspectives,” explained GGA Partner Henry DeLozier, one of several authors of the piece. “Boards that are neither representative of the membership nor reflective of their surrounding community risk losing the opportunity both to serve their current members and to attract new members.”

In addition, the whitepaper encourages that clubs intent on increasing diversity among their board take a holistic, multi-dimensional approach to its creation. “Forward-thinking boards understand that it is the breadth of perspective, not the mere inclusion of various diverse traits, that benefits the organization,” said DeLozier. “In addition to social diversity, professional and experiential diversity are also important in increasing the range of perspectives represented on the board.”

Board diversification is likely to be met with resistance from the status quo, which the paper aims to help club leaders overcome by providing tactics for building a diverse board, developing new board member criteria, and making a commitment to diversity.

In addition to governance, GGA Partners recently published new whitepapers on strategic planning and branding. The firm has announced that another in the series focused on innovation will be published through the third quarter of 2020.

Click here to download the whitepaper

 

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. For more information, please visit ggapartners.com.

Media Contact:

Bennett DeLozier
GGA Partners
602-614-2100
bennett.delozier@ggapartners.com

Menu