Tag: labour

Podcast: The Changing Face of the Golf Industry

Date:

This podcast originally aired by the American Society of Golf Course Architects as part of their ASGCA Insights.

Speaking with Marc Whitney, Director of Communications at the American Society of Golf Course Architects (ASGCA), Henry DeLozier of GGA Partners provides his unique business perspective on the changing face of the golf industry in light of the global health crisis.

“Control the things that you can control. Adaptability for all parties is the key going forward. Now is the time for clubs and architects to come together. Architects can bring forward cost effective designs and ideas to make clubs more successful.”

Listen to Henry’s perspective on where golf finds itself today and how the industry can focus on the future while also learning from the past.

 

(13 minute listen)

The New Normal?

Date:

This article continues a series of communications from GGA Partners to help private club leaders address challenges confronting their businesses and their employees as a result of the global health crisis. Today, Henry DeLozier discusses steps to take in advance of reopening and ramping up operations.

We may not know what our world will look like after the current crisis subsides and our clubs reopen, but we should be preparing for it nonetheless.

When asked what steps they are taking to prepare their business for the post-coronavirus environment, many small- and medium-sized business owners and managers say they’re taking a “wait-and-see” approach. That attitude may be understandable, with conditions and health and safety guidelines changing by the day, but it’s not advisable.

The more effective strategy is the one that many other businesses are taking to navigate the crisis in creative and productive ways. Their leaders may not know what the future holds, but they’re getting ready to adapt to whatever is necessary to succeed.

As clubs begin to ramp up into a post-virus world, private club leaders, in concert with key operational managers, well-informed members and designated board members, are following four important guidelines:

1. Updating the club’s financial plan.

The business interruption and financial impacts will be profound and may even threaten the club’s existence. The board must reset the club’s financial plan by evaluating the current in-flow of dues revenue and the realistic projection of pending banquet and catering activity. Refer to the club’s historic reference points for revenue as the key component in ramping up successfully. Balance revenue projections with the probable attrition rate caused by members who will leave the club for health and financial reasons.

Plan to restart programs and services in a phased manner that focuses on the most popular and engaging programs in the eyes of your members. It’s important to remember that members may have different priorities in a post-recession world. Knowing what those are through surveys and focus groups is far more advisable than assuming the old normal is also the new normal. Keep in mind that the club may not be able to restart at a level and pace that meets members’ expectations without what may be significant investments.

In a financial sense, the club may be starting over. This can be good for clubs overloaded with expensive debt since it gives them incentive to renegotiate their debt structure. Interest rates are at historic lows and will remain that way for some time. This makes it a good time to restructure the club’s financial plan to remove historic flaws, such as membership-optional communities and outdated governance practices.

2. Strengthening the team.

Every club in your area is affected differently by the pandemic. Some will retain staff with little change. Others will be forced to reduce operations, programs and staff. Some of your own employees will decide not to return or may be unavailable. Be prepared and recruit aggressively to fill and strengthen key positions on your team. It’s also a good time to review and update personnel records, roles and benefits.

3. Introducing new social programs.

As leaders hit the reset button, remember that private clubs enjoy an emotional relationship with their members far more than a transactional one. When evaluating and creating programs, consider the following:

Members will want to see one another and be seen. There will be a great opportunity for friends to be reunited and reminded that their club is a safe haven for their families and friends.

Look at events that are either successive – where one event sets the stage for the next – or part of a series of similar events. Give members the sense of ongoing relationships rather than one-off types of events. (Example: “around-the-world” theme parties featuring different destinations members traveled to without leaving the comfort of the West Bay Club in south Florida, executed by Brian Schultz, the club’s former manager.)

4. Host member information exchanges.

As members anticipate their clubs reopening, they will have lots of questions, which can be boiled down to “What’s changed – and what hasn’t?” Get ahead of the onslaught of questions by anticipating as many as you can and communicating the answers widely through email, newsletters and social media.

We may not know what the new normal will look and feel like until it arrives. Meanwhile, we know members will be anxious to return to their clubs and to take advantage of all it offers them. Taking the steps outlined above will help get your club ready.

Crystal Ball Thoughts on the Shape of the Next Normal

Date:

This article continues a series of communications from GGA Partners to help private club leaders address challenges confronting their businesses and their employees as a result of the global health crisis. Today, Henry DeLozier highlights GGA Partners’ crystal ball thoughts on what the post-crisis environment will look like for club and leisure businesses.

Gordon Gecko wasn’t the good guy in the Faustian tale Wall Street and, yet, the character played in the 1987 movie by Michael Douglas left behind some memorable advice, “The most valuable commodity I know of is information.”

In early April, GGA Partners gathered its team of trusted advisors and thought leaders for the express purpose of developing strategic tenets to guide GGA clients across the globe. Following are glimpses of impacts for private clubs and club leaders:

Expect Longevity

Murray Blair and Fred Laughlin, directors at GGA Partners, observe that the effects of the epidemic will be lasting and may be sortable now into certain phases:

Pre-Vaccine – Until a reliable vaccine is developed, tested, and made available for widespread usage, conditions for most clubs will change only slightly from current circumstances. Baseline operational methods will change significantly as partial- and full-closures are showing operators and members new – more attractive, in some cases – methods which satisfy members’ concerns for caution and dining at their clubs. Many clubs are finding that demand for dining options at the club is growing as so many previously competitive restaurants are closed.

Operating costs will vary widely. Housekeeping budgets will increase substantially as members want to experience highly obvious signs of the club’s emphasis on sanitary conditions, cleanliness, and personal safety for members and staff. Labor costs will vary widely based upon local supply/demand balance as many workers will be less mobile than before.

Post-Vaccine – After a vaccine has been found and put into use, members will renew their active usage of their clubs differently. Bennett DeLozier observed that club members who previously were nonchalant on matters of strategic planning at the club will demand that their club have a clearly stated and broadly understood game plan. Many members who are responding GGA attitudinal surveys observe that there was no expectation of a health pandemic and, yet, believe “The club should have had a disaster preparedness plan.” Strategic planning, which was previously an indicator of the best leadership in clubs, will be important to most private clubs more so in the future.

Continued & Reinvigorated Family-First Focus

Barb Ralph, one of GGA’s most tenured team members, opined that members will seek more family-oriented facilities, programs and services. The notion of “clanning”, first suggested by futurist Faith Popcorn in her 1996 book, Clicking: 7 Trends That Drive Your Business–And Your Life, documents Barb’s thinking on the importance that causes many to want to keep those dear to them in a safe haven – like their club.

A New Normal

Linda Dillenbeck, a director for the GGA Partners Club Communications Practice, looks beyond the pandemic to underscore the critical importance of effective and trusted member communications from the club to its stakeholders: members – their families and friends, employees, neighbors, suppliers, and vendors.

Linda suggests that in a time when new standards are being established, the necessity of effective communications from clubs to their members will be a difference-maker to the clubs’ future economic durability. “Club’s with a proactive communications approach will be at a distinct advantage throughout and after the coronavirus epidemic,” according to Dillenbeck.

Shifting Operational Needs

Speaking from the perspective of the millennial generation, Alison Corner, Ben Hopkinson, Andrew Johnson, Mingye Li, and Andrew Milne agree that clubs will change significantly and – in some ways – toward operational needs and priorities previously reported through GGA Partners’ millennial research installments.

To summarize the ideas from these brilliant young minds, clubs will shift dramatically into (a) high-gear focused on membership recruitment and retention; (b) new activities, like musical events and performance art; and (c) new membership types, categories, rights, and privileges.

Martin Tzankov, a GGA manager, expects the new normal to bring a focus to financial durability to clubs. Martin notes the importance for club leaders to mind the strategic priority of balance sheet management and the financial health of their clubs.

Many club leaders forget the four cornerstones of board service: leadership, governance, strategy, and finance. Looking ahead, the clubs that perform best after the coronavirus pandemic will be those holding the best information. Perhaps Gecko was right.

Club Leadership for Tough Times

Date:

This webinar continues a series of communications from GGA Partners to help private club leaders address challenges confronting their businesses and their employees as a result of the global health crisis. 

In case you missed it, this webinar – hosted by the National Club Association (NCA) in early April – explores the ways effective club leaders are responding to challenges and evolving circumstances posed by the coronavirus pandemic.

In it, Henry DeLozier, Partner, and Patrick DeLozier, Director, feature as experts on crisis response and facilitate discussion about how the board and management at one of the world’s best clubs are dealing with today’s pressing issues.

Nicholas Sidorakis, GM at Southern Hills Country Club, and Bryan Johnson, Southern Hills Board President, explain how they are navigating the everyday challenges of the current health crisis while focusing on the future well-being of Southern Hills Country Club.

View or listen to the webinar (54 min)

View or download presentation slides (.PDF)

A special thank you to Henry Wallmeyer, Joe Trauger, John Good, and Cindy Vizza at the National Club Association for the opportunity to participate.

 

Lifting the Fog of Crisis

Date:

This article continues a series of communications from GGA Partners to help leaders of private clubs address challenges arising from the COVID-19 coronavirus that are confronting their businesses and their employees. Today, Henry DeLozier, a partner of our firm, highlights that now is the time to remind members of their club’s relevance and value. 

Lifting the Fog of Crisis: Now is the time to remind members of their club’s relevance and value.

The “fog of war” is a term coined in the 19th century to describe the uncertainty military troops often experience in wartime situations. Amid the deep uncertainty that the coronavirus has brought to our families, communities and businesses, many of us find ourselves in our own fog of war.

As club leaders reckon with the impacts – both immediate and long-term – of the current pandemic, lifting the fog of misunderstanding and encouraging engagement are important to your club’s longevity and success.

Here are two important steps to make your club a beacon of hope and inspiration to club members, their families and friends:

Make your club a positive influence for members.

Members appreciate knowing how the club, its members and staff are responding to current challenges. They are especially interested in how the club is taking care of its employees. In addition to e-mail updates enhanced with photographs and short videos, also consider:

Organizing virtual events. Using such technologies as Zoom and Google Hangouts, host a virtual happy hour. Keep the number small enough that everyone can be part of the conversation. As the organizer, start with a general update from the club and then let members take over with questions and updates of their own. This is an opportunity to lift people’s spirits, so keep it fun as much as possible.

Telling stories that inspire. Tell members about staff who are volunteering to care for others, including other members, while continuing to do their jobs at the club. Many members have special relations with club staff and will appreciate staying connected through stories.

Encouraging members to take away meals and snacks. Brad Bourret, GM at Cabarrus Country Club in Concord, NC, launched Take-Out Tuesdays before the crisis. He now reports that take-out for his club has exploded in volume. In troubled times, keeping connected to the things and people familiar to them gives members a greater feeling of safety and well-being. Think of it as comfort food.

Increase members’ understanding of club matters.

Provide regular updates. These are obviously not normal times, but retaining some level of normalcy is comforting. Members will appreciate knowing what is taking place at their club. Maybe a new freezer has been installed or the locker rooms and bath house have been fully steam-cleaned to ensure the club’s usual high sanitation standards. If spring flowers and shrubs are blooming, send photographs or a short video that reminds members of the natural beauty they enjoy at their club.

Introduce learning opportunities. Many members don’t understand how some aspects of their club functions. For example, club finances, board governance and the process for recommending members are unclear to many members. In addition, basic operations, such as housekeeping standards, the care and maintenance of facilities and kitchen storage and cleanliness practices, are obviously timely subjects. Now may be a good time to capture their attention and communicate important information on these topics through a podcast.

Conduct single-topic surveys. If you want to know what your members are thinking, what questions they have and what suggestions they would like to make, ask them. Short member surveys – which typically require less than 10 minutes – are great ways to update your understanding of members’ wants, needs and expectations.

The most serious crisis most of us have ever experienced has settled a fog over much of our lives, including our clubs. Efforts to lift the fog, including making your club a positive influence for members and increasing their understanding of how the club operates in good times and bad, reminds members of the importance of the club in their lives.

Your club’s relevance is among the many things being attacked by this virus. Now is the time for club leaders to take the steps that keep the club a meaningful and valuable part of members’ lives.

Employee Engagement

Date:

This article continues a series of communications from GGA Partners to help leaders of private clubs address challenges arising from the COVID-19 coronavirus that are confronting their businesses and their employees. Today, Patrick DeLozier, a director of our firm, offers some ideas on keeping the team engaged.

Employee Engagement: It’s now more challenging, but also more important.

At the top of our priority list during these unsettling times is making sure our employees are not forgotten. They need to know that their clubs genuinely care for them and their well-being, and that you are mindful of the economic and social consequences that accompany this pandemic.

You also want to let employees know that they are valued members of a team that needs to stay connected during these tough times, so that they are ready to ramp up full-scale operations once it is safe to do so. Staying together even when you’re apart starts with communications, but also includes working effectively from remote locations and finding balance in a new work and home routine.

Social distancing doesn’t mean social isolation.

Leaders should make sure they are communicating with employees regularly and consistently. There are a number of ways to do this, some that take advantage of technology and others that rely on old-school practices.

You can write personalized notes to employees to keep them up to date on club news and plans. You can do this electronically, of course, which gives you an opportunity to add a video message. But this is also a good time for an old-fashioned handwritten note that arrives in the mail.

For those employees celebrating birthdays and work anniversaries, a phone call is a simple but effective way of showing that they’re a valued member of your team and further establishes you in their minds as an empathetic manager.

Make sure employees are included on any communication sent to club members. Keeping everyone informed at the same time builds trust and the sense that we’re all in this together.

Being comfortable – and productive – at home.

Most of your employees are probably not accustomed to working from home, which means they’re dealing with a new set of distractions—a dog barking, a child wanting attention – while trying to be productive in an unfamiliar workspace. Here are a few suggestions for working remotely:

Create a comfortable and separate workspace. Resist the temptation to pull out your laptop and plop down on the sofa, which makes it too easy to be distracted by other household activities.

Use one of the many video tools, including Zoom, WeChat, Skype and FaceTime to replicate the social interaction and brainstorming opportunities that a meeting at the club would provide.

It’s a balancing act.

Balance your day. Try not to fall into the trap of working too much. Instead, maybe watch an online concert, take an online yoga class or go for a walk with the dog. One of the best things you can do for your employees is to stay healthy, both physically and mentally.

Make time in your workday to speak with co-workers, friends and family about subjects not related to work. Share a funny story or compare notes on a favorite show or movie.

Now’s the time, carpe diem.

How many times have you thought, “If I only had more time, I would … .” Now you do, so take advantage of your down time to plan, dream and innovate. You might consider creating an idea think tank with your team and challenge them to submit ideas that support your member enhancement program. Have department heads dissect their business unit with the goal of improving efficiency, productivity and profitability.

John Quincy Adams said, “If your actions inspire others to dream more, learn more, do more and become more, you are a leader.” Now, more than ever, employees are looking to you for leadership. Those who feel their employers are communicating consistently, openly, honestly and with empathy will stay engaged and return to work feeling connected to a team and a mission.

Because sometimes we just need to laugh…

Think Big Entering A New Decade

Date:

Thinking of big changes in 2020?  Writing for Golf Course Industry Magazine, GGA Partner Henry DeLozier shares four macro changes to consider as the new decade begins.

Golf no longer exists in a vacuum, separate and distinct from market forces that shape other mainstream businesses. Gone are the days when golf club and facility managers could operate without a sensitive finger on the pulse of social, environmental and political changes affecting their business. As we enter the third decade of the 21st century, here are four macro changes to be aware of and to use to your advantage.

1. New solutions to labor shortages

Traditionally, labor costs for golf courses have ranged from 52 to 56 percent of golf course maintenance budgets. With increases in minimum wages and the ripple effect throughout organizational charts, labor costs continue to escalate. Derek Johnston, a partner at Global Golf Advisors, says labor costs have jumped as much as 6 percent.

Operators managed the first wave of escalating labor costs by reducing head counts and outsourcing certain activities to third-party contractors. Now, they are being forced to get more creative to deal with what is by far the facility’s single largest line item. Some have reacted by flattening their org charts, eliminating supervisory positions and restructuring responsibilities for some managers and staffers. As a result, staffing levels that ranged from 19 to 25 employees per 18-hole course are in significant decline.

Labor will remain a primary focus and concern for operators in 2020. Suggestions for managing rising costs are to re-evaluate all operational activities with an eye for possible benefits to be gained from outsourcing; take labor-intensive components of your operation and determine how the work could be accomplished more efficiently; and look at non-golf sectors for solutions being implemented in other fields such as hospitality and manufacturing.

2. Increased environmental awareness

Golf courses throughout North America have embraced opportunities to increase their environmental stewardship. Beekeeping, which sustains the bee population and ensures ongoing pollination; bat houses, which address mosquito infestations; and habitat restoration for butterflies, especially monarchs, whose habitat supports pheasant, quail, waterfowl and many other species; have been introduced at many locales.

Making golf courses and their surrounding grounds environmental sanctuaries is resonating with key market influencers, including millennials and women, who are also prime targets for increasing play and membership. Audubon International CEO Christine Kane reports that clubs as sanctuary communities are on the rise nationwide: “Audubon-recognized sanctuary communities have increased more than 20 percent over the past five years,” according to Kane.

Progressive superintendents and golf managers who expand the reach and impact of their environmental efforts will be viewed favorably by community leaders as well as current and prospective members and customers.

3. Expanded reach of social media

Superintendents and facility managers have become important sources of content relevant to club members and consumers. Photographic images of flora and fauna on club grounds are of interest to members who take pride in their clubs’ beauty and connection to the environment.

Instagram and Twitter can be used to show images sourced by staff members — golf course workers, cooks, janitors, golf professionals — who are alert to opportunities to snap butterfly habitats, wildflowers and all sorts of wildlife that call the club home. Such images are often posted to the club website and distributed to club members and visitors as a means for extending brand engagement.

Gone are the days of the cut-and-paste guidance for how to repair a ball mark. The increased relevance and timeliness of today’s news is attributed to the capability and proliferation of social media.

4. Comprehensive planning

The growth of strategic planning (supported by specialized plans for marketing, communications, finance and membership) is another example of general business’s influence on a more enlightened group of golf managers. Just as most any business relies on a strategic plan to guide its decision-making, golf is recognizing the importance of establishing a clear vision that serves to prioritize programming and investment. Top performers rely on data-based plans to distinguish their facilities not only in overcrowded markets, but also with consumers debating their leisure activities and spending. Those facilities that create market differentiation will prosper in 2020 and beyond.

Key Benchmarking Standards in the Golf Industry

Date:

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. 

Budgeting 2019

Date:

Budgeting for 2019 requires a broader-than-usual alertness to changing times and impacts on golf-oriented businesses. Newfound elasticity on revenue sources, such as dues and fees, will allow many to plan for revenue increases. That’s the good news. More sobering is the fact that most courses and clubs will strain to cover the rapidly accelerating costs of operations.

While it’s helpful to know that costs are rising, budget planners benefit even more from understanding the factors driving cost increases. Here are five cost areas where knowledge of underlying trends and timing will lead to accurate projections.

Labor

The U.S. Department of Labor’s Employment Cost Index notes that wages and salaries for U.S. businesses increased 2.9 percent for the 12-month period ending in June 2018, following a 2.4 percent increase in June 2017. The cost of benefits rose 2.8 percent for the 12-month period ending in June 2018, after increasing 2.2 percent in June 2017. Employer costs for health benefits increased 1.6 percent for the same 12-month period.

Insurance

The costs associated with insuring golf facilities are increasing. Willis Towers Watson’s insurance industry semi-annual report (2018 Insurance Marketplace Realities) projects increases in insured categories more vulnerable to natural catastrophe impacts.

  • Property: Previous-loss history more than doubles premiums in most markets. Clubs located in markets exposed to catastrophic claims will increase as much as three times those of non-exposed clubs, while those clubs with catastrophic experience with losses may see increases from 15 to 20 percent.
  • Casualty: WTW projections indicate that rates for casualty insurance will increase less than 4 percent.
  • Auto Liability: For clubs with automobile insurance premiums, rates are expected to rise from 5 to 9 percent. Ongoing market challenges exist in this space, and two years of steady price increases have not kept pace with loss trends and adverse developments. Rates are expected to rise more steeply.
  • Cyber: Golf clubs are vulnerable to cyber-risk. The WTW study notes a 15-fold increase in two years with claims near $5 billion. Organizations without claims can forecast increase of 5 percent or less.

Healthcare

“Over the past nine years, employee out-of-pocket spending for a family of four increased 69 percent in the form of higher co-pays and higher deductibles, along with 105 percent employee premium contribution growth,” Keith Lemer, CEO of WellNet Healthcare, said in an interview with CNBC earlier this year, noting that over the same period a year earlier employer premium contributions increased 62 percent.” Lemer added, “In 2008 more than 8 percent of a family’s income was spent on health care. In 2015 (last available data) it rose to 12 percent. This means people are making less money today as a direct result of the cost of health care.”

Food

The costs of food consumed at home diverged a few years ago from the costs of food served away from home – in restaurants and clubs. The U.S. Department of Agriculture predicted grocery store price increases from 1 to 2 percent. Food consumed away from home is expected to increase from 2 to 3 percent. For menu planning purposes, be aware that beef and veal are projected to rise 2 to 3 percent, egg prices will increase 4 to 5 percent, while cereal and bakery prices will go up 3 to 4 percent. The USDA expects prices for fats, fruits and vegetables to drop.

Fuel

Large consumers of fuel and oil by-products, including golf courses, will see some relief in fuel-related costs in 2019, according to an August 2018 J.P. Morgan forecast. “While geopolitical tensions and lingering risks of large supply disruptions remain an upside risk, we think that prices will be corrected downwards towards end of the year and remain capped in 2019,” J.P. Morgan analyst Abhishek Deshpande wrote in the note reported by CNBC. This is important for golf where oil prices and those of oil by-products, including fertilizer, have direct budgetary impacts. For budgeting purposes, managers should watch oil futures. One can expect higher gas prices about six weeks after an increase in oil futures.

GGA’s Henry DeLozier penned this article for Golf Course Industry Magazine.

Menu