Through our numerous assignments and research initiatives at Global Golf Advisors over the last twelve months, we have encountered both unique challenges and consistent trends at golf facilities throughout the EMEA territory. Here, I have identified five that are particularly noteworthy for their influence on current golf facility performance at European Clubs.
1. Capital Maintenance Trends
Capital maintenance, capital improvements and the funding of both are amongst the greatest challenge facing golf facilities now and are expected to continue to be so into the immediate future. 40% of clubs are reporting that they have more than three year’s worth of deferred capital maintenance and expenditure, largely a consequence of economic recession/stagnancy between 2009 and 2015.
Long-term capital planning is rare, with most clubs lacking a formal plan to fund capital requirements, using whatever cash is available each year to fund their reserves. Less than 50% have a capital reserve study in place informing long-term capital requirements. Of those that are investing in capital, almost 6 in 10 are using a combination of debt and membership levy to fund their programs.
Clubs spend on average 7.6% of gross annual revenue on capital maintenance but estimate they need to spend 9.6% to keep pace with capital maintenance.
2. Women make the ‘buy’ decision
Historically golf clubs have been institutions that served male viewpoints, wants and needs. New programs and services are changing membership structures, methods of club governance and the feasibility of many clubs.
In her book, “Marketing to women” Martha Barletta indicates that 91% of home purchase decisions are made by a woman. Typically, the club membership decision is a part of the home choice decision due to location, psychographic and demographic profile.
As such, clubs must reset membership programs to address the primary push/pull factors that influence the buy decision. Women prize their clubs as a platform for socialization. Clubs must demonstrate in clear and appealing ways that the lifestyle of the club is diverse, active and accessible for busy women and their families.
Sales and marketing tactics in forward- thinking clubs are seeking to address schedule flexibility, interesting and current programs and the opportunities for meeting and keeping friends.
3. Business Intelligence
There is increasing adoption amongst clubs of more sophisticated business intelligence for decision-making. This includes the tracking and analysis of financial and operational performance trends, market pricing trends and positioning, member satisfaction and net promoter score (NPS), comparable club benchmarking and targeted market segmentation.
Club Boards/Management have an increasing need for quantitative, interfaced data to afford informed decision-making about the club.
Club Managers continue to report feeling pressure due to performance comparisons to benchmarks and competitors in all areas, especially as they relate to dues, fees, compensation, benefits, pricing, and staff levels. Other leaders struggle to meet their Board’s demand for data which has led to an increase in staff hours to track, monitor, analyze, and produce data. Some GMs have found traditional sources of data to be insufficient in providing the data their Board/Owner wants.
Top performers are tracking specific internal and external market KPIs and act upon them to sustain the market position. Many clubs – which lack the comfort of capital or staff resources to execute their own intelligence program – rely on frequent, concise surveys that monitor customer satisfaction, such as the secret shopper program provided so effectively by 59Cub. Some have even tied staff bonus incentives to member/customer satisfaction ratings.
More recently many clubs have turned to subscription-based services such Global Golf Advisors’ Strategic Intelligence Platform to track operating performance, customer satisfaction, and competitive market data all in one central portal.
4. Sustainability
Last July, London’s new Mayor Sadiq Khan announced a ‘crackdown’ on pollutants. His goal is to “Make London one of the World’s most environmentally friendly cities”. His plan to achieve this goal includes amongst other things creating an ‘Ultra-Low Emission Zone in central London by 2019 and beyond central London by 2020.
The fact that Mr. Khan has placed this issue near the very top of his agenda, is a great indicator of just how much influence sustainability and environmentalism has on the public mindset – politicians don’t tend to tackle issues unless they are going to improve their popularity.
Many clubs are now rightly keen to present their sustainability credentials, but to have resonance, consumers want to know the details/specifics and the outcomes. For clubs, this means their efforts in this space should be measured and proactively reported, with the support of a trusted third party.
The Golf Environment Organization is doing extraordinary work in supporting clubs achieve exactly this. Their club tools are not just providing vital guidance on best practice for sustainable performance, but are now also providing measurement and reporting tools to aid in effective communication of the results of such performance.
5. Membership
Gone are the days when most clubs were operating with waitlists and a pipeline full of members lined up to join the club. The reality is that most clubs must now aggressively seek and find new members. Successful clubs are adopting a more data-driven approach to membership recruitment/retention and are adjusting membership and amenity offerings to be more competitive in their business space.
61% of clubs map the location of their members to identify trends and areas for new member growth. Global Golf Advisors recommends that clubs do this annually to maximize membership sales effectiveness.
Six in ten clubs have encountered challenges with an aging membership or growing senior member category. Two-thirds of this group has adopted a set of tactics to address these challenges, among which adjustments to age bands and entry fees are most common solutions.
More than one in four (28%) clubs have experienced a decline in their total number of members in the last 5 years. The annual attrition rate of clubs in the UK is 3.5% while in the rest of Europe that rate is 4.7%.
The top three factors for creating a sustainable membership strategy include
- improve overall amenity quality,
- embracing modern technologies to complement modern lifestyles, and
- further enhancing the club’s platform for connecting its membership.
Trends such as these, although not universally applicable, are highly valuable indicators of change. The capacity to be prepared for change and take advantage of the opportunities that come with it, is what marks a successful club. Best put by Darwin, “It is not the strongest of the species that survives, nor the most intelligent. It is the one that is most adaptable to change”.
Rob Hill is a Partner at GGA with responsibility for their EMEA Office. A former recipient of Boardroom Magazine’s “Strategic Planning Firm of the Year” award, GGA brings an unmatched financial, marketing and operational focus to each of its strategic assignments. The firm serves over 2,700 clients around the world from offices in USA, Canada, Sydney (Asia-Pacific) and Dublin (EMEA). Rob can be reached at rhill@globalgolfadvisors.com