The private golf club industry enjoyed the success of the 1990’s. From 1990-1999, the number of golfers increased from 27.4 million to 28.8 million, the number of golf rounds rose from 451.4 million to 518.4 million, and the net increase of courses rose by 20.6%. However, as golf clubs experienced a 20.6% growth from 1990-1999, the number of golfers and golf rounds played only rose by 4.9% and 12.9%. (NGF Rounds Played in the U.S.). From 2000-2012, the number of golfers dropped from 28.8 million to 25.7 million, the number of golf rounds decreased by 10.7% from 518.8 million to 463 million, and the net increase in course openings shrunk to 3.5% (NGF Golf Facilities in the U.S.).
Over a 20-year period from 1986- 2005, more than 4,500 courses were added. In 2000 alone optimistic developers opened 362 golf courses. (NGF Industry Update – U.S. Golf Supply ). However, over supply with a shrinking demand closed approximately 1000 courses by 2003. NGF State of the Golf Industry). At that time Joe Beditz, NGF – President and CEO accurately stated “The problem of oversupply will fix itself once the industry loses some 1,500 – 2000 golf courses.”played was not sufficient enough to support the abundance of supply. The slow correction that was occurring was necessary to help return the private club industry to a more healthy equilibrium between supply and demand. (NGF Industry Update – U.S. Golf Supply ). When the Great Recession of 2008/2009 hit many decision makers of private golf clubs were forced to react.
“It is not the strongest, nor the most intelligent that survives. It is the one that is most adaptable to change.” -Charles Darwin
Private golf clubs that have survived the shakeout and avoided over-reacting by eliminating programming and services have evolved with a raised marketing awareness. As with most luxury markets, most private club memberships were purchased based upon exclusivity and prestige. However, things are changing..
Progressive thinkers amongst board and management are now exploring marketing theories that 10 years ago were unfathomable.
Blue Ocean Theory Innovates New Membership Subsets.
During the growth years of the private club industry there was optimistic development in affluent communities of private country, yacht or city clubs. Today, many of these institutions are competing in dwindling markets. Therefore, it has become increasingly competitive to sustain growth. In these potential member pools, the waters become bloody red oceans fighting over shrinking demographics. However, as with most industries, some shrivel up and fade away while others in the same market blossom from creating blue oceans of new market spaces to enhance dues.
Tiger Woods recently opened his first private country club course in the U.S named Bluejack National Private Club and Community. According to the co-Founder, Mike Abbott quoted in Club and Resort Business Magazine; “ We think that golf has lost its way because of how challenging it’s become, the time commitment involved and the loss of social interaction, as people go looking for their ball. As a result, not only is the game not as fun as it used to be, it is also a big reason why clubs have stopped being as interactive as they once were.” Along with creating new experiences on the golf course, facilities will include areas such as “The Place” and “The Fort”. The amenities and programming of such facilities will include: resort style swimming pool, sports field marked for flag football, wiffle ball field (Little Fenway, modeled after Boston’s Fenway Park), skate park, study hall pavilion, ropes course, zip lines, walking trails and an active fishing program. In addition, it will offer 386 private residences, in which the first couple to purchase a home are not golfers. Food and beverage operations will provide fruit stands, burger and shake joint, and a coffee house. Some of these amenities didn’t exist in the club industry 10 years ago.
“Many leading organizations plummet from the pinnacle of success to the depths of failure when market conditions change. Because they’re paralyzed? To the contrary, because they engage in too much activity of the wrong kind. Previous success breeds active inertia and active inertia breed’s failure.” -Donald Sull, Why Good Companies Go Bad.
Jobs to be Done Theory Disrupts Existing Potential Member Markets
In the recent issue of Club Business Magazine, Damon DeVito of Affinity Management expounds upon having a different point of view by asking; “Does your club allow jeans in the dining room? If not, is your club nicer than Congressional Country Club? They allow jeans in every room except one – and nobody goes into that one”.
According to a March 2015 article in USA Today, the Broadmoor Country Club in Indianapolis lost a half-million dollars in 2013, then did away with its ban on jeans in the clubhouse and has added child care. It added over 80 new members in 2015/16. That boosted membership to about 280 from a low of 167 a few years ago. The club says it has stabilized its finances after cutting $125,000 in expenses last year and boosting revenue by $143,000. One simple adjustment at Broadmoor made a big difference in the culture: dropping the ban on jeans in the clubhouse.
Another club in Indianapolis, the Woodstock Club, lost $171,916 in 2011. As a result they ditched their requirement for coats and ties in the dining rooms and now treats the partners of unmarried members as full members, not guests. That includes same-sex partners. The Club says added about 25 new members from 2012-2015, for a total of 488.
“What the private golf industry has failed to come to grips with is that the options they provide were designed for another generation of golfers, not the golfer of today.” – Jim Koopenhaver, Pellucid Golf Research.
Third Place Theory Drives Social Capital
According to Ray Oldenburg, author of the Great Good Place, the third place, (or third space), is the social surroundings separate from the two usual social environments of home (“first place”) and the work (“second place”). Examples of third places would be environments such as cafes, clubs or parks. In his influential book, he argues that third places are important for establishing feelings of a sense of belonging.
Private clubs have always provided a third place destination for members. Not only as a home away from home, but also as a means of increasing one’s social capital. With increased dependence upon the internet, social media sites have grown tenfold in the past decade with 65% of U. S. adult population using social networking sites, according to Pew Research Center. Social currency is quickly becoming a professional and personal measurement in the lives of members. In one form or another, social currency rises out of on and offline social networks and communities. As in the past, social currency came in many forms in a private club. In all cases, social capital is about increasing one’s sense of community, helping for one’s identity providing status and recognition.
Third Place communities are neutral areas where members can gather and interact. Beyond the realms of home and work, members can put aside their concerns to engage in conversation and camaraderie.
“If it ain’t broke, don’t fix it.”-No one in the Private Club Industry since 2009.
Marketing theories are on the low end of the learning curve for most private golf clubs. With limited access and a captured audience through member referrals to sustain waitlists, club boards and management never needed marketing strategies.
However, a pristine, well-conditioned golf course alone is no longer enough to differentiate a competitive position to attract members. As the world around clubs continue to change, so will the members that join. As the private club industry continues down the road to recovery, it has become imperative that they market themselves based upon how existing and potential members perceive the club.
As clubs continue to transform towards the future, it will be interesting to observe how quickly new norms will be adopted. For example, as mobile devices continue to replace other forms of communication, what will become of tee times and menu ordering? With video continuing to grow exponentially in the field of education, how will the relationship between the teaching golf pro and long distance member be impacted? Considering how the rate of change in the private club industry has accelerated in the past five years, how quick will these changes take place? Possibly sooner than we think.