We’re currently providing consulting services for a Homeowners Association (HOA) owned club that has raised some interesting issues and several which are relevant to other member-owned private clubs, especially those in planned communities. In the past year, we’ve worked with a couple of age-restricted (55+) HOA golf courses and observed some of the characteristics that have experienced declining membership, declining use of their golf course facilities and have been forced to consider from among several alternative operating models.
Among the choices are to maintain the club as private for community residents, open up membership to non-residents or to allow some amount of daily-fee play from both residents and non-residents. Especially in age-restricted communities there is often a concern for security and opening the gates to the outside can be perceived as risky. There is also sometimes the option of simply raising the HOA dues given that all residents (whether they’re golfers or not) benefit from a thriving club in the community. Needless to say, just like taxes, raising dues is never popular.
Of critical importance in this discussion is the attitude of the community. Are they more concerned with price? Or do the see the value in preserving the community’s amenities and thus the value of their homes? Are they “owners” or “customers”. If a club or community boasts about having the lowest dues, one can be certain that the level of services and the value in membership will be compromised.
Often, a club has to choose between privacy/exclusivity and opening up to the outside. In one case I’ve observed, the club has opened for both non-resident memberships and non-resident public play. However, they’ve limited access to some club facilities to only residents. The resulting diminished value in membership to non-residents negatively impacts the dues rate that can be charged. Combined with dated facilities that are also no longer efficient for a modern club, the HOA needs to make some decisions.
Among the choices the HOA will be faced with include the following:
- Whether to be private or open to daily fee play;
- Whether to welcome non-residents;
- Whether or not to invest capital in updating or upgrading the club’s facilities;
Many clubs, not just those that are owned by an HOA or those that are amenities to a community are faced with similar decisions. Key to understanding the best way to go is comprehending the club’s “culture”. At all levels, clubs take on a personality that often determines whether the goal is to be the best, to be the most profitable, to be the cheapest, to be the most exclusive or to be the biggest or smallest or most prestigious. For those clubs that are an amenity to a community, the club’s impact on surrounding property values should also be a consideration, especially since many (if not all) of the members can be homeowners int he community. Once the club understands its facilities, location and market it can make these decisions from a more informed perspective.