It seems as though 2017 saw more than its share of golf course closures. While the statistics aren’t out just yet many in the industry are predicting a record number of courses closing this year. What (if anything) did these operators do wrong and how can a golf course avoid extinction?
Golf courses and clubs close for several reasons. These include:
- Decline in membership/play
- Alternative highest and best use (development)
- High debt
- Financial inability to address deferred maintenance
- Financial inability to make upgrades/enhancements
- Mismanagement
- Competition
- Improper Market Position
- Declining Facilities
In the ever competitive golf world, avoiding this fate necessitates value in membership and requires clubs (even the most prestigious) to understand the markets around them and how they evolve. It also requires clubs to understand their individual strengths and weaknesses and how to establish their own niche in the market. All clubs are not alike. The simplest of supply/demand analyses don’t address the myriad of differences between competing private clubs and yet all we read about is the idea that there are too many. I’ve seen clubs fail that shouldn’t have and the excuse of over-supply was over-used. These clubs could have been preserved and thrived had they simply looked forward and thought about how to compete – not only with other clubs, but with daily fee golf courses and alternative activities.
A couple years back, I attended a seminar where a representative of ClubCorp discussed the concept of reinventing their clubs. He suggested that while “older members will go for new, younger members will not go for old”. He also indicated that the clubs where they have reinvested and broadened the offering of activities and programs the most are their top performers. Certainly, there is no formula where “one size fits all” I can clearly say that those clubs that fail to evolve and improve are also at greater risk for economic failure. I’ve seen it happen many times.
This is a crucial element that many clubs miss. Many club leaders and club members have been there a long time. They love their clubs and the club (“as-is”) and its “traditions” has become part of their way of life. C H A N G E is not a four-letter word. Ignoring the outside world and resisting appropriate change can kill a club before they know what happened. While it is a slow, often painful death, many of our clients get to that position simply by ignoring the market and declining to reinvest. When potential members are deciding if and where to join, what others are they considering? What are the strengths and weaknesses of the competition? How are they priced? That market pool can include other nearby clubs, as well as daily fee, resort and even municipal courses. Understanding your club’s market, knowing where to focus reinvestment dollars can be invaluable in revitalizing a struggling club, or even in perpetuating a thriving club for the future. It’s not JUST a game of supply and demand, but also a game of proper market positioning.
A thorough review that will facilitate informed decisions will entail visits to the competing clubs — because we need to know if the club being evaluated is getting its “fair share” of the market and whether its performance is both competitive and consistent with its market position and facilities. Is the club strong in golf facilities, but weak in food and beverage? Is it a family club or a business oriented club? There are many determinants of this and all clubs need to “match” elements like location, facilities, existing membership, potential membership and infrastructure to each other to maximize their performance.
So, how do you avoid extinction?
Alternative (residential) development can’t always be avoided, simply because the property might be worth more that way. However, recently listening to former NFL quarterback, ESPN commentator and owner of 7 golf courses, Ron Jaworski, it sounds simple. Jaws simply focuses on “making people happy”. It’s not that simple but golf is a hospitality business. One has to understand their customers and know how to make them happy. he’s “turned around” several courses. To some, it may be a focus on course conditions, to others it may be the atmosphere in the restaurant/bar or it may be the other patrons/members and social opportunities that keep them coming back. Many of the courses that I see cease golf operations didn’t have to.
Sometimes, it takes capital investment to be competitive, in other situations it takes a change in programming, operations or staffing. Whatever it is, learning and understanding how and then making people happy will motivate their return. Understanding your club, identifying its strengths, weaknesses, opportunities & threats (SWOT) can help you plan accordingly, implement the right prescription and avoid the “bogey” of golf course closure.