“We Don’t Have any Competition” – Really?

If I had a dollar for every time I asked a club about their “competition” and they told me “we don’t have any competition”, I’d be wealthy. Over the past 35 or so years that I’ve been appraising, analyzing, studying and brokering golf course and club properties, it often seems as though many clubs and operators have the perception that they are immune to competition. This can apply not only to the affordable clubs and daily-fee facilities that can have a price-sensitive clientele, but even to the most upscale private clubs, that either through pricing or atmosphere can find themselves struggling when economic conditions become challenging.

So, what are some of the competitive market dynamics we’ve observed over the years?

No doubt, the challenges vary from smaller and mid-size communities to those in and around big cities. For instance, it’s not uncommon for upscale clubs in major markets to consider the surrounding (and maybe not so upscale) clubs as not being directly competitive in favor of “peer” clubs in different markets that may be several hundred miles away and exhibit similar amenities, characteristics and culture. While the surrounding clubs may not be as attractive, may be targeting a different market segment and offering a different product, the geography is important because the upscale clubs’ universe of potential members is still likely to live within an easy commute from the club. The small-town club, even if the only club in town, on the other hand, may find itself competing not only with any other private clubs in the market, but also with the area’s daily-fee courses due to a limited number of nearby “clubbable” households and the typically more price-sensitive golfer population of small towns.

In the smaller markets it’s not uncommon for budget-conscious golfers to estimate how many rounds they might play and decide between joining the club and playing public golf based on an estimate of their cost per round. While many club members and leaders may be critical of this approach, it can’t be overlooked when we know that a club’s survival can sometimes depend on just those “marginal” members.

As golf is generally regarded as a hospitality enterprise, a big element of the golfer’s decision of where to play is “the experience”. There are some of the most upscale private clubs with terrific courses that fail in making either the member or guest experience positive. It’s sometimes as if one should consider themselves privileged to be there. Conversely, there are clubs and courses of lesser reputation that make everyone feel welcome and appreciated. They recognize that they do have competitors and do everything possible to enhance the experience. As I’ve always told my kids, every decision has a price. With clubs, that choice is often based on the club’s culture. If the culture hasn’t evolved with the times, membership interest could suffer.

As compared to golf in other countries (the UK for instance) the game is still (at least perceived as) somewhat of a status symbol in the US. Many private clubs tout their exclusivity and formality, which can include policies often unpopular even with the existing membership. In other countries, even at the most prominent clubs, guest play is welcome (at a cost) and the clubs generally make you feel as though they’re happy you’re there. In the current market environment, many clubs are thriving despite some unpopular policies because so many clubs are full with waiting lists. Nobody knows how long this will endure or where.

The choice golfers often have to make is based not only on cost, but also access. Most (not all) private clubs typically offer a more unbridled level of access to the course that provides the member with the flexibility of playing when they want rather than simply when there are available tee times. As golf has thrived in the COVID era, access has become a challenge even at many private clubs as more members, often with more time to play have filled membership rolls. Time will tell if the surge in play is sustainable and whether clubs will either limit membership, restrict play or simply accept more crowded conditions. I remember one time I went to play a prominent club as a guest and the first thing my host said when I arrived – in the parking lot – was “where’s your cell phone?” It didn’t exactly make me feel warmly welcomed.

As many clubs have either become flush with cash or have enhanced borrowing power, the competitive nature of many clubs to outshine their competition has become apparent with often large reinvestments in the club. This also brings focus to the competition (including daily-fee courses) that may have a lower cost, no assessments and possibly better access.

Right now golf is in a “seller’s” market. There are more players per available tee time than just 4 or 5 years ago and the competition isn’t as fierce as it was then. Many clubs (reportedly over half, nationally) have waiting lists. The cost of both private and public access golf has increased dramatically. However, nobody really knows how long this market will last. If, and when the surge subsides clubs and courses alike will again acknowledge that they need members and golfers more than those members and golfers need the clubs and courses. It wasn’t that long ago when golf was trying to figure out how to slow course closures and club failures.