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July 2018

The New Privileges of Membership

NewPrivilegesofMembership.jpg‭By Scott Kauffman
 
Amenity-drive recapitalization is positioning private clubs for a bright future.

On a recent weekend at Bella Collina, the private golf and lakefront community’s 75,000 square-foot Tuscan-themed clubhouse was buzzing with activity as 100-plus visitors enjoyed a night of food and music at a place affectionately known as the Castle. By many accounts, this busy Bella Collina evening didn’t seem out of the ordinary for the Orlando-area property, or any other private club holding a special member event.

However, what made this night different is the fact it was composed of guests celebrating one of the many destination weddings now hosted by this picturesque private club. As General Manager Jerry Thompson described it, it’s a great way to bring “golfers” back into the club when it’s dark outside.

Welcome to the new-age private golf and country club.

At a time when clubs seek alpha in more creative ways due to the changing demographics of the private club business, Bella Collina’s recently expanded ballroom is a prime example of how a growing number of clubs are successfully integrating non-golf amenities as a stimulus to drive greater overall revenue. Consequently, this amenity-drive recapitalization is also helping dozens of clubs retain and grow memberships from coast to coast – further strengthening their fiscal state.

If the decade of the 1990s was golf’s big development boom, this is the decade to be remembered as golf’s recapitalization boom – highlighted by major multi-million-dollar renovations and reimaginations that extend far beyond the confines of the courses that define so many of these places. By one measure, golf course renovation projects alone have totaled an estimated $3 billion at 986 facilities since 2006, according to recent data from the National Golf Foundation.

What the research doesn’t consider is the vast number of developers and private club owners/members investing tens of billions on newly improved clubhouses and other non-golf assets from brand new health and wellness centers to world-class resort-style pools or aquatic facilities and newly enhanced dining venues.

At a recent series of “Trends in Private Clubs” events hosted by global accounting firm RSM, one of the key takeaways and recurring themes playing out in the private club rich state of Florida is “continued extensive capital reinvestment,” RSM reports. For instance, in a state that leads the industry with 1,000-plus overall golf facilities and more than 400 private clubs, RSM reported 46 percent of the 200-plus clubs surveyed are “planning what they consider to be significant projects in the next 12 months.”

The results, published in RSM’s annual “2017-18 Trends in Private Clubs” report, is the highest percentage since RSM started tracking this statistic. Moreover, the 42nd annual study showed capital spending at Florida clubs averaged $3.38 million in 2016 (based on $5,050 capital investment per each of the average 670 full-time member equivalents at Florida clubs). To be sure, these renewed investments and commitments going into hundreds of clubs in Florida and other parts of the country are more than just an enlarged banquet room or obligatory fitness center. As RSM put it, “clubs have focused on enhancing the dining experience with more informal and outdoor dining options, and successful clubs are continuing to make capital improvements.”

Indeed, what’s driving the bulk of today’s rush of new resort-style amenities are services that resonate with the starkly different modern-day private club member or family that encompasses working moms and dads and multiple generations at play. For instance, at Bella Collina, resident member and course designer Sir Nick Faldo now enjoys a new, resort-style pool that rivals any four-star resort, an adjoining 3,000-square-foot health and fitness center called Sportivo Centro and the newly expanded 7,000-square-foot ballroom that quadrupled the club’s wedding events and fueled hundreds of new invitational sports and social members.

And Bella Collina’s array of new multi-million-dollar amenities is on top of an award-winning $50 million-plus clubhouse that was already well established.

In January, more than 1,000 Quail Ridge Country Club members and guests celebrated the grand opening of a sparkling new 60,000-square-foot clubhouse and cart facility at their Boynton Beach, Florida, community. Among the highlights at the new $23 million clubhouse: five dining rooms, an indoor and outdoor grille room, two outdoor dining patios, lobby and library, new men’s and ladies’ locker rooms and a larger golf shop. The club is expected to begin work later this summer on the expansion of Quail Ridge’s spa and fitness center.

According to Quail Ridge director of marketing and membership Holly Kaspar, the new amenities are already proving to be a wise investment for the club as Quail Ridge is having a “record-breaking year” in real estate and membership sales, and “record-breaking usage” of the clubhouse and dining, and spa and fitness center. Meanwhile, Quail Ridge sold out 200 summer memberships and had a wait list for another 20 as of May. The recent round of capital investments has been so positive Quail Ridge members approved the next phase of their long-range planning with $10 million in projects to include a major renovation of the South Golf Course.

Following is another pair of multi-million-dollar private club makeovers with similarly fruitful fiscal results:
 Rolling Hills Country Club in Palos Verdes, California: 10 years after struggling to retain members at a golf-centric facility that cost $25,000 to join, this private golf and country club community recently invested $70 million in a new clubhouse and array of family-oriented amenities and now boasts a waiting list with an initiation fee at $175,000.

 River Run Country Club in Davidson, North Carolina: Less than a year after finishing a $2.5 million capital investment, highlighted by a $1.2 million renovation of the member dining facilities in the clubhouse and another $250,000 to create a new tennis center restaurant called Slice, River Run general manager Tom White now has a wait list for the club’s new “Young Professional Memberships,” overall membership grew 11.5 percent to 736 members in 2016 and net operating profit more than tripled to $432,000 in 2016.

In many respects, a number of the clubs are engaged in an amenities arms race. And the clubs reimagining their communities in the most comprehensive of family-oriented nature seem to be mostly succeeding in the new normal. As one general manager put it, the days of golf-centric clubs and communities are over, except for those rare places with certain golf pedigree and prestige.

 In other words, for clubs to retain members and add new ones these days, they must be multi-dimensional in what they offer and represent a “more comfortable and hospitality-like look and feel,” according to leading clubhouse designer Kimberly Timmons Interiors, whose Denver-based firm is in the process of completing a significant redesign of the clubhouse and newly enhanced fitness center at historic Sequoyah Country Club in Oakland, California.

At Bella Collina, the infusion of new capital and fresh new ideas and attractions are ways the West Palm Beach-based DCS Investment Holdings is evolving with the private club business and turning this formerly distressed residential community into a dynamic development with more than 50 homes built and dozens more underway since it acquired the 1,900-acre property, championship golf course and clubhouse six years ago for $10 million.

“When we purchased Bella Collina, the community was full of strategic defaults and the club was losing millions,” says Randall Greene, whose DCS Investment Holdings group is owned by Washington Redskins co-owner Dwight C. Schar. “The question was how do you pull out a recovery? One of the huge advantages we have is our beautiful setting and clubhouse.

“For instance, we’re one of the few clubs in Florida with a private natural spring-fed lake, not to mention being next to one of Florida’s largest lakes in the state (Lake Apopka). … The reality is you have to have all these amenities we now have today to succeed. It has to be a full-blown package and the package has to be up-to-date. Golf is evolving and we’re evolving with it.” 

Scott Kauffman is a golf business writer and the managing director of Aloha Media Group.

 

 

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