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Country Clubs Look Beyond Golf to Woo Millennials

6 min read

Gone are the “build it and they will come” days of country clubs, as the once formal and exclusive institutions for the affluent loosen up to pursue millennials and young families.

Millennials, ages 21-39, are becoming parents, purchasing homes, moving up in their professional careers, starting their own businesses and reaching a prime age to consider joining private membership clubs, according to a report released in 2016 by the Club Managers Association of America and the Center for Generational Kinetics.

That’s why it’s important for country clubs to cater to millennials.

The time is ripe, too, because the economy has recovered from the Great Recession. The downturn had battered luxuries like golf, which had enjoyed two decades of dramatic growth fueled in part by Tiger Woods.

“In general, clubs are not a growth business, but they’re not a dying business,” CMAA CEO Jeff Morgan said. “Clubs are an evolving business in the sense that we’re in a period of transition.”

Above all, Morgan said, country clubs are small businesses that have to make data-driven decisions to respond to their changing markets.

Clubs are turning to targeted marketing, adding junior golf programs and fitness centers, abandoning one-size-fits-all memberships and reinvesting in their facilities. Some, like the Hot Springs Country Club, are offering a more casual setting where members can wear jeans instead of khakis and play music from their golf carts.

“Used to be, 20 years ago, when you thought of a country club, you would think of a golf course and a clubhouse that would probably have some sort of bar. To some degree, you might think it’s heavily used on the weekends by more [men than women],” Morgan said. “That has evolved tremendously. Clubs are now family-centric and serving the men and the women and the couple and the kids. I will say that the vision we have when we think of country clubs — middle-aged men out there on a Saturday — really has changed to much more of a family community-center environment that offers great experiences.”

Several Arkansas clubs said they are being challenged to be all things to all people and to make do with reduced revenue, a consequence of having fewer members.

“It’s a struggle. Everything’s more in the mantra of trying to do more with less,” said Jason Branch, a golf professional at Fianna Hills Country Club in Fort Smith. “It’s a challenging market, to say the least.”

Branch, who is also president of the Arkansas chapter of the Professional Golfers’ Association, hopes programs like a junior tour that attracted 300-plus children will build a pipeline of future golfers.

But this much is abundantly clear: Having a golf course is no longer enough. The game is difficult, time-consuming and expensive, all strikes against it with the millennial crowd.

But the expense of joining a club isn’t necessarily driving younger folks away. A bigger factor is whether a club is a good lifestyle fit for millennials, according to the CMAA report.

As for the time issue, many clubs are encouraging their golfing members to play nine holes instead of 18 or to treat the game more casually by playing for however long they can.

Golf may not be as popular as it once was, but a recent uptick in first-time players may indicate the tide is turning, according to the National Golf Foundation’s most recent annual reports on golf facilities and golf participation released in March and April.

The number of people playing traditional golf has gradually declined in recent years, and fewer retailers are selling golf equipment and clothing. But the NGF reports that the total number of people who played on a golf course for the first time ever rose in 2016 to a record 2.5 million. The previous record was set in 2000, when Woods was in his prime on the PGA Tour and people were flocking to the greens to follow in his footsteps.

But over time, that burst of new interest faded, total on-course participation declined to 23.8 million players in the most recent figures, down from 24.1 million in 2015.

The Arkansas State Golf Association doesn’t track rounds played in Arkansas or other state-specific statistics. But Executive Director Jay Fox said the association’s membership has fallen by 1 to 3 percent a year for the past several years, matching a national trend.

Another national trend has been more golf courses closing than opening each year. That has been going on since 2006, and it is expected to continue for the next several years, according to the NGF. There has been a cumulative contraction in golf course supply of 5.9 percent since 2006.

The report called the contraction a natural economic response to the industry being overbuilt.

More than 4,000 new golf facilities opened between 1986 and 2005, the NGF said.

At the end of 2016, there were 15,014 golf facilities across the country and 171 fewer courses than the year before, a 1.2 percent contraction. Also in 2016, the equivalent of 15.5 new 18-hole courses opened and 106.5 reopened, but 211.5 courses closed.

Pleasant Valley Is Thriving
While many clubs have shuttered, others have been reinvesting in themselves, and those seem to be doing well, said Morgan, the CMAA chief.

One of those is Pleasant Valley Country Club in Little Rock, which has more members than ever. It just completed more than $5 million worth of major renovations, General Manager Michael Auerbach said.

The club’s origins date back to 1947 as the Riverdale Country Club, which was in the Riverdale area of Little Rock and had 550 members. In 1963, Winthrop Rockefeller, then the head of what was to become the Arkansas Economic Development Commission, asked the club to move to a new neighborhood being developed in west Little Rock.

It was offered debt relief, a new clubhouse, tennis courts and a 27-hole golf course. The club reopened in the new neighborhood in 1968 as Pleasant Valley Country Club.

Recently, the club improved its clubhouse, golf course and tennis courts. It upgraded its swimming pool and added a splash park, too.

Pleasant Valley also completed those projects without charging members an assessment beyond their regular monthly obligation, a practice that’s typical in the industry.

Pleasant Valley is not alone in renovating its property. The NGF reports that 986 major course renovations, representing a total investment of at least $3 billion, have been completed since 2006.

Like all private clubs across the country, Auerbach said, Pleasant Valley suffered during the Great Recession. Luxuries like club membership are often the first things people strike from their budgets when they have to cut back, he said.

The ending of the Woods era was another factor.

“There’s no doubt that Tiger Woods helped golf,” Auerbach said. “But the bigger thing to that was it’s all economics. I mean, there’s other factors involved, but either you have the money to belong or you don’t.”

The national economic downturn caused the club’s membership to plunge from about 725-750 to 550, he said. Now, at 920, Pleasant Valley’s membership is the highest it has ever been.

Peak membership does not, however, translate to peak rounds of golf.

For the past three years, the average number of 18-hole equivalents has been 26,000-27,000 rounds, the manager said. The peak was 29,000-31,000.

Auerbach said the club’s “aggressive push” to bring in new members, especially the younger crowd, had succeeded. The average age of its membership has dropped to 53, from 58 three years ago, and a vast majority of the new members are in their 30s and 40s.

One of the steps Pleasant Valley took was to waive a portion of the initiation fee for new members who sign and honor a multiyear contract. New membership categories were added, as was a junior golf program sponsored by the PGA and called Operation 36. That program has “grown dramatically,” Auerbach said.

Still, a current member must sponsor any new member, and the club’s Board of Governors votes on the new membership. New members pay between $1,500 and $15,000 in initiation fees and regular monthly dues of $105-$437 depending on one of seven membership classifications: regular, corporate, intermediate, nonresident I, nonresident II, sports and social.

Auerbach said Pleasant Valley is in a “very strong financial position” with healthy cash reserves and annual revenue of nearly $7 million.

In 2016, the club’s total revenue was $6.96 million, and its expenses totaled $6.36 million. In the past three years, according to Pleasant Valley’s 990s filed with the IRS, its total revenue, total expenses and revenue generated by membership dues have been flat.

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