Another successful Trends season wraps up
ECLUB NEWS |
We were very excited to see more than 600 clients and friends at our most recent annual Trends events at Harbour Ridge, Boca West and Grey Oaks country clubs. As usual, the host clubs demonstrated the highest levels of hospitality to the many club management and leadership individuals in attendance. Kurt Kuebler of Kopplin, Kuebler and Wallace did another excellent job managing the general manager and chief operating officer panel discussions at each location before RSM leadership discussed trends and key industry data.
Key takeaways this year focused on some recurring themes: managing operating costs; continued extensive capital reinvestment; and ongoing debt and treasury management.
Looking at capital spending trends in 2016, these now stand at $5,050 of capital expenditures per f member equivalent (FME), or $12,270 per FME on a cumulative three-year basis; all part of the continuing process of meeting member expectations and remaining competitive. 46 percent of clubs are planning what they consider to be significant projects in the next 12 months, the highest percentage since we started tracking this statistic.
The way in which clubs pay for these improvements is, again, a decision to be made by each club; however, the proportion of clubs carrying some form of third-party debt is generally trending upward with 76percent of clubs carrying debt. Looking at this on a per member basis, debt per FME has increased to $8,010 in 2016 from $7,220 in 2015. Bear in mind though that the debt per member number for an individual club will usually correlate with the life cycle of its physical assets. If a club has a higher than average debt per member figure, it could be because it has newer facilities.
While dues comparisons amongst competing clubs is an often quoted statistic, many differences exist between the advertised dues price and the total cost that a member is required to pay each year before they even set foot in the club. Other fixed charges of membership, such as capital assessments, operating assessments, food and beverage minimums, and mandatory service charges, can lead to a very different conclusion being drawn as to which club offers the best value proposition. At $17,400, the total annual cost of being a full member in 2016 increased approximately 3.6 percent from 2015.
Dues, as a percentage of total operating revenues, have remained around the 62 percent mark during 2016. So since almost 62 cents of every dollar of operating revenue received by a club comes from dues, it remains critical to increase dues modestly each and every year. Dues for 2017 are increasing by 4.0 percent on average.
Payroll remains the largest component of the club operating expense at 53 percent of total operating expenses and approximately 52 percent of total operating revenue. In terms of per FME cost, payroll and related expenses averaged $9,000 through 2016, with one employee serving 4.2 memberships. Compare this with the corresponding 2015 levels of $8,700 and 4.3 and it can be seen that clubs are moving compensation upward while increasing membership service levels. A club’s brand is its staff and its staff are the club’s brand.
To explore these and many other financial and operational trends in the industry, download 2017-18 Trends in Private Clubs.