Golf property analyst Larry Hirsh, interviews Jon Last about consumer trends, the economy and it’s impact for golf facilities.
My friend Jon Last is smart. Armed with an MBA from Wharton, he took a lifelong interest in sports and turned it into a business (Sports & Leisure Research Group) analyzing consumer behavior in the sports marketplace. His resume includes major studies for the USGA, PGA of America, ASGCA and NGCOA in the golf space along with projects for Major League Baseball, the National Football League, Sports Illustrated, Walt Disney Company and more. He’s experienced as well. Since all of us in the golf business are dependent on the behavior of the golf consumer, I figured Jon would be the best guy to ask about the effect of consumer behavior on our favorite game.
The first question I posed was whether there’s a direct relationship between American’s economic confidence and club membership & golf participation. Jon indicated that while overall confidence has fallen in recent years, the upper income bands (club members) are less impacted. He said “This phenomenon is continuing to hold true in luxury travel, as well. This is consistent with a lot of what we’ve seen in price elasticities and attitudes about discretionary spending and reflects a further widening wealth gap.” Last specifically cautioned those clubs that are more mid market. When I asked about the politics of golfers and club members, Last said: “We regularly track this, and your perceptions are correct, as affiliation with the Republican party skews significantly higher among private club members, than it does in the actual population. That said, attitudes by golfers and facility operators have shown a significant and increased emphasis on creating a more “democratized” golf experience, in recent years. We’ve seen meaningful increases over the past decade in those who believe that the game has become more welcoming and amenable to a wider swath of the population, and that has manifested itself in increased emphasis on screen golf, gamified ranges, short courses, proper tee box selection and other entry ramps that have brought about welcome shifts in golf’s demography overall.”
Last again cautioned the mid-market clubs when I asked about the potential of stability in club membership should a recession occur. He stressed that a “hyper local” club by club approach is most appropriate in analyzing potential membership stability and that even though the mid-market clubs might be more vulnerable he suspects that a deep recession would spread to the more upscale clubs, especially where entrance fees and dues have increased rapidly in recent years. When I asked about price elasticity relating to the rapidly rising cost of membership at many clubs, he said: “This will vary significantly by club and by market. I’ve advocated loudly for more clubs to conduct formal price elasticity analyses. We’ve done these across luxury categories, including ticket pricing for sports properties. As recently as last year, we’ve actually found several instances where money is actually being left on the table. And nationally, we continue to see a resilient segment of Americans who remain willing to spend top dollar for special experiences.” He indicated that defining “clubbable households” has become more difficult. The median household income (HHI) nationally is $137,000 with a mean just under $320,000. that means there’s a broad distribution. Thus, the definition of a clubbable household varies by club and by market.
One thing we often discuss in the club world is how far people are willing to travel from their home to their primary club. Again, with market variances, Last says about 25 minutes seems to be the “sweet spot.” With more folks working from home, club membership has flourished. Last says: “Attitudinally, people feel that they have greater flexibility to how they spend their time and that, coupled with the disruption in other discretionary activities during COVID, was a windfall for golf. Remember, the two biggest inhibitors for greater participation have historically been time and money. We’ve fundamentally shifted the first one, and that directly has benefited golf facilities.”
Last sees (like I do) that golf is a “hyper local” marketplace influenced by micro market factors. With many clubs (53% nationally) full or with waiting lists he’s observed some flattening in pricing indicating that we’re at or near the apex. He observed that “What we have seen here is also continuing to be driven by the reality that facility supply has meaningfully contracted since the last recession. I believe that we will still see some correction in market composition. Recall that the in the prior boom/bust cycle, we saw too many high end, country club for a day facilities, and developers who aren’t rigorously assessing demand, price elasticity and specific market dynamics could see themselves repeating the mistakes of the past.” When I asked about accessibility versus exclusivity, he said: “We are at an interesting dichotomy in what golfers want. There are segments that want a frictionless experience, where others still covet high touch. Some of the proliferation of technology into customer service in golf, assumes that former is more coveted, and that’s consistent with a narrative that embraces youth and innovation. That may be true for some, but the smart club is assessing member/guest needs and sometimes recognizing that the right technology solution may be more applicable to back office functions that free up staff to be more attentive and accommodating to an evolving group of entrants to the game.”
Last indicated that clubs need to do a better job of understanding their future members and learning the drivers of attrition as well as those who haven’t committed to a club. With clubs often relying on membership surveys for their decision-making, I was quite interested to hear Last say that well executed research navigates past and around all this noise created by quick and dirty methodologies. AI or one size fits all off the shelf survey packages severely lack the needed rigor. He emphasizes that to assure data quality, they’re throwing out significantly more bad sample than even three years ago and that bad sample, equates to flawed insights.
When I asked Jon about what he sees in the club of the future, among the things he wonders is whether clubs can become hubs for immersive, theater like experiences (such as COSM) for watching sporting events in an environment that makes you feel like you are at the game or even sports books at clubs, expanding the ever-growing market for sports betting. Is that something the sometimes stodgy club world would embrace?
Like I said, my friend Jon Last is smart.