Marketing and Membership

Students will often hear that membership is the lifeblood of clubs. This simply means that without members, clubs would cease to exist. This is true for both not-for-profit and for-profit clubs. The focus of this chapter is on membership, that is, who are the members and why do they join; and marketing, that is club activities directed at retaining existing members and recruiting prospective members. The reason that we are combining a discussion of marketing with one of membership, is because it is hard to separate the two functions in clubs. When we use the word ‘marketing’, we are referring to marketing to members, either current or prospective. At one time, marketing was not within managers’ lexicon. However, as we have alluded to several times, clubs must be much more outwardly focused now than they were a generation ago. We will talk more about marketing, but let’s first examine why members join clubs.

Types of Clubs

Clubs come in so many different types and forms, that it becomes necessary to classify them, much the way we do with hotels. Hotels may be classified by size (number of guest rooms), service level (economy to luxury), price (based on average rate), location, etc. Clubs are classified in a slightly different way. When we discuss the types of clubs that exist, we can do so in six different ways: 1 By primary activity/location 2 By clientele 3 Equity/nonequity 4 Size (by number of members, gross volume, or initiation fee) 5 By ownership 6 Tax status

Financial Operations in Clubs

Most students have taken a module in accounting, finance or both. There are many aspects of both of these areas (and where they overlap) that apply to clubs. In this chapter, we will present the areas with which students should be familiar, and those which club managers have told us are important. This chapter will focus primarily on ‘big picture’ financial topics, that is, financial areas that are under the purview of the general manager, finance committee, controller, and/or the board of directors. However, club practices differ from those of other hospitality organizations in both large and small ways, many of which affect their financial procedures. For instance, many clubs do not accept cash payments (or credit cards) for services, only allowing members to charge services rendered to their accounts. This obviously impacts who pays, how they pay, cash flows, and systems and procedures. Another example is the importance of dues to clubs – clubs’ greatest source of revenues is usually in dues (quarterly or monthly payments by members). This means that clubs rely greatly on a source of funds that is a function of the number of members, not member activity. Another example of how club finances differ is that they have sources of revenues and expenses that are unique in the hospitality industry, such as initiation fees, ‘unused food minimums’ and ‘unrelated business income’. Add to this that the majority of clubs are operated on a not-for-profit basis, meaning that they manage their operations for the long-term sustainability of the organization and not for short term profit. All of this adds up to clubs representing a unique niche in the area of financial management.

People in Clubs

In this chapter, we will look at some of the functions of Human Resources Management (HRM) in private clubs. Human resource management encompasses the range of functions which impact employees from recruiting and hiring, to the structure of jobs, to training and development, to performance evaluations and rewards. It also includes administration of employee benefits, salary determination, promotions and transfers, and looking after employee health and safety. And more! It is not the intent of this chapter to provide a comprehensive HRM primer, but rather to provide a snapshot of HRM practices that managers and clubs find useful in day-to-day operations. First, though, we will examine how the management of human resources in clubs is different than it is in other types of hospitality organizations.

Recreation

One of the things that makes a club into a club is that it brings together people with a common interest. Sometimes the common interest is food and beverage, but often it is a recreational activity, of which the most prominent is golf. But there are many other recreational activities that take place at clubs and this chapter will discuss many (though not all) of them. Club activities are many and varied. It is important for students to understand the individual activities, and particularly: (1) who participates; (2) how they are managed; (3) how they interact with other activities/areas of the club; (4) whether they are cost centres or profit centres; and (5) trends and changes affecting these activities and their popularity.

Governance

We are fond of reminding our students that no two clubs are alike. That said, clubs can be similar in certain ways, including the ways in which they are governed. This chapter discusses what governance is, why it is important and presents several different governance models.

Food and Beverage

Many club managers would agree that comparing commercial food and beverage operations to private clubs is like comparing apples to oranges. Clubs are uniquely challenged with multiple dining options (much like a hotel or resort) and in the ability to forecast demand, because many members may not make reservations. Additionally, many club food and beverage operations lose money because of high food and labor costs (more will be said about this later). Finally, club dining is reserved for members only, so clubs are serving a limited market. There are other differences, but these are some of the key ones, all of which present unique challenges. According to research by ClubBenchmarking, 75% of food and beverage departments in clubs lose money. This is not necessarily a good or a bad thing – just a function of how food and beverage in clubs is managed. This chapter will explain how they are managed, how they are similar to (and different from) restaurants, and why so many of them lose money or show a deficit. We will revisit these issues but, first, let’s confirm how important food and beverage is to a club’s livelihood.

Trends in Clubs

As we explain to our students, clubs have changed more in the last 10 years than they did in the previous 100 years. While this is perhaps a slight exaggeration, it is close to the truth. For many years, while the economy, legal environment, and demographics were all in their favour, clubs were able to continue managing their organizations as they have always done. Then, as their members grew older (and less active), new tax laws came into play, the economy weakened, and new generations with different needs emerged, clubs either changed of their own accord or were forced to change. When discussing changes in clubs, it is helpful to explore the trends that are occurring.

Introduction to Clubs

Private clubs have existed for as long as people have desired to gather in groups to do things together. It has been suggested that private clubs (and their predecessors) date to the Roman baths but probably pre-date even those. It is doubtful that the Roman baths represented the first time people congregated in groups to socialize, discuss commerce, politics, or just engage in a mutually agreeable activity. Certainly, most agree that the ‘modern’ clubs (in the English speaking world) originated in England, were limited to ‘gentlemen’ and organized for social, political, business and/or pleasure reasons. The concept was then ‘exported’ along with ex-patriots all around the world. Clubs have since evolved to the point where they exist in countries around the world although they are embraced to a greater or lesser extent in different places. Examples of private clubs can be found in such countries as England (and the greater UK), Ireland, the United States, Canada, Australia and New Zealand, South Africa, Switzerland, Hong Kong, India, Pakistan, Japan, Singapore, and the UAE. Perhaps no country has adopted the idea of clubs as much as the USA, where they have evolved into a veritable industry, are protected by law, and number into the thousands. Humans, being social creatures, long to spend quality time with others – ‘others’, historically, representing those of their own kind. Perhaps it is for this reason that clubs have, rightly or wrongly, developed a reputation for being discriminatory. People generally find benefits from spending time with others. These benefits may accrue in many forms, including personal, professional, and political.