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The stunning double green complex at Ballyhack. A Destination Club founded in 2009. |
Ever since Dick Youngscap founded Sand Hills Golf Club, there have been numerous individuals who have been inspired by the destination club model. Over the past 9 years, I've had the opportunity to visit a few and consult with many. In numerous conversations I have with friends, the question always revolves around the overall success of the project....how can these places work?
After visiting Ballyhack Golf Club in Roanoke last week, I have created a brief overview of the concept along with how projects have both succeeded and failed throughout the years.
The Destination Club
Founded on the premise of discovering an ideal site for golf, the course's architectural quality is paramount to the success of the project. Located normally in a remote area where both commercial and private travel can be challenging, the quest of getting to the club is half the reward. Destination Clubs are not created to make large returns on investment. They are created by people who have a passion for the game, have discovered a property which can present a thrilling challenge of golf, and offer an exclusive membership experience that is second to none.
Common Amenities of the Destination Club:
--18 holes of compelling, high quality golf. The course IS the reason people are coming
--A modest clubhouse that can provide minimal items in pro shop, dining for members and guests, a great bar, and outdoor gathering areas
--On-site lodging that normally accommodates a minimum of 4 people per unit. Each unit would feature 4 bedrooms along with 4 bathrooms
--A small, but quality practice area
Features of the Membership
--Golf purists who are looking to have a "core" experience via golf, dining, camaraderie
--National membership: normally placed in remote areas where population would never be able to sustain project
--Initiation fee is moderate: The ability to "get in" is always harder than the initiation fee. Most destination club models thrive on a membership level of 150-200 members respectively
--Annual Dues are low: The overall club model to profitability weighs on usage rather than the traditional monthly dues model as seen in private clubs
How the Model is Sustainable
--Ownership group is well capitalized. The project is not laden with debt, and ownership is committed to covering operational shortfalls during early stages of membership development
--Successfully collecting revenues through lodging, guest fees, dining from both member and sponsored play
--Carefully accepting at-large, unsponsored play at a premium rate
--Product truly is world-class. The golf course motivates people to travel great distances to experience
--Staff is cross-trained to handle numerous duties, therefore eliminating specialization that is prevalent at most traditional country clubs
--Membership is comprised of diverse, wealthy individuals and corporations who value premium experiences and are willing to pay above market prices
--Ownership Group is representative of powerful individuals who have a passion for the game and a large network of contacts to invite to membership
Why Destination Clubs are Failing
--Under-capitalized: Ownership is unable to fund project with necessary dollars to cover operating shortfalls, debt service, and needed capital expenditures
--Over Supply: This product appeals to less than 1% of the current golfing population. A recent influx of destination properties has saturated what already is a restrictive market.
--Built at the Right Price: Excessive facilities construction quickly rises project costs well above amounts able to be recovered by membership and operations.
--Ownership does not have deep enough contacts to lay foundation of first 100 members for the Club
--Product is not world-class
So what's the future for this model? Outside of having an ownership group who is well-capitalized or identifying a foreclosed property at below-market-values, not much. This is "dream land" golf where all of us wish we could build our ultimate retreat for our buddies. If you are lucky enough to play one, don't hesitate at the chance. If you are dreaming of developing this model, be aware of the harsh realities.