Country clubs are at a crossroads. Some are closing. Some see a big opportunity.
The American country club is at a crossroads.
By Andy Medici
The 99-year-old Decatur Country Club in Alabama closed in late 2022 after years of declining membership and rising costs.
After 125 years, the Bethlehem Country Club in Vermont is set to close after the 2023 season.
Gainesville Country Club in Florida put itself up for sale earlier in 2023 for $3.25 million, with the property listing describing it as an incredible income opportunity and perfect for the development of hotels, apartments and retail. Country clubs that have closed in Dallas and Tampa Bay are also poised to become housing and retail developments.
They aren't alone.
Across the U.S., thousands of country clubs are facing an existential threat. High operating costs and the persistent need to renovate and update aging facilities for a new generation have led many independent clubs to close — in no small part because their land is often worth more than ever as development has encircled the clubs.
The story writ large has played out on a grander scale, as the number of country and private clubs has fallen from 11,407 in 2014 to 9,909 in 2023, according to research by IBISWorld and analyst Michal Dalal. Every industry has seen consolidation over the decades, and country clubs are no different, as the larger players have the cash and resources to adapt and upgrade as club-goers demand more. IBIS expects still more closures, but predicts the industry will stabilize in 2029 at around 9,770 clubs.
Meanwhile, the $27.2 billion industry, according to research by IBISWorld, has seen its growth rate stagnate over the years, with revenue and profits slipping during the pandemic.
Over the next five years, IBISWorld expects total industry revenue to grow at just 1%, with a profit margin of about 1.1% in 2028.
By many measures, the industry is at a crossroads. But as some clubs close, others see a big opportunity.
The cost of exclusivity
One of the primary reasons for those thin profit margins and the industry's challenges are the high fixed costs of running a country club.
Members expect the same level of service whether there are 20 members or 200 — and that means country clubs that fail to engage their members and get new ones in the door are doomed to a spiral that means lost membership, declining quality and potential closures.
A 2022 finance and operations report by the Club Management Association of America, based on confidential surveys of 440 clubs, found clubs bounced back to more normal operating levels after a drop in 2020. Overall, the median full family membership dues for a year were $8,850 for golf and country clubs and $3,726 for city and athletic clubs, with typical dues increases of 5%.
But it’s not all doom and gloom. The number of adults aged 50 and older, considered the prime age for country-club memberships, is growing, thanks to demographic shifts.
Households with earnings of more than $100,000 were growing, too, albeit slowly, adding to the number of potential members clubs can draw on.
Then there is golf. For years before the pandemic, golfer participation had been trending down after the Tiger Woods-driven boom in the early 2000s. But the Covid-19 pandemic shattered those declines as people sought open-air activities during the height of social distancing. More than 3.3 million people played on a golf course for the first time in 2022, the third straight year that number had topped 3 million. The previous high was 2.4 million new golfers in 2000.
Golf simulators have also boosted participation in the sport, with 15.5 million people participating in golf activities such as driving ranges, simulators or venues such as Topgolf and Drive Shack. Millions of Americans are now able to play golf, whether on a course or inside.
And that means growth, which is one reason some are optimistic about the sector, despite a string of independent club closures.
Seizing the moment
Count David Pillsbury among those bullish about the fate of country clubs in an evolving market.
“I think we’ve got the healthiest ecosystem I have seen in our business in 30-plus years," said Pillsbury, CEO of Invited, which was formerly known as Country Club Corp.
Invited, which owns and operates 144 private country clubs with 180 golf courses, is one of the largest players in the industry. The company is now all-in on owning clubs after striking a deal to hand off its management division earlier in 2023.
Invited aims to purchase three to five country clubs a year in its bid to claim a bigger share of the market.
Why? Pillsbury estimates there are about 1,200 country clubs built as part of communities in the 1990s now struggling under increasing capital costs and aging facilities while membership continues to decline. Many of these clubs are owned and ran by members of the communities that surround the club who have no training in club management — they just want to enjoy the club.
“What's happened is that the market has passed these clubs by,” Pillsbury said. “The solution is, let us come in and run your club.”
Invited will find clubs like this, buy them and invest $5 million or $6 million renovating them so those same individuals can enjoy an updated, professionally-run club with a full suite of amenities without having to manage it.
“I think you are going to see consolidation because these clubs are capital constrained and they have been for 25 years,” Pillsbury said. “You will see companies like Invited buying those clubs.”
But, above all, Pillsbury sees a market imbalance.
There is strong demand for the services and activities that well-run, well-designed country clubs can provide — and limited capacity. After all, building a new country club with a complete golf course, restaurant and other activities is harder to build in close proximity to the prosperous urban and suburban centers that have popped up in recent decades.
But curing the imbalance also means operating a club ideal for the post-pandemic era, and that can sometimes be very different than what was desired in the 1990s.
A country club that competes with home
So what do country-club members seek now? They want a hyperlocal experience for the entire family, which means not more than 15 miles from home. It’s not just about golf, it’s about lifestyle and programming that fits that lifestyle, Pillsbury said.
Specifically, that includes a restaurant and culinary expectations that are far higher than years past. That also means a full-scale fitness facility. It means local programming that gives members a reason to come and spend time at the club — with the home being Invited’s biggest competitor.
That's driving programming like the "Bad Mom's Golf Club," which began in Dallas as a casual golf program for women but has spread to more than 29 clubs. It's also leading to changes like repurposing and optimizing space at clubs to ensure there’s room for pickleball or even e-gaming activities, Pillsbury said.
Children are a big part of the strategy for successful clubs today, too.
Invited’s junior program, which is serving 3,000 kids over the summer in a variety of camps, sold out in a week, Pillsbury said. Club membership, on average, sees attrition rates of 10%, but parents who have kids in junior programs have a 3% attrition rate.
All of these extras cost money. But he’s confident members will pay for it, and that's how Invited has taken on the challenges associated with soaring labor, food and goods costs.
“It’s pretty simple. We pass those costs along to our members and they pay it,” Pillsbury said. “And they pay it because we are giving them what they want.”
And as more clubs close, those who want to join a high-quality club will have fewer options, he added.
“It’s going to be tough on consumers, but they are just going to have to write bigger checks if they want to be in that space,” Pillsbury said.
Industry shift fuels renovation wave
Many country clubs are opening up their wallets for big-ticket renovations, too.
Diablo Country Club in California recently broke ground on a $22 million renovation — part of a $34 million multi-year upgrade that began with a refreshed golf course and will add a new pub, updated event areas and a new fitness center.
An aerial view of the practice green and clubhouse prior to the TOUR Championship at East Lake Golf Club on Aug. 23, 2022 in Atlanta. The club is undergoing a significant renovation.
Country clubs such as Atlanta's East Lake Golf Club are set for renovations, while others, such as Colonial Country Club in Forth Worth, Texas, are on strict timelines for their own renovations.
Michael Lewandowski, the president of L&L Ventures in the Pittsburgh area, has worked on renovations to several local clubs. And while every club has different needs, they are all working to evolve and grow in order to keep longtime members and attract new ones. His company has worked on both The Club at Nevillewood and the Allegheny Country Club, and each had their own unique requirements.
“Country clubs are either going to evolve and continue to cater to the members and keep their facilities updated or they are going to die out,” Lewandowski said. “It's a constant marketing effort to make sure you are at capacity."
Expectations are high, too, he added. Clubs with 600 members means there are 600 opinions, and renovations need to keep in mind existing character even while modernizing or updating features.
Some renovations are more basic, such as new heating or air-conditioning systems. Others are more functional, such as building more flexible event space.
In recent years, clubs that have seen an influx of new members are simply looking to create more space, Lewandowski said.
“A lot of the clubs are just getting old, and they just need to do a new roof, new siding, revamp the electrical and plumbing,” he said. “But a lot of clubs, since Covid, they’ve seen their membership grow by 20%, 30%, 50%. Because it’s grown so much, they now need additional capacity to host people inside the club.”
A lot of clubs' renovation money, however, is aimed at the golf course. Offering a memorable golf experience is key, said Brian Costello, golf course architect and CEO of JMP Golf Design Group.
Costello said quality of practice facilities like putting greens and driving ranges can be a difference maker. But clubs are now setting up those offerings with technology tools like Toptracer for “real-time analysis” at the range,” Costello said.
He said the dining experience is also becoming more important.
“One of the courses we recently renovated during the pandemic added an outdoor dining area with fire pits and glass enclosures on the sides. They also added a hillside fruit tree orchard and vegetable garden to grow produce featured on the menu,” Costello said.
Overall, country clubs need to be updated as they age, and if the age of the club is starting to impact the club-goer experience, then it’s time to consider improvements, Costello said.
That means country clubs need a long-term master plan to guide their capital expenditures and decide what needs to be addressed and in what order.
“One of the bigger challenges that clubs face is the sometimes well-intentioned, but disparate views, towards renovations. Some may say 'it is good enough' while others are posturing about what should be dealt with first,” Costello said.