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Converting From Daily Fee to Private

Converting From Daily Fee to Private. PGA Orlando, 2011. Gary Dee Executive Vice President Heritage Golf Group. 6 Yrs: Apprentice (High End Private) 5 Yrs: Head Professional (Resort/DF) 3 Yrs: Gen. Manager (DF & High End Private) 4 Yrs: Exec. w/ PGA TOUR 17 Yrs: Exec. w/ CGG & HGG

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Converting From Daily Fee to Private

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  1. Converting From Daily Fee to Private PGA Orlando, 2011

  2. Gary DeeExecutive Vice PresidentHeritage Golf Group • 6 Yrs: Apprentice (High End Private) • 5 Yrs: Head Professional (Resort/DF) • 3 Yrs: Gen. Manager (DF & High End Private) • 4 Yrs: Exec. w/ PGA TOUR • 17 Yrs: Exec. w/ CGG & HGG • 1978 Elected to PGA Membership • Team Member Involved in Approx. 75 Clubs

  3. Overview • Executive Summary • Key Considerations

  4. Executive Summary • Conversions = Tricky Business • 3 Actual Case Studies • 2 w/Excellent Results • 1 Stalled (1/2 Pregnant)

  5. Key Considerations • General • Market Analysis • Timeline for Conversion • Capital Improvements • Transition Plan • Membership Related • After the Conversion • Pitfalls to Avoid • P/L Comparison

  6. General • Zoning • Restrictive Covenants • Developer Agreements • Statutory Restrictions

  7. Market Analysis • Private Club Competition • Within 5 miles • Within 10 miles • Sales Potential • Price Points

  8. Timeline for Conversion • How Long Will a Conversion take? • Will Improvements Need to be Added at Certain Membership Levels? • The Quicker the Better

  9. Actual Legacy Conversion Process • Initiated Process in September, 2004 • Completed Conversion in June, 2006 • Total Elapsed Time: 21 Months • Went From 225 Members to 400 Members

  10. Capital Improvements • Improvements Needed to be Competitive ? • Clubhouse • Locker Rooms • Golf Course • Careful Not to Overspend • Add Upgrades Only to the Level Necessary • Avoid the Natural Tendency to Make it “Too Nice” • Essential to Identify “Members Only” Space FOR SALE

  11. Actual Legacy Club Improvements • Added New Men’s Locker Room • Expanded Ladies Locker Room • Expanded Clubhouse Grill Area • Added New Free Standing Golf Shop • Expanded Clubhouse Dining • Enhanced Practice Area; Bunkers; Greens • Total Upgrades Cost @ $3.2 M; 3 Phases

  12. Transition Plan • How Many to Sell? • “Triggers” Along the Way • Blocks of User Times • “Phasing” of Times • For Improvements • Fully Private When? • Member Communication • Member Referral Programs • “Members Only” Space Essential

  13. Membership Specific • Types of Memberships • Pricing • Initiation Fees • Monthly Dues • Accompanied GF Rate • Refund Rules • Resign List Procedures • Documents Needed • Application • Bylaws • Feature Sheets • FAQs

  14. After the Conversion • Consider Complexity • Private Segment is No Picnic • Member Advisory Board • Bylaws • Marketing Materials • Potential for Litigation

  15. Pitfalls to Avoid • ½ Pregnant • Serving Two “Masters” • Daily Fee Cutoff Point • The Blame Game • Over Upgrading • Delusions of Grandeur • Watch Private F/B Like a Hawk • Securities Violations for IF Uses

  16. P/L Comparison • Improved Operating Results are Possible When Everything Works Right • The Next Slide Shows Actual Results

  17. Placeholder – Shad’sP/L Comparison Slide

  18. What if You Miss? • Selling Initiation Fees at $5 k Instead of $15 – $20 k • Dense Real Estate Surrounding but “House Poor” • Locker Rooms Not Added Prior • Sluggish Economy • Other Private Clubs Nearby • Now Serving Two Masters

  19. Questions?

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