Bruce Carter, President of Optimal Design Systems International, discusses some key renovation tips.
How A Club Keeps Changing To Stay The Best in Their Market
By: Bruce Carter
The need to renovate a club is like the need to renovate your body. No matter what, if you do not keep up with the latest exercise and nutrition, your body ages and becomes a shadow of what it once was, and you are not able to effectively be the most productive you can be. So it is with a club. Not renovating lessens your competitive ability, and slowly, your club can “whither” away. Oh sure, maybe you can hang on… but the profits are never the same.
Then, there are clubs that are continually proactive in a changing marketplace. They do not wait and let competition come and then react. They know that they need to keep making changes with their club, sometimes small changes, and other times, more significant changes.
The Weymouth Club in Weymouth, Massachusetts has been in business since the 1970s and was the subject of a Club Insider Cover Story in April 2012. They have grown, space by space, to over 150,000 square feet. Their service and member programming is clearly exceptional. Yet, with many new clubs opening, including lower-priced models, once again, they decided to follow a plan for renovations in different phases to stay at the top of the marketplace and maintain their healthy prices.
As always, in any renovation, decisions have to be made as to where to prioritize the expenditures. Usually, this is divided into three categories. One is looking how to add more revenue as a result of the renovation, including creating new spaces that can add dues revenue but also non-dues revenue. The second area is the all important interior environment and décor of the club. The goal here should be to create new levels of the “wow” factor. This obviously affects new membership sales but also motivates people to retain their memberships. The third decision is to decide what to do first and how to best divide up what needs to be done into phases so renovation expenses do not overwhelm the club.
“Impact dollars” is a term that is used to help create a plan and set priorities. High impact dollars will get the highest return on investment, create the most excitement and increase member satisfaction. Low impact dollars means spending renovation dollars unwisely, misjudging what will do the most good. It should be noted that, at times, a renovation calls for “unglamorous” expenses, such as fixing an HVAC system or getting rid of mold, but these are absolutely necessary.
The Weymouth Club looked at their competition, the trends with fitness and what they felt would have the most favorable effect on new and existing members. This led to a priority list. Then, costs were determined for the different changes, and this resulted in what things would have the most impact and end up being part of the first phase. Then, a second phase was determined with possible future phases based upon how well revenue was affected by the first two phases.
This is a good process to follow in renovating a club because this works with any budget a club will have to spend. Even if it is a small amount, prioritize how to get the most “bang for the buck” with that amount. Then, plan what will be in the next phase relative to timing and budget. So often, some type of renovation change is better than none.
The Weymouth Club felt the priority for the first phase was making the lobby and locker rooms more upscale while doing new colors and finishes for the workout and group exercise areas. The second phase would involve the conversion of a tennis court to more mind/body space, such as hot yoga, Pilates, a spa and expanded lounge and social areas.
For the first phase, budget did not call for complete changes, so certain things in those areas would remain while other things having a higher impact dollar effect would change. For example, in the locker rooms, changes were made with vanities, new granite, accent lighting, carpet, lockers and floor tile, but the wall tile and most of the lighting remained, yet the result looked as if they created beautiful new locker rooms.
To get “more” space, The Weymouth Club had to go through a process all clubs should do in deciding what they may have to get rid of to get more space. This involves looking at the revenue per square foot a space is currently making, and with changes, project what the increased revenue per square foot would be. For example, they converted a tennis court but assumed that more revenue could be produced (and more members could be served) changing that space.
Often, when a club does not have the ability to convert space to other uses, it still may make sense to remove certain areas to reduce the amount of outdated equipment. For example, this can leave more space for more functional training, leading to increased group and personal training revenue (these areas can potentially be the highest revenue per square foot areas in a club). It often comes down to what makes more revenue per square foot and will make you more competitive.
It should be noted that the Weymouth Club did a lot of planning so the renovation would minimize member inconvenience and misinformation about the renovation. So, it is recommended to regularly communicate to your members the benefits of the renovation. Also, members often think renovations will mean more dues. So, it’s good to let them know it will have minimal or no effect on their dues. Controlling the “rumor mill” by training your staff properly is important in a renovation.
Regularly making upgrades to your club is a must. Even small amounts of dollars, if planned properly, can have a substantial impact. Always looking to see how changes can increase the average revenue per member is clearly a trend in the club business. Simply knowing that most people do not like exercise means you need to provide a beautiful environment to “help” people want to join and keep coming back for more. Exercise alone will not do this for so many in your marketplace. As an example, the Weymouth Club has been doing this for almost 40 years. It is clear that the one thing they will not change is knowing that they need to continually change.
As published on clubinsideronline.com, March 2014.