Country club 'breakout growth' is over. Here's what it means for waitlists and initiation fees.
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Country clubs that made it through the leaner years of the Great Recession and the tumult of the Covid-19 pandemic are likely see blue skies in 2024 and beyond — and that means well-situated clubs will be able to keep dues and initiation fees high.
Right now, indicators are showing clubs are largely in the driver's seat in 2024 with increased demand and limited supply, according to Chris Davis, a director at Club Benchmarking, which uses club data and evaluations to help them plan for their capital needs.
At the end of 2019, about 25% of country clubs with golf courses had waitlists. Now about 49% have waitlists, according to Davis. Meanwhile, the median initiation fee rose from $29,000 in 2019 to about $50,000 at the end of 2022, according to Club Benchmarking data.
Clubs without golf courses — usually urban clubs, yacht clubs or athletic clubs — did just fine too, with waitlists rising from 24% of clubs in 2019 to 44% at the end of 2023. Initiation fees rose from a median of $13,000 to $22,000 over the same time frame.
“We believe that the breakout growth is certainly over from what we have seeing,” Davis said. "It's tempered a little bit.”
But those who want to join a country club should not expect those fees to come down anytime soon, Davis stressed. Country clubs ideally pay for operating expenses out of regular dues, and use initiation fees for capital expenses. That means that over time, the investment in the club itself should mean that newer members pay more — the result of there being more amenities and facilities to enjoy.
“If the initiation fee of a new member coming through the door is lower — that's diluting the value of the current members of the club,” Davis said. “If you bought a share of Apple in 1985 and all the money Apple has made has gone to growing the company, and?a new person comes off the street and wants to buy a share of Apple at the same price, the current owners of that stock are going to have an issue with that.?It works the same way in the club,” Davis said.
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Much of the initiation fee growth and waitlist growth occurred in 2021 and 2022, with lower growth in 2023, Davis said.
But clubs ideally should never raise their initiation fee beyond what they feel they could justify in a potential down market, Davis said.
“It should always be priced at a level you are comfortable with so that you don’t have to reduce it. It sends a bad message when you discount it,” he said.
But that also means that dues increases should be tempering as well, Davis said, as many clubs used the last few years to play a kind of catchup with their long-term expenses and money lost while operating during the pandemic. Davis said many clubs raised the total cost of membership by a median of 9% last year, but those are unlikely to continue.
“The clubs that adjusted appropriately over the past 24 months — I would expect that additional increases will be right along with however inflation goes,” Davis said.
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But while country clubs need to be focused on creating a great experience, club members should think about clubs more like an owner than a customer, Davis said.
“Owners are focused on value. They ask ‘Why am I a member here? What have we invested in this club?’” Davis said. “The customer is looking for 'What’s the least amount of money I can pay and play the maximum amount of golf?'"
But not every club was or has been able to make it through the demographic and financial gambit of the last decade. Thousands of clubs have closed since the Great Recession, with some former golf courses turned into developments or simply lying unused, the subject of intense community debate.
Other clubs have found themselves at a crossroads and have ended up selling to larger industry players looking to widen their footprints . Some are experimenting with new subscription-based pricing models.
Country club, golf course closures are ebbing as golf surges in popularity
Overall, there were about 12,059 country clubs in the United States in 2008, according to a January research report by IbisWorld. By 2023, that had fallen to 10,016.
In 2024, that is projected to fall still further, to about 9,975. However, the number of closures is slowing and IbisWorld predicts that the number of country clubs will start growing again by 2028.
The National Golf Foundation has also found that golf course closures — which has since 2005 outpaced golf course openings — are lessening as well. In 2023, there was a net decrease of just 0.5% in the number of golf courses, the smallest drop since 2009 and the fewest total closures in absolute terms since 2004.
The NGF also found through a survey of construction projects that golf course development is on the upswing , with 116 courses in planning or under construction in 2023 — the highest in years.
And it comes at a good time too, as millennials age into the prime years for country club membership while the Covid-19 pandemic created a resurgence in golf interest. The number of "on-course" golfers grew once more in 2023 to 25.6 million, according to the NGF, while "off-course" golfers playing at driving rangers or virtual setups grew as well to 27.9 million.
"If you’d asked me in late 2019 to predict the future of golf, there’s no chance I could have imagined a devastating worldwide pandemic and a world economy tottering on the brink of recession, if not depression, followed by a complete rebound of the golf industry," said Cary Lannin, Director of integra Realty Resources-Chicago in a report on golf courses published in March.
He noted the pandemic surge has been anything but a blip, and that weather-related issues that were prominent over the last few years served only to temporarily depress the amount of golf placed. In 2021, a record number of rounds of golf were played, while 2023 looks like it could match that.
"Both public and private facilities have been able to boost green fees and member dues in response to the uptick," Lannin said.