Even ritzy private clubs can't dodge the downturn


POSTED: Monday, February 09, 2009

While membership at Oahu Country Club is “;somewhat in the normal range of attrition”;—down 1.4 percent from a year ago—the organization indefinitely cut its initiation fee by half in September to $15,000 and loosened payment terms in response to the economic downturn, according to General Manager Loren Pippin.





        A sampling of initiation fees and monthly dues at some of Oahu's private clubs. Rates vary depending on type of membership and resident/ nonresident status:

Hoakalei Country Club:
        $30,000, $325


Waialae Country Club:
        $67,300, $470


Outrigger Canoe Club:
        Several hundred up to $15,000, $194


Honolulu Country Club:
        $35,000, $440


Mid-Pacific Country Club:
        $16,500, $458


Oahu Country Club:
        $15,000, $478


The Pacific Club:
        $5,000, $286




At the same time, the organization hired a membership marketing director to boost recruiting efforts at the private, member-owned club, which has about 975 members.

“;Membership in a private club like ours is a privilege and luxury, so we're committed to that type of lifestyle,”; Pippen said. “;It's a commitment financially, there's no question about it.”;

Cutting fees and delaying renovations are among the ways some of Hawaii's private clubs are dealing with a slowing economy.

“;Clubs are a luxury item, so everybody's hunkering down in the economy and people are looking at what are their main costs,”; said real estate and business consultant Stephany Sofos. In October, she dropped her membership at the Honolulu Club, one of two private club memberships she has held for 28 years.

Mid-Pacific Country Club cut its proprietary membership initiation fee by 34 percent a year ago to $16,500, from $25,000, and began offering three-month trial memberships in May. Total membership—at 733—has been decreasing for the past two years, having been more than 800 in July 2006. The drop is primarily due to an increase in the number of golf courses on each island and an overall reduction in the number of average rounds of golf played in Hawaii, according to Tim Dietrich, Mid-Pacific general manager.

“;No one's rushing right now to spend money, that's for sure,”; he said.

“;Basically, the Wall Street blowout exacerbated the situation. It made a bad situation worse.”;

In addition, country club demographics have turned to younger members in their 30s, whose values and aspirations have changed from those of the clientele of 15 years ago, Dietrich said.

“;The country club is not as important as it was in the past,”; he said. “;It has to do with family time and family values—more time with family rather than the traditional male-dominated country club scene,”; he said.

Mid-Pacific also is evaluating whether to move forward with two construction projects planned for this year “;to make sure it's a good, fiscally prudent decision.”;

Other private organizations, such as Waialae Country Club, are faring better.

The club, which hosts the Sony Open professional men's golf tournament annually, has maintained its regular membership initiation rate of $67,300, though it has deferred a multimillion-dollar project scheduled for this year to at least 2010, according to General Manager Allan Lum. Year-over-year membership has remained the same at about 1,200 members.

“;We have quite a full membership, and although we have a waiting list that isn't nearly as long as it used to be, fortunately we still have people interested in joining our club at the current rate,”; he said. “;We aren't planning in having a reduction in fees or any sale of sorts.”;

Demand is continuing for Hoakalei Country Club, the island's first private country club to be opened in 30 years. It features the first Ernie Els-designed golf course in Hawaii, according to Tulinh R. Luciano-DeSmith, director of sales and marketing. The club, which opened in January, has 50 members, and though expectations at this point were for 150, club executives “;continue to meet with people who are excited about the opportunity.”;

While its membership might not be decreasing, Outrigger Canoe Club has felt the effects of the slowing economy, with revenue falling 15 percent in the food and beverage business from the previous year, according to General Manager Michael Ako.

Many Outrigger members are being more conscious about their spending, reducing trips to the bar and dinners at the club, said Renee Osborne, an Outrigger Canoe Club member who recently dropped membership at the Honolulu Club.

“;We'll still go there, but you're not going to have dinner and cocktails five or six days a week when you have food in your refrigerator,”; she said. “;With the economy the way it is right now, it's easy to sign a check (and) then get a huge bill at the end of the month. After a while something had to give in my budget.”;

While the number of people dropping their membership has increased during the last year, the club has been filling those vacancies from its lengthy wait list, Ako said.

The club's monthly dues rose $12, to $194, this year for its more than 4,800 members to help offset an increase in business costs, and Ako said Outrigger is moving forward with a multimillion-dollar capital improvement project.

Honolulu Country Club has not made any substantial changes to its fees and is “;just trying to ride out the storm like everyone else”; while continuing to improve its facilities, according to Gary Brown, executive vice president.

“;If we improve the product when the economy is struggling, we'll be able to shine even brighter,”; he said.

While some consider country club memberships a luxury item, others say it is an essential part of their social lives and business strategies.

Gregg Robertson, president of Robertson & Co., an investment banking and real estate development consulting firm, is not planning to cut his memberships at the Outrigger Canoe Club and the Pacific Club.

“;People join clubs for particular purposes, so the club becomes an important part of your activity and what you want to achieve with them,”; he said.

The Pacific Club saw an eight-year growth in membership cease in the fourth quarter and has seen a softening in its day-to-day business, according to Gary Oliveira, general manager and chief operating officer.

“;Obviously, people all around are more cautious,”; he said. “;For some members a club is really social; for some it's about their business plan. They really make the club experience part of the fabric of their life. What you consider a luxury, somebody else might not.”;