Although some health club operators might complain that the recession has wreaked havoc on their revenues, any decline pales in comparison to the decline that the golf industry experienced in golf participation during that time.
In 2005, golf was at the height of its popularity in terms of participation, with 30 million golfers in the United States over the age of 6, according to the National Golf Association. However, that number dropped to 25.3 million in 2012. The number of golf courses also dropped from 16,052 in 2005 to 15,619 in 2012.
So when Linda Farrant, who owns Great Life Golf and Fitness, Topeka, KS, with her husband, Rick, found out that the owner of the large fitness facility she belonged to paid about $12,000 per month in rent, the accounting major and her finance major husband started running the numbers to see how the fitness business could make enough revenue to afford that type of rent.
“It was fascinating that they could generate that kind of money out of that kind of space,” Rick Farrant says. (View the video of Rick sharing how the company has grown.)
The couple determined that adding fitness to the empty rooms at the large golf and country clubs they had been purchasing since 1991 could help stabilize attendance throughout the year, eliminating the need to lay off staff during the winter. Now, they say, it was one of the best moves they could have made.
The Farrants, along with Rick’s brother, Gary, now own, license and franchise 24 golf courses in Kansas and Missouri. Six of them were failing or closed golf courses when they purchased them. The Farrants have added a fitness center to 21 of the courses.
“We won’t look at a golf course anymore unless we can put in a fitness center,” Rick says. “It’s just too hard. The market is shrinking. There are a lot of struggles there. That’s a battle we don’t even want to fight.”
Their 18 premiere clubs run $30 per month for singles, couples and families. Their four select clubs run $40 per month, and their two elite clubs run $100 and $400 per month. The prices for all include golf and fitness.
Planning for the Future
When Great Life offered only golf, the couple ran projections to determine a good price point. Their projections showed that the lower their dues, the more people they would attract and the higher their ancillary revenues from guest fees, golf cart fees, beer sales and other sales would be, which increased the overall revenue. The couple then lowered their dues from $75 per month to $25 per month.
“If it hadn’t worked, we would have been done,” Rick says. “But it did work. That took us to another level.”
However, Great Life did not hit its stride until they added fitness, Rick says. Instead of pulling only from the 6 percent of the population that golfs, Great Life now also pulls from the 16 percent of the population that belongs to a fitness facility.
“So from a business side, we are now hitting 22 percent of the market where if we were in just the golf market, we would be hitting just 5 or 6 percent,” Rick says.
Converting those fitness center users to golfers is paramount for the Farrants, who hope to lure people to the greens by situating their fitness centers with a good view of the golf course. The retention rate for golfers is higher than it is for fitness center members, Rick says.
“We can track that, and once we get them into that side of the equation, they’ll be here for life,” he says. “Where the fitness guys, you have to battle to keep them. So if we can get them in doing both, we keep them.”
Great Life’s attrition rate averages 10 percent to 15 percent each year, Rick says. Its margins and revenue also are good, he adds, without providing numbers.
The Farrants have used their experience to help others. They formed a limited liability company in which they are half-owners with the YWCA of Topeka. Great Life is hired and compensated to run the YW, which had been losing $10,000 per month before this agreement went into place a year and a half ago.
The Farrants also are translating their model into a franchise offering to help other golf course owners who want to add fitness to their mix. Plans are to expand in the future more through franchising than through purchasing.
Part of the reason for the shift relates to family. The couple has five grown children, seven grandchildren and recently adopted four young children whom they had fostered. Keeping track of all the family activities as well as a growing number of clubs can be daunting, even with a good group of managers on hand, Rick says.
That does not mean the Farrants are not looking to improve by keeping track of what others are doing and adapting ideas that might work for Great Life. They read industry publications, attend industry trade shows and visit other facilities in hopes of finding ideas that will improve their business.
“We are not reinventing the wheel,” Rick says. “We are seeing what others are doing and what is working.”