Transitioning Toward a New World for Clubs

On the supply side, there’s increases in input costs resulting from supply chain bottlenecks and likely future employee wage rises. On the consumer side, the rising cost of living, combined with market volatility in housing and the share market creating negative sentiment, is putting a dampener on consumer discretionary spend. And politically, both the state Liberal and Labor parties have committed to gaming reform.

All of which is to suggest that revenues look flat for the foreseeable future and growth will be harder to come by. Many clubs have limited headroom to pass rising supply costs on to members and guests through price rises. So, where to from here?

There’s a need for clubs to review their business and operations, and to transition to new models to meet the future head-on. Chief among them is ensuring you’re getting maximum yield for your current assets. 

Assets Optimisation

The principle here is the maximum possible space in your club’s assets should be revenue-generating.
Do you have assets and spaces that can be sold or leased out? Or under-used spaces that can be made revenue-generating? Can you charge for a service that’s currently provided for free? Can you downsize to a more refined and targeted offer, given COVID demonstrated that bigger isn’t necessarily better?

Club assets and available footprints require close scrutiny to ensure they are generating maximum yield. This includes reviewing asset allocations and capital reinvestment, and potential divestments, based on their projected ROI in the short-to-medium term. 

Operations Refinement

Adjusting your offer and value proposition: If discretionary income is harder to come by due to a greater share of consumer wallet going to necessities, are you adjusting your value proposition to suit?

This doesn’t necessarily mean being cheapest, but it does mean communicating the value you offer, and ensuring your products and services offer best value. It’s crucial that clubs understand customers’ current and future needs and wants, then provide a value proposition and experience to meet them.

Managing the P&L: Costs will continue to rise, and if price increases cannot be passed on, analysis of impacts on profitability ratios, cashflow and debt facilities is in order for scenario planning.

People and culture balance: If the labour market continues to remain tight in the face of rising wage costs, retention of staff will continue to be difficult. What are you doing to ensure your culture keeps your people, and keeps them engaged? Do you have the right mix of leadership people to make decisive calls, and do you have the right, real-time information to make them? Transitioning the business model will require a change of culture — how will your culture need to be adjusted?

Gaming Reforms

Given there has been a strong commitment to reform from both political parties, the primary driver of the traditional club business model is under review. Clubs need to evaluate the medium-to-longer term impacts of reform and ensure their business model can transition and continue to prosper.

Now is the time to audit your assets and operations, and scenario plan for gaming reform, in order to refresh your strategic and operational plans and redefine your business model. By doing so, you’ll be better prepared for transition to the brave new world clubs are moving toward. 

For more information, contact us via email or visit our website.