Got Tough Management Problems? - Try Running A Golf Resort!

Millions of Americans love to play golf.  They play at any time, arriving at the course at ridiculous hours of the morning and then staying until they literally cannot see the ball.  They play in any weather from torrential thunderstorms to equatorial scorchers to snowstorms.  They leave work early or don't come in at all, they play on any day of the week and don't miss a holiday.  So with all these enthusiastic customers, running a golf resort must be the easiest job in the world, right?  You won't think so after you read the following interview with Russ Scott III, President of Mountain Manor Inn & Golf Club in Marshalls Creek, Pennsylvania (in the eastern Pocono Mountains near the New Jersey border).

Q:  Thanks for taking the time from what looks like an insane schedule just to speak with us.  How long has your family been in this business?

A:  Our father and mother started this business after World War II and my brothers and I all have continued it.

Q:  How many brothers are there and are you all active in the operation?

A:  There are three of us, but our youngest brother left the resort about ten years ago to start his own business.  So Craig and I have been running the company since then, but with plenty of advice from our parents!

Q:  How do you divide up the responsibilities and work load?

A:  We each do what we are trained to do and what we love to do.  Craig is a graduate of the Hotel Management program at Cornell and an avid golfer.  So he oversees the food operation and the day-to-day golf business.  I left college early and came into the business when I was 19 years old.  My job was to take over the construction and maintenance area from my father and have been doing that ever since.  I really enjoy working with the big equipment and in being outside.  Later, about the time when Dad retired, I took over the administrative function as well.  So I don't get outside that much any more. Craig and I share the load for the hotel side.

Q:  This is an amazing and huge property, you can see golf course on both sides of the road when you are driving.  There also seem to be dozens of buildings in addition to the Inn and hotel rooms.  What are they all?

A:  There are five separate golf courses, one executive par 3 and then four nine-hole courses laid out to let golfers combine them into ""custom eighteens"" and to speed up starting (which cuts down on golfers waiting to play).  The buildings that you can see from the road are hotel rooms around the Inn and conference center, the gym and tennis/skating rink and motel duplex (bi-level) rooms.  On the other side of the road is the family entertainment center with the arcade, the miniature golf course and the go-cart tracks.  Behind that are some of our golf villas - we have about 100 of them, two- and four-bedroom year-round residential units - and the course maintenance shed.  There are a lot of other buildings and constructed areas that you cannot see. There are over 500 acres that we have put to use down here.

Q:  Who builds all the buildings?  And who takes care of them?  There must be an army of people taking care of it all.

A:  We build everything ourselves and we maintain everything ourselves.  We have a construction crew which doubles as a maintenance crew if need be.  There's no army, in fact, there are less than 10 men working those crews.  Remember, this is a seasonal business and you need to keep your best people employed year-round or you will lose them.  So everybody, including Craig and I, becomes a jack-of-all-trades and can do a wide range of jobs.  We schedule major maintenance and refurbishing during the off-season and new construction depending on when we need to put a building into use - and what the weather allows us to do.

Q:  So employees are a big part of your investment?

A:  Employees and equipment - they go hand in hand.  Golf resorts are like farms.  The only way to stay alive and grow in this business is to increase productivity per employee, per acre, per golf hole and per room.  That means investing in new equipment and training in every area of the business.  We are constantly training people to use different equipment and take over new responsibilities.  The good employees want a challenging job and we want them to have one.  It is as simple as that.

Q:  Is it hard to find good employees?

A:  (laughs) Oh brother!  You don't want to know!  Seriously, it is one of the hardest jobs we have.  People regularly commute to Philadelphia or New York City from this area or hop across the river to New Jersey.  Good paying jobs are only as far away as you are willing to drive -- probably 2 hours to New York and 1 ½ to Philadelphia.  This is tough work and our people work harder and carry more responsibility than the average worker for about the same salary.  So, you bet it is hard to find good people.  We try to keep it simple, though, by looking for honesty and effort.  If our workers have those two qualities, we feel we'll do fine.

Q:  What about the golf courses?  They are beautiful, running along the creek and then up into the mountains.  They must have cost you millions of dollars to build them, where did you get the financing?

A:  To sort of answer that question, our courses are built over a 40 year span of time.  The first one was built back in the late 40's and early 50's with a farm tractor and my parents hand-picked the rocks that were raked!  So, while it was back-breaking labor, it wasn't millions of dollars to build!  And that is how we built all our courses.  Not by hand, but over a long period of time and with a great deal of planning.  For example, you have to know where your building material is coming from - particularly when you can't afford to spend money bringing it in.  So when you lay out the course, you traipse the hills and valleys to see what is growing and where there is water, soil and rock formations.  So you dig this one area in order to have enough rock and dirt to build another course feature over here (points at course diagram).  So the water hazard on this hole gave you the foundation for the next hole's tees and the sloping grade for the cart path.  We avoided this rock formation and let the trees and plants alone to screen the next fairway and to give the animals and birds a place to live.  How much sense would it have made to knock it all down and then come back and plant new trees and shrubs?

Q:  And a waste of money.  The way you describe it, it must be an amazingly complicated job to build a golf course.

A:  It is complicated, but you break it down into logistics issues.  You schedule the job based on the course plan, equipment and people who are available, overlaid by the permitting process and the weather.  And you take your time.  For example, if a particular piece of equipment is being used to construct a fairway, figure what else can you do with it while it is there.  Like any construction business, you don't make money when you are moving your equipment. It costs people hours and machinery hours to move things.  So you do it only when you have to and get the most out of that equipment and its operator when it is in place.

Frankly, it takes a great deal of time to build a golf course, but we take even longer because we have the time, we own the land and we have no outside capital forcing us to open by some start date.

Q:  Before I get back to the financing question, can you give me another example of this type of construction planning? 

A:  Sure. First, each hole is different and when building them, you build in how you are going to take care of them when you are done.  (Points) See that rock cliff on the side of the mountain?  It is about 50 feet high (it looks larger from where we stand) and the fairway, rough and cart path are about 80 yards wide.  That used to be the mountain. 

Here's what we did.  Having laid out the course to start and end where all the other ""nines"" start and end, we knew what kind of equipment we needed.  So we bought a used bulldozer that was too big for our regular construction solely to use for building the holes up on the mountain.  To make that fairway out of the mountainside, we had to move about 2,000 tons of clay and bedrock.  So we parked that dozer up there for nearly two years.  After getting rid of the usable topsoil - and there isn't much around here - we spent the next 18 months ripping and pushing the bedrock.  Whenever there was operator availability, we put one up there.  In the winter we would rip (gouge the raw rock with an enormous hydraulic bulldozer attachment) the bedrock and after the rain and ice would split the rock apart, we would bulldoze that rock to other places on that hole and nearby holes to build the foundation and infrastructure.  Then we would rip again and let Mother Nature take on some more of the rock busting for us.

So we let low equipment cost, time and the weather work for us.  The fairway, rough, cart path and service road, plus the underground sprinkler and utilities all came out the way we wanted because we took the time to plan and build it right.  The service road lets the fairway and rough mowers come in on an easy grade and move with the contour for faster and better cuts.  The tee and greens mowers come in on the end of the service road here and the cart path there (points) - both are intersections for the greens and tees for the other four holes that are on that same hillside.  So that saves mowing time, equipment wear and tear and gets them on and off the course faster - so more golfers can play the courses.

Q:  All from the beginning plan?  This is mind-boggling, but I promised that I would come back to the financing.  How do you finance this construction?

A:  Believe it or not, unless there is something major, we use our standard lines of credit and equipment financing and let the cash flow from existing operations pay down the debt and lease obligations.  Most importantly, we bought land over the years whenever anyone was selling at a price that we were willing to pay.  Some negotiations went on for five or more years!  So our land costs are very low.  We also use whatever materials are on the land for building the course and for use in other parts of the property.

Q:  Like the rock example?

A:  Yes, and more.  For example, we know we need bumpers on the cart paths, so when we cleared the land, we bought a portable saw mill and cut the trees into ties to use to border the cart paths.  Other types of trees we cut to use for the gym roof beams and the ones in the indoor tennis and skating rink.  As we worked on each hole, we moved the saw mill to where the trees were.  Any wood we didn't use for construction or building, we cut into firewood for the villas.  We also mulch the twigs and leaves for plantings around the property.  So we don't waste any of the tree.  If it takes Mother Nature 50 years to grow one and you decide you have to knock it down, use it all.

And top soil is another good example.  We never have enough good soil here in the mountains so we use every bit we can find.  We will store top soil for years in order to build or rebuild a single fairway.  In fact, we sometimes use our equipment down in the township to build ball fields and parks for free in return for the extra top soil.

So to answer your financing question, overall, our construction costs per hole are much lower than someone setting out to build a golf course.  We planned our courses over 30 years, not 30 months.  This lets us use our standard bank financing and means that we don't have investors breathing down our necks the whole time we are building.

Oh, another thing.  We buy used construction equipment specifically for a project.  We take really good care of it and then sell it at the end of the construction period - usually for more than we paid for it or more than the outstanding loan.  If you invest the time and money in the equipment maintenance, it comes back to you in the form of saleable asset value.

Q:  And makes you money in the process!  So the answer to the financing question seems to have a number of parts to it.  First, don't spend unless you have to; buy what you need and use what you have.  Second, don't start any major project unless you know your operating cash flow and have a reasonable completion date which fits into your present business.  And third, keep your capital partners involved in the process.  Does that sum it up?

A:  Pretty much, yes. Another way we look at it says don't spend what you don't have or don't have a very good chance of repaying.

Q:  Obviously this is a very tough business to be in.  We know many of your competitors in this area and around the country have gone out of business or into bankruptcy.  What makes Mountain Manor different than other golf resorts?

A:  I think we do a few things differently than other properties and have had a few benefits they didn't have.  Mainly, we are family owners who are fully committed to this business. Buying land over five decades is a serious commitment to the business and it requires a strong financial discipline.  But it is a key benefit to our business to know that we have another 1,300 acres that can be developed.  Which is on top of the nearly 550 acres around us here.  And building a golf course over 5 or 6 years requires a real discipline and sacrifice.

We make a decent living from the business, but it is nowhere near what a top manager at another resort makes - and he or she works 50 hours or 60 hours a week and goes home.  Craig and I live here and we are on call literally 24 hours a day.  When a guest complains, we do something about it or make sure that someone does something about it.  When a sewer line breaks in the middle of the night, I fix it.  If the meal at a wedding (Mountain Manor also runs a conference center and event business) is not up to par, Craig is right there with the chef or cooks to make it better.  If a golfer thinks a green is not cut right or complains about the fairway, one of us is on the walkie-talkie to the grounds chief to find out who was mowing and how they did it.  There is no job that any employee does that we can not do, have not done or will not do.  Period.  When your employees know that, and know that you will be working right next to them, they take the extra care to do a job right.  That is a major difference between Mountain Manor and other resorts.

I think a lot of the original owners of the resorts in this area sold out or fell on hard times.  As a result, many of the businesses changed hands.  This is such a tough indsutry, if the owners are not hands-on, it will be very difficult to make money.  Or even stay alive.  A salaried employee cannot give you that kind of commitment.

But it comes back to you in positive ways.  When our bank financing was up about ten years ago and it was time to refinance, we had banks coming to us for the loan!  We were told that they had no other profitable resort customers in their regional loan portfolio.  So, did they ever pick our brains about what we were doing differently than others!!

Q:  Which has to be pretty gratifying.  This first interview has been an eye-opener, I can tell you.  Do you have any special piece of advice to close out?

A:  Piece of advice?  I guess, ""Plan, plan and plan some more"".  Whatever you do, make time work for you.  Do nothing so quickly that you don't have the time for everyone to have their say and for you to do all your homework.  If you need to create visuals to lay out your plan, do it.  During our last course construction, we laid out the course on paper and then used a video recorder to track our progress.  That way, we could create a history file of what the ground looked like and how we built on it.  We also kept track of the plant and animal life so we could create little habitats and secluded patches for them to live.  There are more turkeys and deer here than when it was woods.  Lots more for them to eat, too (laughs).

Q:  And pay attention to the details.

A:  You bet.  If you pay attention to the details, you own the business.  If you don't, it owns you.

NOTE:  Mountain Manor Inc. won the Northeast Pennsylvania Family Business of the Year award in 1999 and was runner-up in the State of Pennsylvania that year.  They can be reached at (800) 626-6747.  

Also, if you have another idea, give us your best shot at the ""Toughest Business of All."" Send it to SBW Editors at 411@smallbizworthy.com and we'll follow your lead to see which is the toughest business of all.