Mr. President, Have We Evaluated The Options?

Letter to Tac President  1 May 2010

Author : Rike Wootten

Dear Editor,
This is a letter that I sent to Lance Lee on May 21.

Dear Lance,

I am writing this note today as a concerned member of the Tokyo American Club.

The recent referendum that is now in front of the general membership for vote is a concern.  TAC is facing a serious financial situation, and we are being presented with a proposal to increase fees in a very difficult economic environment.  Few, if any of our members, are experts in the management of a club such as TAC, yet we are being put in the position as owners of the club to make decisions as if we are.  I would like to suggest that we postpone the referendum that is scheduled until such as time as the following idea can be complete.  It should not take longer than a few months, allowing the referendum to be completed well before the move to the new club, if ultimately we need it at all.

The Tokyo American Club should issue a Request for Proposal from hotel or club management companies, such as Hilton, Hyatt and Marriott that would cover managing the entire operations of our club.  Our day to day operations are similar to that of a first class hotel, outside of room management.  Restaurants, sports facilities, bars, concierge etc., are all similar to that found in hotels.  By doing so, we should expect the following benefits to occur:

a)  Better purchasing power as the groups have multiple operations in Japan
b)  Lower operating costs as we have the ability to leverage centralized management that these chains would offer
b)  Confirmation that our club is being managed at competitive international standard prices
c)  Knowledge that TAC is keeping with international trends

Naturally if our current club managements cost are competitive, we do not need to go beyond soliciting bids.  Whereas it may be disruptive to existing staff to do this type of RFP, it should not be a major concern if TAC is being run as efficiently as possible.   Also if any management company were to replace our existing management, they would need to keep the vast majority of staff in any event.   I would suggest that this RFP be done every several years to confirm that TAC is getting the best value from providers, and that it provides members with transparency over the club operation.  To my knowledge, most major hotel contracts run between 5 and 20 years.

I am also aware that there has been concern that management salaries are above the industry norm.  I do not believe it is appropriate to have complete transparency over salaries, but would suggest that we hire a firm such as McLagan Associates that specialize in compensation.  They should be in a position to advise if our compensation packages are competitive with those in similar positions/industries.

I am and have been very satisfied with TAC over the years.  But the times ahead are likely to be difficult ones, and we should ensure that we are always getting the best value we can for our members.  It is not the time to raise fees until all avenues have been exhausted.


Rike Wootten
Member since 1995

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