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Commercial Complexities

Operators of pools at HOAs, gyms and hotels enjoy lucrative contracts -but it’s not always easy

While some pool companies dip into both commercial and residential pools on their routes, others have pivoted to focus solely on the former, citing less competition, healthier contracts and deep coffers for HOA, hotel and gym pools, to name a few. And while large bather loads sometimes cause headaches, they say it’s worth it to pick a side.

Perks and pitfalls

Fred Ross, a California-based consultant and former owner of commercial entity Deckside Pool, once had a route of about 100 residential pools. After he purchased 50 commercial pools, however, he found it too much work to do both and moved to only provide commercial service.

“The commercial property managers expect a lot,” Ross says. “If you don’t answer the phone in two rings, you’re fired.”

Anita Minervino, president of Coastal Pure in Myrtle Beach, South Carolina, once handled both residential and commercial pools but grew tired of private pool owners unwilling to spend money to properly maintain their pools.

“They’d say they only wanted us to come every two weeks, that they’d take care of it in between our visits,” Minervino says, “but they wouldn’t.” Within a few years after starting the company in 2009, Coastal dropped all of its residentials for more robust HOA contracts and now exclusively services 19 of them. She says building relationships with property managers has been rewarding, and that when looking at the money side by side, it made sense to do only commercial.

“I would rather take care of a 100,000 gallon commercial pool than a 10,000 gallon backyard pool,” she says, adding that increased options for chemical automation have made the segment further appealing.

Companies like Poolsure, which focuses on automation in commercial pools, saw this to be true. Kevin Boyer, chief operating officer, says Poolsure carved out its opportunity when it saw that most pool operators aren’t keen on maintaining high-tech systems themselves — not only because of complexity but also things like chemical exposure and associated risks.

The hours are better, too, Minervino says: From October 1 to April 1, she only works two days a week. “We work weekends, but we don’t work nights,” she says, “and once you’re finished, you have the rest of the day to yourself.”

David Hawes, CEO of California-based H&H Pools, had the opposite experience when he was a commercial pool guy. He was servicing about 90 commercial pools until 15 years ago, when he sold them to a friend. Hawes recalls the pain of being on call 24/7 with HOA clients — he also serviced some condos and hotels — and taking his now-wife on dates that would end up with him draining a spa.

“She married me anyway, but it was difficult to justify the amount of time dedicated to the commercial properties,” Hawes says. “It’s hard to dabble in commercial. It’s all in or not.”

Ross, however, says he enjoys more flexibility, not less, in commercial pool service, and although there are “a gazillion keys and gate codes,” commercial pools offer multiple income streams, and come with yearlong contracts and the freedom to raise prices on chemicals when needed.

“I can pass along the 10% increase on chlorine or on parts and materials,” Ross says of commercial clients. “Residential is no contract — and while you can raise your service charge any time you want, it’s only month to month.”

Minervino says a standout reason for Coastal Pure’s switch to commercial also had to do with the almighty contract, which for Coastal ranges from $12,000 to $55,000 a year. “You don’t need that many to make you happy,” she says. “These are big pools.”

While HOAs (standard commercials of 40,000 to 50,000 gallons) are a popular commercial segment, others ripe for the taking are apartment complexes; hotels and motels; country clubs and fitness centers; and city-owned pools. Another option: Ross’s company cornered the market for so-called Junior Olympic pools — 80,000- to 150,000-gallon behemoths that cater to swim meets, swimming lessons and swim team practices, and thus require much bigger equipment.

Because industrial sites like Water World, Disneyland and Knott’s Berry Farm are fully automated these days, companies with more technical backgrounds usually gobble those up. Playing at that level isn’t necessary to success in the commercial segment, though: HOA pools are excessively popular because “there are millions of them,” Ross says.

Profit potential

Commercial pools carry the possibility of multiple income streams, but there are more people looking over your shoulder. Hawes, based in California, recalls a “constant struggle” with Department of Environmental Health agents who he says have little understanding of how pools work. Minervino says South Carolina also has a ton of regulations — “more than California,” she says: To operate a commercial pool in her state, there is a 38-point checklist, water testing required daily and surprise inspections.

But while health codes and health inspectors are top of mind on commercial pools, their ubiquity also creates an opportunity for upsells. Ross calls the health department “our No. 1 salesman.” If the department recommends (or demands) a new sign, motor or machine, the HOA’s property management pretty much always goes along with it, he says.

“The [property managers] hated getting these letters from the county,” Ross says. “It made them do their job.”

While Hawes agrees a near constant need for fixes is undoubtedly a boon to commercial contracts, he still cautions the commercial-curious to consider time spent on repairs and service versus residential, and to compare the ROI to residential. “A lot of folks stay in the commercial market for the constant stream of repairs,” Hawes says. “That’s great, but it became a balance issue for us. Is that worth the stress that sometimes goes along with commercial pools?”

Labor shortages due to COVID have affected how many pools Coastal Pure has been able to service. While Minervino used to hire from a large pool of healthy, active retirees in Myrtle Beach, they’ve been harder to find this year and last. She recently gave up seven commercial accounts because they didn’t have enough staff. “I’ve never experienced this kind of shortage,” she says, adding that she suspects her normal hiring pool has opted for less physically demanding work indoors with A/C at stores like Home Depot.

Minervino realizes commercial pools can be highly involved and that not everyone wants to work on them. “We can’t just test the chemicals and get out of there,” she says.

 ‘There are a lot of rules’

Licensing numbers among the hefty requirements for commercial pool operators. Ross cautions that if employees are working on equipment, a simple cleaning and maintenance license will not fly — most companies need a CPO (Commercial Pool Operator) certification. Requirements vary state by state, but commercial companies are more likely to get dinged on infractions, Ross says.

Alan Falik, president and owner of Poolsure, says commercial pools inherently carry more risk and liability. “It’s a different customer base,” he says. “The CPOs at these pools require different tools and knowledge, and with everything else they’re doing, they have to monitor the pool 24/7.”

And more liability often means more insurance. Ross says, the commercial world usually wants operators to carry $2 million to $3 million in liability insurance, plus workers’ comp. They also will require you to name them as additional insured, which he says creates a blizzard of paperwork. There are also strict rules about tax forms in many states where employees must be on the payroll, not contractors. Commercial pool operators should review their company’s practices in this area, Ross says, to avoid illegally issuing a 1099.

“If you’re going to go into commercial, you have to play by the rules,” Ross says, “and there are a lot of rules.”

Hawes says commercial pools also require an elevated style on communication versus residential pool businesses. Commercial pools, he says, often have an entire HOA board behind them, which results in many more opinions (and political considerations) than with a single homeowner. He says it’s important for commercial operators to be well spoken, look professional and carry yourself well in front of heads of sometimes-large corporations who own the commercial pools.

“You want to…set yourself apart from all the other vendors in this market,” he says. “You’re not talking to Joe Homeowner.”

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