Feature Article - June 2008
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HEALTH CLUBS

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Industry Growth

The vast majority (91 percent) of respondents working for health, fitness and sports clubs indicated that the number of people using their facilities had either increased or remained the same from 2006 to 2007, with nearly half (49 percent) indicating they had seen no change. Just over half (54 percent) project that they will see no change from 2007 to 2008, and a similar number (53.3 percent) expects no change from 2008 to 2009. Some 9 percent said they actually saw a decrease in the number of patrons working out in their facilities from 2006 to 2007, though fewer expect to see decreases from 2007 to 2008 (5.3 percent) and from 2008 to 2009 (3 percent).

Health, fitness and sports clubs in the survey were far more likely to charge a fee for membership or usage than other facility types, though surprisingly more than a quarter (27.2 percent) indicated that they did not charge a fee.

Respondents in this category were also likely to have seen no change in revenues from 2006 to 2007, and were not expecting that to change over the next few years. While 55.5 percent said they had seen no change in revenues from 2006 to 2007, another 37.2 percent said their revenues had increased in that time period. Nearly 60 percent are anticipating no change in revenues from 2007 to 2008, while 36 percent expect growth in that period. And 54.5 percent expect no change from 2008 to 2009, while 43.1 percent expect an increase.

The International Health, Racquet & Sportsclub Association (IHRSA), announced in March that its early estimates from its annual tracking study indicated that health club membership in the United States increased by 3 percent last year, while revenues overall grew by 5 percent to $18.5 billion.

Respondents to our survey indicated that their average annual revenues for fiscal 2007 were $983,600, a number they projected to grow by 12.6 percent by fiscal 2009 to $1,107,700.

Data reported in IHRSA's annual membership report, Profiles of Success 2007, showed an increase in health club membership of more than 115 percent over 10 years, while total revenue had grown 127 percent. Clubs also had improved membership retention from 2005 to 2006, from 70 percent to 73 percent. Revenues per member had also grown.

"As an industry, we aim to grow total membership year after year, and industry stability is in no small part dependent on customer satisfaction, member retention and increasing revenues per member," said Joe Moore, president and CEO of IHRSA in a press release.

Another survey from IHRSA that tracked 16 leading U.S. health and sports club companies representing a total of 186 facilities found that these companies had collectively grown their total revenue an average of 15.6 percent to $17.9 million for the fourth quarter of 2007.

"For the year as a whole, 2007 reflected a period of steady growth for the leading mid-sized companies represented in the IHRSA Index," said Katie Rollauer, IHRSA's senior manager of research. "The fourth quarter results are impressive in light of the uncertain economic conditions clubs faced at the end of 2007."