HEALTH CLUBS

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A Look at Trends in Health, Fitness and Sports Clubs

For last year's survey, we took a combined look at health and fitness clubs alongside YMCAs, YWCAs and JCCs. However, because of the vast differences in these facilities' modes of operation—with YMCAs and their ilk being managed as private nonprofit organizations and with health clubs operating largely on a for-profit basis, we have separated the data this year to consider the two types of facilities separately. The separate data reveal a much more conservative mode of operating—with lower operating expenditures, more conservative estimates of growth and more cautious growth plans—among health, fitness and sports clubs than among YMCAs.

About the Respondents

More than 13 percent of respondents to the survey overall represented health, fitness and sports clubs, racquet or tennis clubs, or corporate-run or privately run recreation and sports centers. This section narrows that list down further to the health, fitness and sports clubs and privately run centers.

The majority (60.6 percent) of health and fitness clubs covered by our survey were located in suburban communities. Far fewer respondents came from either urban or rural facilities, each represented by just under 20 percent of responses.

Health, fitness and sports clubs generally represent a wide range of operating modes, from single facilities owned by a private local citizen to franchise operations spread across entire regions or, indeed, the entire country.

More than half (55.1 percent) of our health and fitness club respondents indicated that they manage or operate just one facility, and just over three-quarters (76 percent) operate three or fewer facilities. Only 12.4 percent in this category indicated that they operate 10 or more facilities.

While many health club respondents (79.4 percent) indicated that they do partner with other external organizations, they were the least likely to be named as a partner by all types of facilities. The most common partners for health clubs included local schools, nonprofit organizations and corporate entities or local businesses. More than 40 percent of health club respondents indicated that they partnered with these types of organizations.

Staffing Issues

While health and fitness clubs covered by the survey employ fewer people than many other types of facilities (with the exception of colleges and universities), they are expecting to see relatively significant growth in the number of people working for them over the next several years. Health and fitness club respondents projected growth in their staffs of 24.6 percent from an average of 109.6 currently to 136.6 in 2011. Smaller increases are anticipated among full-time workers and seasonal employees, with the bulk of the growth expected among part-time staff.

More than four out of five (81.4 percent) fitness and health club respondents indicated that they currently require some sort of certification of their employees, with 84.8 percent of those requiring a CPR, AED or First Aid certification. Nearly 60 percent also indicated that they require a background check, and nearly half required a personal training or fitness certification.

Clubs that do not currently employ educated, certified and experienced fitness professionals should pay close attention to recent research from the American College of Sports Medicine (ACSM), which indicated that the number-one fitness trend for 2008 would be the availability of more educated and experienced fitness professionals. ACSM asserted that "more organizations are seeking out accreditation for academic and certification programs for fitness professionals, including personal trainers, which will contribute to industry regulation."

Some of this will likely be driven by other trends listed among the ACSM's top 20, including those falling in the number-two and number-three positions: exercise programs for children to fight childhood and adolescent obesity—a trend that will require professionals who understand the unique needs of this segment of the population; and personal training.

"We were interested to find that the top three predictions for next year were statistically close, but they all support the idea that the health professional is going to be held to a higher level in education and certification," said Walter R. Thompson, Ph.D., lead author of the article. "Overall, we're seeing these themes develop now that will help the fitness professional design specialty programs for their clients.

It also creates an expectation for the public, who can glean new ideas to improve and build upon their workouts."


Health Clubs Champion Legislation Encouraging Exercise

The International Health, Racquet & Sportsclub Association (IHRSA) recently led 140 health and fitness industry leaders to Washington, D.C., to take part in its Sixth Annual Legislative Summit—a coordinated effort to influence legislators and impress upon them the need for transformation in the nation's current approach to health care. Participants aimed to encourage the government to remove federal barriers to exercise—largely tax-based issues—and change the health care system's focus from "sick" care to a proactive approach to prevention and wellness.

Many view this health care transformation as a necessity to help cope with rising incidence of obesity and the resultant chronic illnesses that currently impact—or will impact—Americans. Many chronic illnesses, from heart disease and high blood pressure to type-2 diabetes and some types of cancer, can be impacted by getting more active and living more healthfully.

"The unchecked increase in America's waistline comes at a high price," said Joe Moore, IHRSA president and CEO, in a press release. "Not only does it compromise the health of individuals, but it increases the nation's health care costs and lowers our overall productivity. The government can play a lifesaving role by passing legislation that supports Americans' own personal efforts to preserve their health."

Two legislative efforts supported by fitness advocates include:

  • The Personal Health Investment Today (PHIT) Act: This legislation would enable people to pay for exercise and fitness programs, some exercise equipment and youth sports leagues with pre-tax dollars from their Flexible Spending Accounts, Medical Savings Accounts or Health Savings Accounts, enabling them to save as much as 20 percent to 30 percent annually.
  • The Workforce Health Improvement Program (WHIP) Act: This legislation removes barriers to fitness for employees of companies that want to offer health club memberships as a benefit, but do not have on-site facilities by allowing for off-site fitness center memberships as a tax-free benefit. Current law allows employees to use on-site fitness facilities tax-free, but if a business needs to outsource this benefit, employees must pay income tax on the benefit. Passing this legislation would reduce the tax burden on those using off-site fitness center subsidies, encouraging more small and mid-sized companies, which often cannot afford or do not have space for on-site fitness centers, to offer this benefit to their workers.

A national public opinion poll commissioned by IHRSA indicated that seven in 10 Americans would encourage their representatives in Congress to pass PHIT, and three-quarters would encourage passage of WHIP.

For more information on these and other initiatives at IHRSA, visit www.ihrsa.org.


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."

Facility Planning

Respondents from health, fitness and sports clubs were less likely than others to be planning new construction, or additions or renovations to their existing facilities. While 72.4 percent of all respondents indicated they had such plans, only 64.4 percent of health and fitness clubs indicated that they had plans to build over the next three years. (See Figure 53.)

Those who do have construction plans in place over the next three years were also planning to spend less on average than most other types of facilities. The average health, fitness and sports club respondent with plans for construction over the next three years was planning to spend $2,227,000. YMCAs, YWCAs and JCCs were both more likely to be planning construction (72.8 percent have plans to build over the next three years) and also were planning to spend 139 percent more on average on those new and renovated facilities.

The top amenities currently included in most of our health club respondents' facilities were what you would expect in a health or fitness club: fitness centers, locker rooms, exercise studios, meeting rooms and concession areas.

Though fewer health club respondents were planning to add more amenities to their facilities over the next several years, their top choices when they did have such plans revealed a desire to diversify their offerings. The top five amenities health and fitness club respondents said they were planning to add over the next three years were:

  1. Climbing walls
  2. Exercise studio rooms
  3. Classrooms and meeting rooms
  4. Challenge courses
  5. Concession stands

It's Personal
Growth Expected in Personal Training & Certification, Fitness for Kids

According to the second annual Fitness Trends survey from the American College of Sports Medicine (ACSM), the top fitness trend in 2008 will be the availability of more educated and experienced fitness professionals.

Personal training also moved up—by four spots from No. 7 last year to No. 3 on this year's ACSM survey. According to the organization this signals "that the profession of personal training is becoming more realistic and accessible to the public."

Similarly, our survey revealed that personal training was a top program currently offered and planned for addition at health and fitness clubs, along with counseling on diet and nutrition.

The ACSM reports that at least two states, Massachusetts and Georgia, have introduced legislation to license personal trainers—an issue to keep on your radar screen if you operate a fitness or health club facility.

In an article covering the top 20 trends, ACSM reported that "respondents to this survey believe that personal trainers are here to stay and will continue to be an important part of the professional staff of health and fitness centers."

Other top trends for 2008 reported by ACSM included: exercise programs for children to fight childhood and adolescent obesity; strength training; core training; special fitness programs for older adults; Pilates; functional fitness; Swiss ball; yoga and more. Visit http://www.informz.net/acsm/data/images/worldwidetrends.pdf to read an article covering all of the top 20 trends.


Programming

Like the amenities included in their facilities, the top programs offered at the facilities of our health club respondents were what one might expect. Nearly 90 percent of respondents in this category said they offered fitness programs. (We must assume that the remaining 10 percent represent sports-focused facilities without fitness-oriented options.) More than 86 percent also indicated that they currently offer personal training. Mind-body balance programs like yoga and tai chi and nutrition and diet counseling were both offered by around 70 percent of respondents. More than half also indicated that they offer programs designed specifically for active older adults.

The respondents with plans to add new programs over the next three years are expecting to add more of the same types of programs, as well as diversifying into other areas to reach a wider audience. The top 10 program options health and fitness clubs surveyed were planning to add included:

  1. Nutrition and diet counseling
  2. Fitness programs
  3. Individual sports activities, like running clubs
  4. Personal training
  5. Programming designed specifically for active older adults
  6. Programming aimed specifically at teen audiences
  7. Mind-body balance programs like yoga and tai chi
  8. Sports tournaments and races
  9. Educational programs
  10. Programs designed for special-needs populations
  11. Trips and excursions

Fewer respondents from health and fitness clubs were worried about their budgets than respondents in other categories, though it was still their top concern.

As one respondent reported, current economic conditions are worrisome for an industry that relies on fee-paying customers to remain successful: "In a declining economy, customers, looking to tighten their budget, may find health club participation not necessary compared to the rising costs of gas, etc. We worry and feel that it is already happening—that business is down to the downward economy."

Competing with the issue of budgets were such problems as marketing their facilities and increasing participation, and creating new and innovative programming. In fact, over the next three years, health club respondents said these two issues would be of greater concern than their budgets. The problem of how to address older adults with fitness and wellness issues also enters the picture for our respondents in this category over the next three years.

One respondent voiced several concerns at once, saying the problem was figuring out "how to best integrate the fitness industry/facility into a medical model. …We are a health club owned by a hospital and would like to take advantage of this relationship through weight management programs, cardiac rehab programs, etc."

Many find themselves struggling to compete with their nonprofit counterparts—the YMCAs and other, similar facilities. One club owner asserted that "competition with for-profit but nonprofit, protected health clubs (i.e., YMCA) was the top problem facing his facility.



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