Feature Article - February 2021
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The Fitness Challenge

Ongoing Adaptations for the Hard-Hit Health Club Industry

By Joe Bush

Dr. Walt Thompson has authored each of the 15 annual fitness trends surveys from the American College of Sports Medicine (ACSM). In those years, Thompson has seen the most and least enduring programming, training methods, free-weight and machine usage, and types of exercise for health club members and non-club affiliated people: Pilates, group training, HIIT, wearable tech, kettlebells, to name just a few of each year's tracking of the most popular ways for people to get fit so that club operators can better serve them.

Most of the times have been good; though methods change, the desire for fitness has only grown. The financial crisis that began in 2008 may have affected money spent on exercise but not the hunger to exercise. Thompson had seen it all, until early 2020.

"We've never seen anything like this," said Thompson.

The COVID-19 pandemic has affected all types of business, but few more harshly than hospitals, restaurants and exercise facilities. This year's ACSM trends report, a compilation of answers from 4,000 industry members, is only a little about pre-COVID-19 and a lot about the aftermath.

According to the International Health, Racquet & Sportsclub Association (IHRSA), more than 40,000 health and fitness clubs in the United States served more than 73 million consumers (64 million of whom were members) in 2019. The industry employed 3 million part-time and full-time employees. More than 80% of health clubs were small businesses (five clubs or less), owned by independent operators or franchisees.

IHRSA has gathered the stark data from the impact of COVID-19 on the health and fitness industry:

  • 480,000 jobs lost as of Oct. 1, 2020.
  • Based on permanent club closures and clubs still operating having to cut back on payroll due to operating restrictions, projected job losses by the end of 2020 was 1,640,000.
  • $15.6 billion in lost revenue through Oct. 1, 2020.
  • 15% of fitness clubs and studios had closed permanently as of Sept. 30, 2020.
  • Multiple national and regional fitness chains have filed for bankruptcy with closures of many facilities.
  • In states and regions where clubs are allowed to operate, capacity is reduced 25 to 50%—as low as 10% in some places—with strict spacing requirements of at least six feet, though clubs still have 100% of expenses.

"In the first wave of closures, health and fitness clubs were among the first businesses to close, and among the last to open," said IHRSA spokesperson Sami Smith. "While other small businesses could pivot and sell online or do takeout orders, health clubs had no real opportunities to earn revenue.

"Now, many months later, some clubs are still not open or even closing their doors yet again due to government-mandated shutdowns. Clubs have successfully pivoted to make money with outdoor workouts and virtual classes. Still, with seasons changing and other factors—such as significantly reduced capacity limits—these are no way near enough to cover the difference."

Before restrictions on public gathering halted business as usual, 2019 trends sparked the beginning of 2020. Hanging on to their holds on the top trends list were wearable tech (No. 1 in 2018 and 2019), high-intensity interval training (in the top five since 2014), body weight training (in the top 10 since 2013) and fitness programs for older adults (in the top 10 since 2007).

"At the end of 2018 and into 2019, we had predicted with reasonable certainty that group exercise classes would become the predominant form of exercise in particularly commercial gyms," Thompson said. "That proved out the last couple months of 2019 and into early 2020."

Graham Melstrand, executive vice president of mission and innovation at the American Council on Exercise (ACE) said at the start of 2020, the fitness industry was booming with large clubs and fitness studios experiencing record participation.

"Simultaneously, companies that provide at-home exercise equipment with subscription services were enjoying similar rapid growth," he said. "For facilities, this growth was primarily occurring under a traditional service delivery model of in-person physical activity experiences in club and studio."

Melstrand said ACE had been anticipating a rise in interest in health coaching and the associated programs and interventions that are appealing to consumers who are often just outside the core fitness participant as an additional line of service that appeals to the individual looking to improve their health through changing their lifestyle behaviors.

"Offering health coaching has been particularly appealing to organizations and professionals who are seeking alignment with the medical and/or corporate wellness communities," he said.

The most obvious result of adjustments to the pandemic's effects on the industry was the move of online training from 26th in the ACSM trend survey of 2020 to the top spot for 2021.

Mark Zabel, president of the U.S. commercial division and global chief marketing officer for a fitness equipment company based in Cottage Grove, Wis., said one of the lingering effects of the virus will be the explosion of and future use of virtual training classes and mobile applications.

"The consumer segment has experienced significant growth in all categories, including fitness equipment, digital products and virtual training classes," said Zabel. "With commercial facilities being closed, consumers opted for various ways to train in their home.

"I believe the biggest change for the commercial segment will be the acceleration of the need of a 'hybrid' model, and development of technology and digital products that will be produced for health club members. Adoption with these types of products in the commercial segment was relatively low in early 2020 prior to COVID, but now the rate of adoption for health club consumers has grown significantly."