HEALTH, FITNESS & SPORTS CLUBS

A Look at Trends in Health, Fitness & Sports Clubs

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aking up 3.7 percent of the survey respondents, those representing health, fitness and sports clubs were largely representative of private, for-profit organizations. Because they operate on a for-profit basis, these respondents expressed different concerns—focusing heavily on marketing, increasing memberships and coming up with new programming to keep existing members and attract new ones.

Respondents from health clubs were among the most likely to indicate that they operate or manage just a single facility. Nearly two-thirds (64.5 percent) of health club respondents said they operate a single club, and only 6.5 percent said they operate 10 or more facilities.

Many health clubs aim to address a specific niche of members, but that niche is not limited to hard-core exercisers. Increasingly, health clubs are looking to address a wider range of needs for their members of all ages and backgrounds.

"Some of the growing trends within the industry are in programming and services for wellness, baby boomers, generation X and children," said a spokesperson for the International Health, Racquet and Sportsclub Association (IHRSA). "Wellness programming emphasizes a holistic approach to exercise; wellness services can cover programming for special populations with medical issues and offerings for the overall population just seeking to improve their overall health and feel better. Baby boomers and generation X'ers are growing populations, and as they age, they become increasingly more concerned with appearance, health and performance. Increased youth sports participation and child care services call for the opportunity or need for corresponding children's fitness programming."

Economic Impact

As the economy has slumped, experts have seen an impact in the fitness arena—both on how people are working out and where they are choosing to work out.

"We have certainly seen some changes in people's fitness behaviors and spending as a response to the recession," said Scott Goudeseune, CEO of the American Council on Exercise. "Budget-friendly, simple workouts that do not require an investment in expensive equipment or training are enjoying a resurgence, including bodyweight exercises, which utilize one's own body weight as a form of resistance, requiring no weights or equipment, training with resistance bands and walking."

He added that when it comes to health clubs, "while people are continuing to retain gym memberships and personal trainers, spending on added services and personalized, individualized training has decreased." Now people are more likely to pool their money and share group training sessions, Goudeseune said, and they may skip the pricier health and spa treatments that used to be a more common indulgence.

Despite the recession, IHRSA reported recently that a survey of its members revealed that many were still performing relatively well in 2009, with nearly two-thirds stating that certain aspects of their business were performing as well, or better, at the end of January 2009 than January 2008. The survey showed equal or improved rates of performance in membership attendance, non-dues revenue, new non-dues revenue sales and total revenues.

The majority of health club respondents to our industry report survey echoed these findings, with a majority reporting increasing revenues or no change to revenues from 2007 to 2008, and projecting more of the same for 2009 and 2010. From 2007 to 2008, 43.7 percent of health club respondents reported their revenues increased, and another 26.8 percent reported no change in that time period. This reflects better performance than was expected last year, when just 36 percent of health club respondents projected higher revenues in 2008 over 2007.

Health club respondents were, however, much more likely to report lower revenues in 2008 and 2009, compared to other survey respondents. While just 14.1 percent of all respondents said their revenues for 2008 were lower than in 2007, 29.6 percent of health club respondents' revenues were lower. And while 20.5 percent of all respondents were expecting lower revenues in 2009, 35.7 percent of health club respondents were. That said, health clubs projected a quicker turnaround, with 59 percent expecting higher revenues in 2010, and just 13.1 percent expecting a decrease that year (compared to 17.8 percent of the general survey population). (See Figure 47.)

Reinforcing the idea of a quicker recovery among health club respondents, this group was the only category to report an increase in operating expenditures between fiscal 2008 and fiscal 2009. In the same time that schools are expecting operating expenditures to drop 18.5 percent and parks are projecting a 13.7 percent decrease, health club respondents projected an increase of 2 percent, from an average operating budget of $1,012,000 in fiscal 2008 to $1,032,000 in fiscal 2010.

"We think the health club industry is well-positioned for a swift recovery because it reaches a broad demographic through the plethora of business models club operators employ," said an IHRSA spokesperson. "From budget clubs to luxurious facilities, the health-conscious consumer can find a health club option that will fit their budget and goals."

Health club respondents did project their operating expenditures would drop by 6.1 percent in 2009, revealing that they are feeling some impact from the economy.

IHRSA said that despite the good news its survey revealed on club performance, operators were still making changes to work through the recession, including a heightened focus on customer service, profit centers like non-dues programs, and marketing and advertising. They also were more likely to offer discounts on enrollment fees, shorter-term memberships and services offered to non-members.

"Keeping retention up is, of course, key to keeping your facility in business," Goudeseune said. "To that end, providing your clients with exceptional service and personal attention can keep them from eliminating their gym memberships in an effort to cut costs, or defaulting to a cheaper facility or trainer."

IHRSA agreed that outstanding customer service was a key to keeping existing members, as well as attracting new ones, and added that community involvement is also important. "High-quality customer service will set a great club apart from others, and community involvement will help reach new potential members," IHRSA explained. "Offering flexible membership plans will help, too, for cash-strapped consumers."

Other methods for keeping membership affordable were suggested by Goudeseune, such as waiving initiation or sign-up fees, or offering membership incentives such as free training sessions. "Also consider offering special discounts or reduced fees for group instruction or training, providing clients a more affordable option for personalized attention," he added. "Special events or promotions to show appreciation for loyal clients and members can also be an effective retention strategy."

Health club respondents need these strategies, as they were those most likely to be anticipating a decline in users at their facilities in 2008 and in 2009. Nearly a third expect to see a decline in 2008, and nearly a fifth expect a decline in 2009. That said, half or more expect to see an increase in those years. (See Figure 48.)

Also of note, this year's health club respondents were more likely to be expecting increases than last year's respondents. While 50 percent of health club respondents in 2009 reported an increase in the number of people using their facility from 2007 to 2008, just 40.7 percent projected such a change last year. And while 43.7 percent of last year's respondents projected an increase from 2008 to 2009, 54.3 percent of this year's respondents expect such a change.


Family Friendly

More than 10 percent of health club respondents said they plan to add playgrounds and splash play areas over the next three years, reflecting a micro-trend IHRSA also has identified.

"This figure is consistent with what we've found in past IHRSA Industry Data Surveys," a spokesperson for IHRSA said. "For three years, 7 to 11 percent of participating clubs have indicated that they plan to expand the child recreational areas of their facilities."

This fits right in with the macro-trend mentioned earlier of more clubs reaching out with improved opportunities for youth fitness.


Facilities

In March, IHRSA reported that industry revenues reached $19.1 billion in 2008, an increase of 3 percent over 2007. At the same time, the association reported that the number of health clubs grew by 1 percent to total more than 30,000 facilities in the United States.

"Although growth in the total number of facilities has slowed since 2006, the ability of the industry to continue to introduce new locations and facilities indicates there are markets increasing capacity and consumer demand focused on convenience and value," said Katie Rollauer, IHRSA's senior manager of research.

With so many health club respondents operating single facilities, it would be surprising to find that a great number were planning new construction. Still, more than 60 percent indicated that they have plans to build—new facilities, additions or renovations—over the next three years. Just 10.7 percent are planning all-new facilities, but 22.7 percent said they plan to make additions, and 42.7 percent are planning renovations. (See Figure 49.)

Weighted as they are toward renovations, it comes as no surprise that the amount health club respondents are planning to spend on construction is lower than most other respondents. The average amount planned is $1,674,000, a little over a third of the average for all facility types ($4,835,000).

The top features currently included in health club respondents' facilities are what one would expect in this market. More than 90 percent include fitness centers, and around three-quarters include locker rooms and exercise studios. Another 44.7 percent include indoor aquatics, while 40.8 percent include concession areas.

The amenities planned for addition among our health club respondents were somewhat more surprising. More than 10 percent indicated that they plan to add splash play areas and playgrounds over the next three years. The top seven amenities health club respondents are planning to add over the next few years include:

  1. Splash play areas
  2. Playgrounds
  3. Exercise studio rooms
  4. Classrooms and meeting rooms
  5. Climbing walls
  6. Concession areas
  7. Waterparks
Cutting-Edge Programming

The top programs offered among our health club respondents have not changed much since last year's survey. As one would expect, fitness programs and personal training top the list. Some 93.2 percent of respondents said they currently offer fitness programs, and 78.1 percent offer personal training. This is reflected, as well, in the much higher number of health club respondents who said they require some of their staff members to earn personal training certification. While around a quarter of all respondents require such certification, more than three-quarters of health club respondents do so.

The top 10 programs currently featured at health clubs include:

  1. Fitness
  2. Personal training
  3. Mind-body/balance programs like yoga and Pilates
  4. Nutrition/diet counseling
  5. Active older adults programs
  6. Aquatic exercise programs
  7. Holidays and special events
  8. Education
  9. Therapeutic programs
  10. Swimming

Dropping out of last year's top 10 programs are teen programs, which were eighth last year, as well as individual sports activities. New to the list this year are the No. 8 and No. 9 spots: educational and therapeutic programs.

"One overarching trend we're seeing throughout the fitness industry is a rise in popularity of specialty classes," Goudeseune said. "More and more gym-goers are seeking out different classes for specific workouts. In fact, that trend has gone even one step further this year as we witness a transition from specialty classes to specialty facilities."

When it comes to adding programs at their facilities, health club respondents express a desire to keep things interesting and innovative to both inspire existing members, as well as motivate new members to join. The top programs planned for addition in the next three years include:

  1. Nutrition/diet counseling
  2. Active older adult programs
  3. Personal training
  4. Teen programs
  5. Fitness programs
  6. Education
  7. Mind-body/balance
  8. Sport training, such as tennis or golf lessons
  9. Individual sports activities like running clubs

More specifically, Goudeseuene at ACE said they are seeing a greater emphasis on functional fitness and training, with kettlebells experiencing a surge. "We are also seeing more fusion-type classes that mix non-traditional workouts, like martial arts and ballet, with a typical cardio class," he added. "People are always looking for new ways to stay engaged and beat the boredom of repetitive exercise, and fusion-style classes present an alternative to traditional classes." He also said that boot-camp-style workouts continue to be popular.

"Lastly, something on the other side of the spectrum we're seeing is a 'back to basics' approach," Goudeseune said. "With exercises and equipment getting too advanced and confusing for the average exerciser, we will definitely see more trainers focusing on basic movements and techniques with their clients, which we may have lost focus on in previous years. We are seeing a return to building the fundamentals of good posture and correct movement before advancing clients to today's trendy equipment or classes."



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