Fitness Facility Trends
2016 Issue 2 | GearedUp
60
GENERAL INDUSTRY TRENDS
In the early 1990s, the U. S. fitness facility industry began a longterm trend that is still intact, with the advent of 24 Hour Nautilus( later to become 24 Hour Fitness) and Curves. Soon after followed LA Fitness, Life Time Fitness, the transition of Gold’ s Gym licensing to franchising, and several other brands that grew rapidly( think Equinox, Town Sports International, Crunch, Anytime Fitness, Snap Fitness). All of the above-named, including Planet Fitness ®, now occupy 10 of the first 16 spots in Club Industry’ s Top 100 list.
The trend? Corporatization of fitness facility brands … one that is likely to continue for several years to come. Presently“ boutique brands” like Flywheel, SoulCycle and Orangetheory Fitness are rapidly adding facilities around the country.
Another industry trend, no doubt in part due to Planet Fitness’ incredible success over the past decade, is the down pricing of fitness memberships accompanied by the increase in“ unbundling” of memberships. More than one-third of health clubs have now unbundled by adding a low-price, fitness-only membership to their menus. Unbundling will likely increase and take many different forms in the remainder of this decade.
A third industry trend quickly making big waves is the building of smaller, limited-service clubs that specialize in one or two systematized services and often do not offer memberships. These facilities are usually studio size and frequently sell limited-time, limited-use, premium-price programs on a recurring electronic funds payment basis. Industry experts estimate there may be as many as 20,000“ under-the-radar” mini-clubs in addition to the known 35,000 facilities identified in IHRSA’ s annual report.
BUSINESS TRENDS
Business trends differ from general industry trends in that they are statistical trends established from club surveys over several years. My own MSS Surveys of independent North American clubs has accumulated data from eight years of annual polls and 21 quarterly business results surveys.( Note that in the following examples five-year averages are used due to statistical consistency and applicability.)
Membership Sales Growth: the percentage of clubs increasing membership sales
• 2015: 45 % of clubs
• 5-year Average: 47 %
• Trend Direction: down
Membership Retention Growth: the percentage of clubs increasing member retention
• 2015: 43 % of clubs
• 5-year Average: 38 %
• Trend Direction: up
Average Membership Retention:
• 2015: 63 %
• 5-year Average: 63 %
• Trend Direction: flat
Net Membership Increase: the percentage of clubs increasing net memberships
• 2015: 44 %
• 5-year Average: 47 %
• Trend Direction: down by Michael Scott Scudder
1-2-1 Personal Training Sales Growth: the percentage of clubs increasing 1-2-1 PT sales
• 2015: 43 %
• 5-year Average: 48 %
• Trend Direction: down
Small Group Training Sales Growth: the percentage of clubs increasing Small Group Training sales
• 2015: 47 %
• 5-year Average: 49 %
• Trend Direction: down
Group Exercise Class Attendance Growth: the percentage of clubs increasing Group Exercise Class attendance
• 2015: 47 %
• 5-year Average: 51 %
• Trend Direction: down
Ancillary Sales as a Percent of Total Revenues: the percentage of sales other than direct membership fees, initiation fees and / or assessment fees
• 2015: 27 %
• 5-year Average: 22 %
• Trend Direction: up
Total Revenues Growth: the percentage of clubs increasing total revenues
• 2015: 59 %
• 5-year Average: 51 %
• Trend Direction: up
Percentage of Clubs Reporting Net Profit Increases:
• 2015: 59 %
• 5-year Average: 49 %
• Trend Direction: up
Average Annual Net Profit Percent:
• 2015: 7.3 %
• 5-year Average: 9.0 %
• Trend Direction: down Clubs are learning that ancillary sales are key to profitability in operations. Nearly six in 10 clubs report both increases in