fitness facilities survey results for first half of 2011

2011 Six Months (JAN-‐JUN) Fitness Facilities Business Results Survey Report

A first 6 months of 2011 from a survey conducted by FITNESS BUSINESS COUNCILTM in July, 2011. Detailed business can be obtained by contacting Michael Scott Scudder at [email protected] or by telephoning Michael at 575-‐751-‐4220. There is a nominal coaching fee for detailed information. All rights reserved by Michael Scott Scudder. Any re-‐publication, distribution and/or use of the materials, statistics and presentations in this report are prohibited without the express prior written consent of the author.

mailto:[email protected]

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TABLE OF CONTENTS

PAGE 1: TITLE PAGE PAGE 2: TABLE OF CONTENTS PAGE 3: HOW TO USE THIS REPORT EFFECTIVELY PAGE 4: THE SURVEY: RESPONSES (1) PAGE 5: THE SURVEY: RESPONSES (2) PAGE 6: THE SURVEY: RESPONSES (3) PAGE 7: THE SURVEY: RESPONSES (4) PAGE 8: FOR-‐PROFIT RESPONSES RESULTS PAGE 9: NOT-‐FOR-‐PROFIT RESPONSES RESULTS PAGE 10: SEGMENT: 35,000FT2+ FACILITIES PAGE 11: SEGMENT: 20,000 TO 34,999FT2 FACILITIES PAGE 12: SEGMENT: 10,000 TO 19,999FT2 FACILITIES PAGE 13: SEGMENT: 5,000 TO 9,999FT2 FACILITIES PAGE 14: SEGMENT: UNDER 5,000FT2 FACILITIES PAGE 15: PRICE POINTS: LOW PRICE (UNDER $30 MONTHLY) PAGE 16: PRICE POINTS: MODERATE PRICE ($30-‐$49 MONTHLY)

PAGE 17: PRICE POINTS: HIGH PRICE ($50-‐$69 MONTHLY) PAGE 18: PRICE POINTS: LUXURY PRICE ($70+ MONTHLY) PAGE 19: MEMBERSHIPS: 4,000+ MEMBERS PAGE 20: MEMBERSHIPS: 3,000-‐3,999 MEMBERS PAGE 21: MEMBERSHIPS: 2,500-‐2,999 MEMBERS PAGE 22: MEMBERSHIPS: 2,000-‐2,499 MEMBERS PAGE 23: MEMBERSHIPS: 1,500-‐1,999 MEMBERS PAGE 24: MEMBERSHIPS: 1,000-‐1,499 MEMBERS PAGE 25: MEMBERSHIPS: 500-‐999 MEMBERS PAGE 26: MEMBERSHIPS: UNDER 500 MEMBERS PAGE 27: SMALL STUDIOS: DON T SELL MEMBERSHIPS PAGE 28: COMMON ATTRIBUTES OF HIGH-‐PROFIT CLUBS PAGE 29: COMMON ATTRIBUTES OF STRONG-‐PROFIT CLUBS PAGE 30: COMMON ATTRIBUTES OF GOOD-‐PROFIT CLUBS PAGE 31: COMMON ATTRIBUTES OF BREAKEVEN/MONEY-‐LOSING CLUBS PAGE 32: COMMENTS FROM MICHAEL

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Tips on how to use this report most effectively for your company: REVIEW PAGES 4-‐7 FIRST, THEN EITHER PAGE 8 (FOR-‐PROFIT RESPONSES) OR PAGE 9 (NOT-‐FOR-‐PROFIT RESPONSES) NEXT, REVIEW PAGES 28-‐31 (ATTRIBUTES OF PROFITABLE CLUBS AND BREAKEVEN/MONEY-‐LOSING CLUBS) THEN REVIEW PAGE 32 (OVERALL SUMMARY OF MEMBERSHIP PRICES, INITIATION FEES, MEMBERSHIP SALES, RETENTION, ANCILLARY INCOME, NET PROFITS, UNBUNDLING MEMBERSHIPS, OPERATORS SENTIMENT, OPERATORSCONFIDENCE, PRICING CONFIDENCE AND PROFIT CONFIDENCE)

NEXT DETERMINE THE BENCHMARKS/METRICS FOR YOUR CLUB.

FOR EXAMPLE, IF YOUR CLUB IS 22,000 FT2 WITH A SINGLE MEMBERSHIP MONTHLY PRICE POINT OF $39 AND 2,600 MEMBERS:

PAGE 11: 20,000 TO 34,999FT2 FACILITIES PAGE 16: MODERATE PRICE ($30-‐$49 MONTHLY) PAGE 21: MEMBERSHIPS (2,500-‐2,999)

BY FOLLOWING THE ABOVE STEPS, YOU WOULD HAVE COMPLETE COMPARATIVE BENCHMARK/METRIC SNAPSHOTS OF CLUBS OF YOUR PARTICULAR SIZE, PRICE AND MEMBERSHIP.

THE SURVEY WAS DEPLOYED FOR 3 WEEKS IN JULY, 2011 USING ICONTACTTM AN ONLINE SURVEY TOOL LICENSED TO MR. SCUDDER. TOTAL RESPONSES RECEIVED REPRESENTED 495 U.S. AND 14 CANADIAN FITNESS FACILITIES.

80% RESPONSE FROM FOR-‐PROFIT FACILITIES. 20% RESPONSE FROM NOT-‐FOR-‐PROFIT FACILITIES.

89% OF RESPONDENTS ARE DECISION-‐MAKERS WITH KNOWLEDGE OF AND ACCESS TO COMPANY BUDGETS AND P&LS.

OWNER AND/OR PARTNER; GENERAL MANAGER OR CLUB MANAGER; EXECUTIVE DIRECTOR OR ASSISTANT DIRECTOR; REGIONAL MANAGER OR DIRECTOR

The Survey: Responses (1)

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MONTHLY PRICES. AVERAGE MONTHLY PRICE: $49. MEDIAN MONTHLY PRICE: $45.

INITIATION FEES.

AVERAGE INITIATION FEE: $49. MEDIAN INITIATION FEE: $40.

PERCENTAGE ANCILLARY INCOME/GROSS REVENUES.

30% AND HIGHER: 31% OF RESPONDENTS 25% TO 29.9%: 13% OF RESPONDENTS 20% TO 24.9%: 14% OF RESPONDENTS 15% TO 19.9%: 13% OF RESPONDENTS 10% TO 14.9%: 10% OF RESPONDENTS 5% TO 9.9%: 12% OF RESPONDENTS LESS THAN 5%: 7% OF RESPONDENTS


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NET PROFIT BEFORE TAXES (NOT EBITDA GROSS INCOME LESS GROSS EXPENSES).

20% AND HIGHER: 14% RESPONDENTS 15% TO 19.9%: 11% RESPONDENTS 10% TO 14.9%: 16% RESPONDENTS 5% TO 9.9%: 20% RESPONDENTS 1% TO 4.9%: 11% RESPONDENTS BREAKEVEN: 12% RESPONDENTS

UNPROFITABLE: 16% RESPONDENTS

AVERAGE NET PROFIT: 8% MEDIAN NET PROFIT: 6%

HAVE SWITCHED TO UNBUNDLED OR A LA CARTEMEMBERSHIP PRICING: 25% RESPONDENTS

IF ECONOMY STAYS SAME FOR ANOTHER 12 MONTHS: MONTHLY PRICES WILL BE SUBSTANTIALLY LOWER: 5% RESPONDENTS

MONTHLY PRICES WILL BE SLIGHTLY LOWER: 22% RESPONDENTS MONTHLY PRICES WILL BE ABOUT THE SAME: 68% RESPONDENTS MONTHLY PRICES WILL BE SLIGHTLY HIGHER: 5% RESPONDENTS


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1 YEAR FROM NOW (SUMMER 2012), FITNESS BUSINESSES IN YOUR MARKETPLACE:

WILL BE SUBSTANTIALLY OR SLIGHTLY WEAKER: 20% RESPONDENTS WILL BE ABOUT THE SAME: 50% RESPONDENTS

WILL BE SUBSTANTIALLY OR SLIGHTLY STRONGER: 30% RESPONDENTS LOW PRICES WILL TAKE OVER THE MAJORITY OF HEALTH CLUB MARKETS:

YES, BIG-‐TIME: 12% RESPONDENTS YES, SLIGHTLY: 54% RESPONDENTS

EVERYTHING WILL BE ABOUT THE SAME: 17% NO, SLIGHTLY: 13% RESPONDENTS NO, NOT AT ALL: 4% RESPONDENTS

3 YEARS FROM NOW (SUMMER 2014), THE HEALTH CLUB INDUSTRY:

WILL BE IN WORSE PROFIT SHAPE THAN IT IS NOW: 7% RESPONDENTS EVERYTHING WILL BE ABOUT THE SAME AS IT IS NOW: 17%

WILL BE IN BETTER OR SLIGHTLY BETTER SHAPE THAN NOW, BUT NOT WITH PRE-‐RECESSION PROFITS: 71% RESPONDENTS

WILL RETURN TO THE PROFIT MARGINS IT ENJOYED PRE-‐RECESSION: 5% RESPONDENTS


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The Sectors: For-‐Profit Facilities

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PROFITABLE: 76% BREAKEVEN: 9% UNPROFITABLE: 15% MEMBERSHIP SALES UP: 79% ANCILLARY SALES UP: 80% MEMBERSHIP RETENTION BETTER: 74% MEMBERSHIP RETENTION SAME OR WORSE: 26% MORE COMPETITION: 48% SAME OR LESS COMPETITION: 52% DOING BETTER FINANCIALLY 6 MO. 2011 VS. 6 MO. 2010: 80% DOING SAME/WORSE FINANCIALLY 6 MO. 2011 VS. 6 MO. 2010: 20% HAVE YOU UNBUNDLED?: 28%

MSS COMMENTARY: LOWEST PERCENTAGE OF FOR-‐PROFITS OPERATING AT BREAKEVEN OR LOSSES IN THE LAST 3 YEARS. MEMBERSHIP RETENTION HAS IMPROVED PROFITABILITY FOR MAJORITY. KEY HAS BEEN FIRST 6 MONTHS FINANCIAL IMPROVEMENT VERSUS SAME TIME LAST YEAR.

The Sectors: Not-‐For-‐Profit Facilities

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PROFITABLE: 41% BREAKEVEN: 32% UNPROFITABLE: 27% MEMBERSHIP SALES UP: 86% ANCILLARY SALES UP: 77% MEMBERSHIP RETENTION BETTER: 91% MEMBERSHIP RETENTION SAME OR WORSE: 9% MORE COMPETITION: 27% SAME OR LESS COMPETITION: 73% DOING FINANCIALLY BETTER 6 MO. 2011 VS. 6 MO. 2010: 91% DOING FINANCIALLY SAME/WORSE 6 MO. 2011 VS. 6 MO. 2010: 9% HAVE YOU UNBUNDLED?: 14%

MSS COMMENTARY: NOT-‐FOR-‐PROFITS IMPROVING MEMBERSHIP SALES AND ANCILLARY SALES; CONTINUE EXCELLENCE IN RETENTION; BUT BREAKEVEN AND UNPROFITABILITY IN HIGHER NUMBERS THAN THIS TIME LAST YEAR. THE SECTORS PERCEPTION OF LOWERED COMPETITION MAY BE INACCURATE. NEXT 6 MONTHS WILL BE KEY TIME FOR MOST NOT-‐FOR-‐PROFITS.

Size Segments: 35,000ft2+ Facilities

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PROFITABLE: 82% BREAKEVEN: 4% UNPROFITABLE: 14% MEMBERSHIP SALES UP: 84% ANCILLARY SALES UP: 84% MEMBERSHIP RETENTION BETTER: 82% MEMBERSHIP RETENTION SAME OR WORSE: 18% MORE COMPETITION: 42% SAME OR LESS COMPETITION: 58% DOING BETTER FINANCIALLY 6 MO. 2011 VS. 6 MO. 2010: 91% DOING SAME/WORSE FINANCIALLY 6 MO. 2011 VS. 6 MO. 2010: 9% HAVE YOU UNBUNDLED?: 16%

MSS COMMENTARY: BEST-‐PERFORMING SEGMENT OVERALL IN THE HEALTH CLUB INDUSTRY AT PRESENT. KEY FACTOR HAS BEEN FIRST 6 MONTHS FINANCIAL IMPROVEMENT VERSUS SAME TIME LAST YEAR. MARGINS MOVING BACK UP SLOWLY FOR THE FIRST TIME IN 3 YEARS.

Size Segments: 20,000-‐34,999ft2+ Facilities

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MSS COMMENTARY: MEMBERSHIP SALES GENERALLY IMPROVED; ANCILLARY SALES AND RETENTION NEED TO BE STRONGER IN THIS SEGMENT IT S KEY TO CONTINUED FINANCIAL IMPROVEMENT. STILL HAVE 1/3 OF CLUBS IN THIS SEGMENT AT BREAKEVEN OR LOSS OPERATIONAL STATUS.


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PROFITABLE: 69%

BREAKEVEN: 25%

UNPROFITABLE: 6%

MEMBERSHIP SALES UP: 69%

ANCILLARY SALES UP: 63%

MEMBERSHIP RETENTION BETTER: 75%

MEMBERSHIP RETENTION SAME OR WORSE: 25%

MORE COMPETITION: 63%

SAME OR LESS COMPETITION: 37%

DOING FINANCIALLY BETTER 6 MO. 2011 VS. 6 MO. 2010: 69% DOING FINANCIALLY SAME/WORSE 6 MO. 2011 VS. 6 MO. 2010: 31%

HAVE YOU UNBUNDLED?: 38%

MSS COMMENTARY: THIS SEGMENT STRUGGLING WITH OVERALL MEMBERSHIP SALES AND ANCILLARY SALES IMPROVEMENT. MEMBERSHIP RETENTION ON THE INCREASE, HOWEVER. A PARTICULAR SEGMENT WITH A LOT OF COMPETITION AND INCREASING COMPETITION. STILL HAVE 1/3 OF CLUBS IN THIS SEGMENT AT BREAKEVEN OR LOSS OPERATIONAL STATUS AND 1/3 THAT ARE NOT DOING BETTER FINANCIALLY.


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MSS COMMENTARY: EVEN THOUGH MEMBERSHIP SALES AND ANCILLARY SALES HAVE IMPROVED, RETENTION IS STILL AN ISSUE FOR 1/3 OF CLUBS IN THIS SEGMENT. KEY TO CONTINUED FINANCIAL IMPROVEMENT IS RETENTION. COMPETITION IS HEAVY AND GETTING HEAVIER IN THIS SEGMENT. STILL HAVE BETTER THAN 1/3 OF CLUBS IN THIS SEGMENT AT BREAKEVEN OR LOSS OPERATIONAL STATUS. THIS SEGMENT IS SEEING A DRAMATIC NEGATIVE TURN. A LOT OF UNBUNDLING IN THIS SEGMENT IS IT WORKING?

Size Segments: under 5,000ft2+ Facilities

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PROFITABLE: 58% BREAKEVEN: 16% UNPROFITABLE: 26% MEMBERSHIP SALES UP: 74% ANCILLARY SALES UP: 79% MEMBERSHIP RETENTION BETTER: 74% MEMBERSHIP RETENTION SAME OR WORSE: 26% MORE COMPETITION: 32%

SAME OR LESS COMPETITION: 68% DOING FINANCIALLY BETTER 6 MO. 2011 VS. 6 MO. 2010: 74% DOING FINANCIALLY SAME/WORSE 6 MO. 2011 VS. 6 MO. 2010: 26% HAVE YOU UNBUNDLED?: 53%

MSS COMMENTARY: MEMBERSHIP SALES, ANCILLARY SALES AND RETENTION GREATLY IMPROVED. FINANCIAL IMPROVEMENT ACCOMPANIED BY SUCH A HIGH RATIO OF BREAKEVEN/UNPROFITABILITY MAY INDICATE KEY CLUBS NOT YET MATURE. 40%+ OF CLUBS IN THIS SEGMENT AT BREAKEVEN OR LOSS OPERATIONAL STATUS NEGATIVE INDICATIONS FOR 2ND HALF OF 2011. HUGE UNBUNDLING IN THIS SEGMENT IS IT WORKING?

Price Points: Low Price (under $30 monthly)

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MSS COMMENTARY: FOLLOWING FOUR (4) YEARS OF SURVEYS, IT S BECOMING CLEAR THAT LOW PRICE IS UNDER $30 MONTHLY FOR A SINGLE MEMBERSHIP. ANOTHER CATEGORY BARGAIN PRICE UNDER $20 MONTHLY), MIGHT BE WARRANTED. NUMBERS SPEAK FOR THEMSELVES, BUT THERE S STILL NEARLY 1/3 IN THIS PRICE POINT OPERATING WITH NO PROFITS. EVEN BETTER GROWTH IN MEMBERSHIP SALES AND/OR ATTENTION TO ANCILLARY SALES MAY BE NECESSARY, EXCEPT FOR HIGH-‐VOLUME BARGAIN PRICE PLAYERS.

Price Points: Moderate Price ($30-‐$49 monthly)

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MSS COMMENTARY: DITTO COMMENTARY ABOUT 4 YEARS OF SURVEYS MODERATE PRICE IS ESTABLISHING ITSELF IN THIS RANGE FOR A SINGLE MEMBERSHIP. NUMBERS HAVE IMPROVED SINCE THIS TIME LAST YEAR, BUT THERE S STILL NEARLY 1/3 IN THIS PRICE POINT OPERATING WITH NO PROFITS. ATTENTION TO ANCILLARY SALES AND STRONGER RETENTION IS KEY FOR THIS PRICE POINT SEGMENT.

Price Points: High Price ($50-‐$69 monthly)

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MSS COMMENTARY: IGH PRICE IS ESTABLISHING ITSELF AT LOWER GENERAL PRICE RANGES

THAN HAS HISTORICALLY BEEN TRUE FOR THIS SEGMENT . THERE S 1/3 OF CLUBS IN THIS PRICE POINT OPERATING WITH NO PROFITS. GROWTH IN ANCILLARY SALES AND RETENTION IS HELPING WITH FINANCIAL IMPROVEMENT VS. THIS TIME LAST YEAR.

Price Points: Luxury Price ($70+ monthly)

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MSS COMMENTARY: VE NAMED A NEW CATEGORY FOR THIS SEGMENT LUXURY PRICE

BEST-‐PERFORMING PRICE POINT SEGMENT AT PRESENT IN THE INDUSTRY (OTHER THAN BARGAIN-‐PRICERS). NUMBERS IN PROFITABILITY, INCREASED MEMBERSHIP SALES, ANCILLARY SALES AND RETENTION POINT TO RENEWED STRENGTH IN THIS PRICE POINT SEGMENT. BREAKEVEN AND UNPROFITABILITY NUMBERS IN THIS SEGMENT ARE MAINLY DUE TO REPORTS FROM NOT-‐FOR-‐PROFITS IN THIS PRICE POINT CATEGORY.

Memberships: 4,000+ members

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MSS COMMENTARY: NOTHING TO BE SAID BEYOND VERY STRONG SEGMENT

Memberships: 3,000-‐3,999 members

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MSS COMMENTARY: GENERALLY DECENT NUMBERS OVERALL IN THIS SEGMENT WITH INCREASES IN FINANCIAL IMPROVEMENT A REAL POSITIVE. TOO MANY BREAKEVENS AND UNPROFITABLES IN THIS SEGMENT (33%). INTENSE COMPETITION ENTERING INTO THIS SEGMENT AND IT WILL ESCALATE. LOOKS LIKE A LOT OF CLUBS IN THIS SEGMENT NEED TO MOVE THEIR MEMBERSHIP NUMBERS TO 4,000+ TO ACHIEVE COMFORTABILITY.


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MSS COMMENTARY: OVERALL GOOD NUMBERS IMPROVEMENT ACROSS THE BOARD IN THIS SEGMENT. PERCENTAGE OF CLUBS WITH NO POSITIVE CHANGE IN MEMBER RETENTION IS A BIT OF A RED FLAG ALONG WITH SAME PERCENTAGE IN NO FINANCIAL IMPROVEMENT.


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PROFITABLE: 78%

BREAKEVEN: 22%







DOING FINANCIALLY BETTER 6 MO. 2011 VS. 6 MO. 2010: 89%

DOING FINANCIALLY SAME/WORSE 6 MO. 2011 VS. 6 MO. 2010: 11%

HAVE YOU UNBUNDLED?: 0

MSS COMMENTARY: A SEGMENT THAT NEEDS STRONG IMPROVEMENT IN MEMBERSHIP SALES AND ANCILLARY SALES. RETENTION IMPROVEMENT AND FINANCIAL PERFORMANCE IMPROVEMENT ARE POSITIVE INDICATORS. THE PERCEPTION OF COMPETITION MAY BE INACCURATE FROM THOSE REPORTING IN THIS SEGMENT.


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PROFITABLE: 80%

BREAKEVEN: 20%










MSS COMMENTARY: VERY STRONG NUMBERS IMPROVEMENT ACROSS THE BOARD IN PROFITABILITY, INCREASED MEMBERSHIP SALES, ANCILLARY SALES AND RETENTION POINT TO RENEWED STRENGTH IN THIS SEGMENT. IT IS POSSIBLE THAT THESE ARE 10,000 TO 12,000 FT2 OPERATORS WHO ARE LEARNING TO MAXIMIZE SALES AND SERVICE CUSTOMERS.


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MSS COMMENTARY: WHILE MEMBERSHIP SALES, ANCILLARY SALES AND RETENTION ARE STRONGLY IMPROVED IN THIS SEGMENT GENERALLY, THERE IS FAR TOO HIGH A PERCENTAGE (42%) OF OPERATORS WITH NO PROFITABILITY. THIS SEGMENT SUFFERED ONE OF THE WORST DOWNTURNS ON AVERAGE IN IMPROVED FINANCIAL PERFORMANCE IN THE FIRST HALF OF NOT A GOOD INDICATOR. THIS IS A SEGMENT THAT BEARS CLOSE OBSERVATION FOR THE SECOND HALF OF THE YEAR.

Memberships: 500-‐999 members

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MSS COMMENTARY: THIS SEGMENT HAS DONE ONLY ONE THING REALLY WELL, AND THAT IS TO IMPROVE MEMBERSHIP SALES. IT S ONE OF THE WORST-‐LOOKING SEGMENTS IN IMPROVEMENT IN PROFITABILITY AND ANCILLARY SALES. MEMBERSHIP RETENTION IS AN ISSUE FOR 1/3 OF CLUBS IN THIS SEGMENT. NEARLY 40% OF CLUBS ARE OPERATING WITH NO PROFIT A NEGATIVE INDICATOR FOR THE 2ND HALF OF THE YEAR. COMPETITION IS INTENSE AND INCREASING FOR THIS SEGMENT IT BEARS CLOSE WATCHING.

Memberships: under 500 members

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MSS COMMENTARY: THIS SEGMENT HAS IMPROVED FINANCIALLY, BUT FROM WHAT? IT S THE WORST-‐LOOKING SEGMENT FOR PROFITABILITY OVER HALF OF CLUBS ARE OPERATING WITH NO PROFITS. MEMBERSHIP RETENTION IS A HUGE ISSUE FOR 40%+ OF CLUBS IN THIS SEGMENT AND UNBUNDLING MAY NOT HAVE WORKED IN MOST CLUBS IN THIS SEGMENT. THE PERCEPTION OF COMPETITION IN THIS SEGMENT IS INACCURATE. THIS IS A SEGMENT THAT HAS DRAMATICALLY TURNED DOWN IN JUST THE LAST 12 MONTHS AND MAY BE IN REAL TROUBLE!

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PROFITABLE: 67%

UNPROFITABLE: 33%






MSS COMMENTARY: VERY LIMITED RESPONSES IN THIS SEGMENT (LESS THAN 3% OF OVERALL SURVEY RESPONSES HARD TO EVALUATE AT THIS POINT. PERCEPTION OF COMPETITION IS PROBABLY ACCURATE, BECAUSE THESE PLAYERS ARE PERSONAL TRAINING AND GROUP TRAINING STUDIOS. THEY ARE, IN GENERAL, DOING AN EXCELLENT JOB OF SALES INCREASES AND TAKING CARE OF A VERY LIMITED NUMBER OF CUSTOMERS. SOME PLAYERS, HOWEVER, ARE NOT DOING WELL AT ALL (33%).

Common attributes of high-‐profit clubs (20%+)

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*** MEMBERSHIP SALES UP: 87%

**** ANCILLARY SALES UP: 100%

*** MEMBERSHIP RETENTION BETTER: 87%


**** DOING FINANCIALLY BETTER 6 MO. 2011 VS. 6 MO. 2010: 100%


MSS COMMENTARY: THE ABOVE ILLUSTRATES CLEARLY WHAT IT TAKES IN ORGANIZATIONAL, MANAGEMENT AND MARKETING SKILLS TO OPERATE AT HIGH-‐PROFIT LEVELS.

Common attributes of strong-‐profit clubs (15-‐19.9%)

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*** MEMBERSHIP SALES UP: 82%

*** ANCILLARY SALES UP: 82%



**** DOING FINANCIALLY BETTER 6 MO. 2011 VS. 6 MO. 2010: 91%


MSS COMMENTARY: OBVIOUSLY, MANAGEMENT, MARKETING AND ORGANIZATIONAL SKILLS ARE EVIDENT IN THESE STRONG-‐PROFIT CLUBS. EVEN THOUGH THERE IS EVIDENCE OF HIGHLY-‐INCREASED COMPETITION, THESE CLUBS KEEP DEVELOPING DOUBLE-‐DIGIT PROFIT MARGINS! INTERESTING THAT PERHAPS ATTENTION TO RETENTION COULD TAKE THIS SEGMENT UP TO THE HIGH-‐PROFIT LEVEL.

Common attributes of good-‐profit clubs (10-‐14.9%)

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** MEMBERSHIP SALES UP: 79%

** ANCILLARY SALES UP: 79%



** DOING FINANCIALLY BETTER 6 MO. 2011 VS. 6 MO. 2010: 71%


MSS COMMENTARY: GOOD-‐PROFIT CLUBS ARE STRONG ORGANIZATIONALLY, MANAGEMENT-‐WISE, AND HAVE MORE THAN ADEQUATE MARKETING SKILLS. ATTENTION TO RETENTION WOULD HELP CLUBS IN THIS SEGMENT MOVE UP TO THE STRONG-‐PROFIT LEVEL.

Breakeven/money-‐losing clubs: what common attributes?

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MSS COMMENTARY: HERE WE SEE EVIDENCE OF WHAT DOESN T WORK. IF YOU WANT TO GUARANTEE NO-‐PROFIT BUSINESSES, NEGLECT ATTENTION TO MEMBERSHIP AND ANCILLARY SALES. IMPROVED MARKETING SKILLS ARE AN ABSOLUTE NECESSITY FOR THIS SEGMENT. THE GENERAL LACK OF FINANCIAL IMPROVEMENT INDICATES THAT CLUBS IN THIS CONDITION (ABOVE) WILL BE THE ONES TO LIKELY CLOSE THEIR DOORS WITHIN THE NEXT 12 MONTHS.

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Comments from Michael

MEMBERSHIP PRICES: AVERAGE AND MEDIAN MONTHLY PRICES ARE UP FROM BOTH 1ST HALF 2010 AND 1ST QUARTER 2011. POSITIVE. INITIATION FEES: AVERAGE AND MEDIAN COLLECTED INITIATION FEES ARE DOWN SLIGHTLY FROM BOTH 1ST HALF 2010 AND 1ST QUARTER 2011. NEUTRAL. MEMBERSHIP SALES ARE UP SUBSTANTIALLY FROM BOTH 1ST HALF 2010 AND 1ST QUARTER 2011. VERY POSITIVE. RETENTION IMPROVED IN MOST SEGMENTS FROM REPORTS IN BOTH 1ST HALF 2010 AND 1ST QUARTER 2011. POSITIVE. ANCILLARY INCOME IMPROVED IN MOST SEGMENTS FROM REPORTS IN BOTH 1ST HALF 2010 AND 1ST QUARTER 2011. POSITIVE. NET PROFITS WERE UP ONLY SLIGHTLY VERSUS 1ST HALF 2010, BUT SUBSTANTIALLY VERSUS 1ST QUARTER 2011. VERY POSITIVE. UNBUNDLING OR A LA CARTING MEMBERSHIPS IN ON THE INCREASE OF CLUBS REPORTED APPLYING THESE METHODS IN THE 1ST HALF 2011. NEUTRAL. SENTIMENT: ONLY 27% OF RESPONDENTS THINK PRICES WILL GO LOWER IF ECONOMIC CONDITIONS STAY THE SAME FOR THE NEXT 12 MONTHS. NEUTRAL. CONFIDENCE: 80% OF RESPONDENTS BELIEVE THAT OUR INDUSTRY WILL EITHER STAY ABOUT THE SAME OR SLIGHTLY IMPROVE WITHIN THE NEXT YEAR. POSITIVE. PRICING CONFIDENCE: 66% OF RESPONDENTS THINK THAT MEMBERSHIP PRICES WILL GENERALLY CONTINUE TO DECREASE. POSSIBLE NEGATIVE. PROFIT CONFIDENCE: 76% OF RESPONDENTS BELIEVE THAT OUR INDUSTRY WILL BE IN BETTER SHAPE BY 2014. HOWEVER, ONLY 5% BELIEVE THAT PROFIT MARGINS WILL RETURN TO PRE-‐RECESSION LEVELS. 7% BELIEVE THAT THE INDUSTRY WILL BE WORSE OFF. 17% BELIEVE IT WILL BE ABOUT THE SAME AS IT IS AT PRESENT. 71% THINK THAT IT WILL BE IN BETTER SHAPE, BUT THAT PROFIT MARGINS WILL NOT RETURN TO PRE-‐RECESSION LEVELS. NEGATIVE.

SIX (6) POSITIVE THREE (3) NEUTRAL AND ONLY TWO NEGATIVE INDICATORS POINT OUT THE EMERGING RECOVERY OF THE FITNESS FACILITY INDUSTRY FOLLOWING THE CONSISTENTLY-‐CHALLENGING YEARS OF 2008, 2009, AND 2010. WHILE MANY BUSINESS CLOSINGS EVIDENCED THAT THE INDUSTRY IS NOT RECESSION-‐PROOF AND LIKELY MANY MORE CLOSINGS ARE PROBABLY YET TO OCCUR, OVERALL THE NORTH AMERICAN FITNESS BUSINESS APPEARS TO HAVE TURNED THE CORNER.

Michael Scott Scudder

FITNESS BUSINESS COUNCIL

FITNESS BUSINESS RADIO

WELLNESS BUSINESS COUNCIL (Sept. 11)

575-‐751-‐4220

[email protected]

www.michaelscottscudder.com

http://www.michaelscottscudder.com/

fitness facilities survey results for first half of 2011

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