Herman Rutgers

The current and future Landscape of Fitness

Key Developments in the Health & Fitness Market;The Good, the Bad and the Ugly….

Facts, figures, observations & thoughts

Herman Rutgers

FIBO African Summit 2018

Roadmap

• Fitness market

• Personal Training

• Pricing

• Trends

• Boutiques

• Q&A

2016 Deloitte

Meet Joe

Lessons from Joe

Ask questions; what does the customer want

Adjust your service-offering on that ( music, airco )

Ensure a “Wow”-effect ( newspapers, drinks )

“Manage expectations” ( traffic )

People make the difference ( same car “hardware” / different “software” )

7

8

World Health & Fitness Market 2017

Revenues; $ 87,2 Billion (+ 5 %)

Members; 174 Million (+ 7 %)

Clubs 201.000 (+ 0 %)

Fitness is the #1 “sport” worldwide

• IHRSA Global Report 2018 – May 2018

Top 10 Global Markets (revenue, 2017)

1. USA 30,0 $BN

2. Germany 5,6

3. UK 5,5

4. China 3,9

5. Japan 3,9

6. Australia 2,8

7. France 2,7

8. South Korea 2,6

9. Canada 2,5

10. Italy 2,4

Top 10 markets account for 71% of global revenues ( 70% Mbrs)!

South African Market ( IHRSA Global report 2018)

• 1 $ billion in revenues ( +6 %)

• 900 clubs

• 1.8 million members ( +7%)

2018 Deloitte 12

0% 5% 10% 15% 20% 25%

China

South Africa

France

Italy

Spain

Germany

United Kingdom

Australia

Denmark

Netherlands

United States

Sweden

Fitness Penetration (% total population 2017)

Top 10 Global Operator BrandsFitness brands are mostly national / regional!

1. Planet Fitness (USA) 10,6 MM Mbrs

2. 24 Hour Fitness (USA) 3,5

3. Anytime Fitness (Global) 3,2

4. Gold’s Gym Int. (Global) 3,0

5. McFit Group (EUR) 1,7

6. Goodlife (Canada) 1,6

7. Basic-Fit (EUR) 1,5

8. Bio-Ritmo/Smartfit (LA) 1,5

9. Fitness Time (S-Arabia) 1,1

10. Virgin Active (EUR/SA) 1,1

1. Planet Fitness 2,3 $ Bn

2. Life Time (USA) 1,6

3. Anytime Fitness 1,5

4. 24 Hour Fitness (USA) 1,4

5. Virgin Active ( EUR/SA) 0,8

6. OrangeTheory (Global) 0,7

7. David Lloyd (EUR) 0,5

8. Central Sports (JPN) 0,4

9. Migros Group (EUR) 0,4

10. Renaissance (JPN) 0,4

14

USA: Franchisor vs. Corporate

Co

rpo

rate

Fra

nc

his

e

Full Service Boutique

40%

29%

13%

6% 7%5%

Budget < $25 a month Economy $25 to $49 a month Mid-Market $50 to $74 amonth

Premium $75 to $99 a month Premium Plus $100 to $149 amonth

Luxury > $150 a month

Monthly Fee Paid by U.S. Club Members in 2017

% Members

PricingClub Market

SegmentMonthly Price Range Examples of European and U.S. Club Operators by Segment

Budget < $25 Planet Fitness, U.S. Basic Fit, Europe McFit, Europe The Gym Group, Pure Gym, U.K.

Economy $25 to $49 24 Hour Fitness, U.S. Anytime Fitness, Europe DW Fitness First, U.K. Fitness DK, Denmark

Mid-Market $50 to $75 Fitness Formula, U.S. Gym Box, U.K. David Lloyd Leisure, Europe SATS, Scandinavia

Premium $75 to $99 Lifetime Fitness, U.S. Virgin Active, S.A / Europe DIR, Spain Health City, Netherlands

Premium Plus $100 to $149 Village Sports Clubs, U.S. Body & Soul, Munich Holmes Place, Europe World Class, Moscow

Luxury > $150 Bay Clubs, U.S. Equinox, U.K. Aspria, Europe Third Space, U.K.

BOUTIQUES100.000+ locations in US

• Massive growth • Generates higher return due to higher pricing and lower overhead

expense• 80% women• More flexible real estate

“THE NEW FASHION” - NYT

AFS Releases 4th Annual Fitness Studio

Operating & Financial Benchmarking Research Report

Key Findings:

Average Revenue Up 36%;

Retention a Record 81%

OAKLAND, CA, August 1, 2018 – The Association of Fitness Studios (AFS)

announced today the release of its 4th annual financial research study on the fitness

studio market.

European Studio concepts based on PT / Small Group Training

• Bifurcating market (self service / full service )

• Discerning customer (complete customer journey)

• Specialised and purposeful environment (do one thing – excellently)

• Business model architecture (location, ambiance, top staff, pay&play)

• Enabling technology ( booking, paying, engagement, etc. on smartphone)

• Entrepreneurship (millenials, franchise)

6 Key Reasons for popularity Boutiques

The European Health & Fitness Market Report 2018

252018 Deloitte

MarketsGermany and the UK are the two largest markets in Europe

Top 10 European health and fitness markets by revenue, 2017

2

0

6

4

1

5

3

DE

5.2

RUESIT

2.2

NLUK

5.1

SE

1.3

0.9

PL CH

0.9 0.8

2.2

FR

2.5

0.9

23 others

4.5

+ 3.0%

€ in bn; Change in revenue at constant currency

+ 6.8% + 2.0% + 1.3% + 2.9% + 1.6% + 0.9% + 4.9% + 3.4% n/a

Constant currency growth rates:

83% of total European market 17%

262018 Deloitte

Ecosystem fitness sector 2018

Online gyms

Fitness apps

Wearable devices

Outdoor fitness

Novelty races

Fitness aggregators

Non-

stationary

Stationary

Boutique & micro clubs

282018 Deloitte

OutlookProjecting annual membership growth of 3.7%, European market is on pace to reach or surpass 80 million members by 2025

Projected membership development of the European fitness market, 2017-25

Projection

# in m

0

60

90

30

81.9

80.0

20242023202220212020 202520192017

60.057.7

60.0

2016 2018

57.7

+4.0%

+4.0%

+3.7%

292018 Deloitte

Outlook

The Health and Fitness market in 2018 and beyond

Global Fitness market on pace for 250 million members in 2025

Budget segment and boutiques are the main drivers behind market growth

Increasing market consolidation

Health & fitness as a megatrend

Emergence of non-stationary and hybrid fitness models

30

-100%

-50%

0%

50%

100%

150%

200%

250%

The Gym Group Basic-Fit Actic Group Planet Fitness Benefit Systems Technogym

Investors love fitness!Indexed stock price development of selected companies

Brexit23 June 16

IPO Actic Group AB7 April 17

IPO Basic-Fit10 June 16

IPO Technogym3 May 16

Note: Benefit Systems IPO was on 21.04.11 and Planet Fitness IPO was on 06.08.2015. For illustration purposes, indexed stock prices are only presented from November 2015

Source: Yahoo Finance, The Wall Street Journal

Nov15 Mar16 Jul16 Nov16 Mar17 Jul17 Nov17 Mar18 Jul18

Why investors love the fitness business

• Supports global healthy lifestyle trend

• Large and growing market

• Proven track record of key players

• Predictable cashflow

• Increasing awareness of exercise benefits / healthy lifestyle

• Fragmented supply side; Opportunities for consolidation

• Opportunities for international / global growth

• Opportunities for non-dues revenues

• Innovation & Technology enabling efficiency & (new) customer engagement

Desbonnets Gym in Paris - 1811

WORLDWIDE SURVEY OF

2018 FITNESS TRENDS -

ACSM

1. HIIT ( High Intensity Interval Training)

2. ( Small) Group training

3. Wearable tech

4. Bodyweight training

5. Strength training

6. Educated, certified, and experienced

fitness professionals

7. Yoga

8. Personal Training

9. Fitness Programs for older adults

10. Functional fitness

THE 2019 FITNESS FORECAST

Equinox Health Advisory Board

1

2

3

4

5

6

7

8

Resiliency training will gain traction.

Stem cells will go mainstream.

Health business will create a focus on preventing disease.

Next-gen technologies will help us understand our bodies better.

Tracking will be put to more meaningful use.

We'll learn to fight Alzheimer's earlier.

We'll take air pollution seriously.

It'll be the year of the 'every woman'

Non-Fitness Businesses Affecting Fitness:

• Health ( Government, Insurance, Medical )

• Nike, Under Armour, etc.

• Smart-tech – wearables, data-tracking, software

• All things on-demand

TRENDS

TRENDS

• Convenience is the new currency – fitness snacking

• Ecosphere of care – wellness, schedule, medical interactions –one integrated platform

• 24/7 on-demand lifestyle modification, nutritional support

• Line extensions to generate income without additional overhead

• Home is the new studio ( Peloton- $ 550MM funding, IPO plans)

• Fitbit, Apple Watch, Samsung Gear Fit, Xiaomi

• Cloud connected Fitbit, Gymkit, Wellness Cloud, HALO, Preva, etc.

• AI, AR, VR

In addition to Tech;

Attention for staff; High Tech > High Touch!

Key take aways industry

The Ugly

• Competition on Price

• Short termerism / Too much focus on financial results

• “Fishing in the same pond” – lack of creating new targetgroups

• Attrition – on average clubs loose 50% of members after 1 year

The Bad;

• Not enough focus on what the customer wants

• Service quality ( if asked, we do not listen or deliver…)

• Staff churn; not enough investment ( Life Long Learning / Career)

• Lack of Life Long Learning ( Professional Development)

The Good;

• Mega trends support overall continued growth

• Opportunities for new targetgroups

• Governments, medical world and healthinsurance support sector

• Increased professionalism

• Technological Innovation

Thank you for your attention

herman.rutgers@europeactive.eu

The Future is Bright; Cheers to doubling African fitness

market by 2025 !

Back up slides

Once per month a postcard with one piece of information…

What figure/information would you like to get?

Hypothesis; 6 Months on a deserted Island, no mobile no internet…

KPI / Key Performance Indicators

Profit (net profit, EBIT or EBITDA)

Cash Flow

Turnover

Number of new members

Net members gain

Expenses / Costs

Margin

Retention

Staff churn

Etc.

Absolute or difference vs budget / last year

2018 Deloitte 54

© 2018 ·55

Mind

Mouth

Muscle

Dr Pamela Peeke’s 3 M’s Principle

56