Health and Fitness Clubs - US - June 2009

Table of Contents

• Scope and Themes
• What you need to know
• Definition
• Data sources
• Sales data
• Consumer survey data
• Advertising creative
• Abbreviations and terms
• Abbreviations
• Terms
• Executive Summary
• Industry sees membership growth and revenue stabilization
• Memberships hold steady in 2009 but likely to decline as contracts expire
• Performance of leading national chains is mixed
• Smaller footprint clubs and home fitness games gain momentum
• Health clubs borrow ideas from art and entertainment
• Innovations follow larger societal trends
• Ad campaigns push low price points and appeal to the everyday consumer
• Core demographic of 18-35 year olds pays the most and is hardest to please
• Financial constraints are greatest barrier to new membership and renewal
• Perception of health clubs show signs of improvement
• Market Size and Forecast
• Key points
• Health club revenues hold ground despite slowing economy
  • Figure 1: Health and fitness clubs' total revenues, at current prices, 2003-13
  • Figure 2: Health and fitness clubs' total revenues, at inflation-adjusted prices, 2003-13
• Membership begins to catch up to physical club expansion
  • Figure 3: U.S. health and fitness club membership and number of locations, 2003-08
• Competitive Context
• Clubs with smaller footprint growing faster
• Participation in "free" sports increases
• Prolonged recession favors lower-cost clubs over mid-priced
• New home fitness video game targets women
• Gaming for seniors
• Segment Performance
• Key point
• Non-profit segment sees biggest gain in membership
  • Figure 4: Memberships in health and fitness clubs, by segment, 2006 and 2007
• Market Drivers
• Membership holds steady for now
  • Figure 5: Health club membership status, 2008 & 2009
• Saturation of health club leads to highly competitive pricing
  • Figure 6: Number of health clubs and revenue per member, 2002-06
• Initiation fees and personal training suffer most
• Town Sports International
  • Figure 7: Revenue stream growth at town sports international, Q1 2008 & Q1 2009
• Life Time Fitness
  • Figure 8: Revenue stream growth at Life Time Fitness, Q1 2008 & Q1 2009
• Leading Companies
• Key points
• Leading health club chains post mixed performance
  • Figure 9: Sales of leading health and fitness club chains, 2006 and 2008
• 24 Hour Fitness targets the family value market
• Two top chains enter bankruptcy
• Life Time Fitness and TSI show increase membership but curb expansion plans
• Brand Qualities
• UFC launches gym brand
• Innovation and Innovators
• Group classes: Crunch spreads wings with anti-gravity yoga
• Social networking: Health clubs to tweet to broader audience
• Going green
• Chelsea Piers announces dedication to green goals
• University recreational facilities finding innovative ways to be environmentally conscious
• Computerized training: Koko FitClub provides personalized fitness dashboard
• Advertising and Promotion
• Major ad campaigns cut back on media spend
  • Figure 10: Media expenditures for major health and fitness club campaigns, 2006-07
• Gyms continue to compete on price points in a difficult economy
  • Figure 11: Bally Total Fitness: Free Enrollment, April 2009
  • Figure 12: Planet Fitness: One Dollar Promotion, April 2009
• Gyms seek to inspire the ordinary consumer
  • Figure 13: 24 Hour Fitness: Ali Vincent Testimonial, January 2009
  • Figure 14: Gold' s Gym: Rowing Off Calories, March 2009
• Female-focused concepts push strength and confidence
  • Figure 15: Women' s Workout World, January 2009
• Local advertising offers new approaches
  • Figure 16: American Family Fitness Centers: Son Has Cancer, January 2009
  • Figure 17: OZ Fitness: Free Groceries, March 2009
• Health Club Usage Trends
• Key points
• Private club penetration increases among under-45s
  • Figure 18: Incidence of exercise and private health club usage, by age, May 2006-September 2008
• Membership holds steady from a year ago but new memberships slowing
  • Figure 19: Health club membership status, 2008 & 2009
• Respondents 18-34 remain the core demographic but are more difficult to retain
  • Figure 20: Health club membership status, by age, March 2009
• Household income remains the largest determining factor of membership
  • Figure 21: Health club membership status, by HH income, March 2009
• Membership Types
• Key points
• Month-to-month memberships decline as recession favors long-term contracts
  • Figure 22: Type and cost of health club memberships, by year, 2008 and 2009
• Females pay less on average and may favor smaller gyms
  • Figure 23: Type and cost of health club memberships, by gender, March 2009
• Younger respondents spend more on membership and are more likely targets for high-end
  • Figure 24: Type and cost of health club memberships, by age, March 2009
• Middle-income group seeks value in long-term contracts
  • Figure 25: Type and cost of health club memberships, by HH income, March 2009
• Reasons Not to Join a Health Club
• Key points
• Cost remains primary barrier to membership
  • Figure 26: Reasons for not belonging to a gym, 2008-09
• Females may feel more welcome but increasingly look for free alternatives
  • Figure 27: Reasons for not belonging to a gym, by gender, March 2009
• Perception of health club value improved among over-35s
  • Figure 28: Reasons for not belonging to a gym, by age, March 2009
• Gyms commonly perceived as too expensive even among higher-earners
  • Figure 29: Reasons for not belonging to a gym, by HH income, March 2009
• Membership Renewal
• Key points
• Large majority of current members would renew
  • Figure 30: Probability of renewal, by gender, March 2009
• Over-55s are more likely to renew
  • Figure 31: Probability of renewal, by age, March 2009
• Lower earners show lowest likelihood of renewing
  • Figure 32: Probability of renewal, by HH income, March 2009
• Most common reasons for not renewing are financially driven
  • Figure 33: Reasons not to renew, March 2009
• Price discounts are most likely way to increase renewal rates
  • Figure 34: Reasons not to renew, March 2009
• Attitudes
• Key points
• Perception of health clubs improves but turnover rate is unchanged
  • Figure 35: Attitudes towards health and fitness clubs, March 2009
• Female demographic is more price sensitive and feels more time pressure
  • Figure 36: Attitudes towards health and fitness clubs, by gender, March 2009
• Social environment is more important for over-55s, while under-35s are harder to please
  • Figure 37: Attitudes toward health and fitness clubs, by age, March 2009
• Appendix: Other Useful Consumer Tables
• Probability of renewal
  • Figure 51: Probability of renewal, by gender, March 2009
• Attitudes toward health and fitness clubs
  • Figure 52: Attitudes towards health and fitness clubs, by HH income, March 2009
• Appendix: Trade Associations