As Economic Downturn Bites, Can Britain's Health Clubs Keep in Shape? ; NEWS ANALYSIS: Recession? What Recession? the Country's Fitness Industry Is Still Gearing Up for Growth
Mesure, Susie, The Independent (London, England)
THE UK fitness industry has never been healthier. Brits up and down the country can't seem to get enough of the health and fitness fad that has swept the nation over the last five years. But as the bear market threatens to develop into a full-blown recession, on both sides of the Atlantic, investors fear that consumer belt- tightening could leave fitness club operators exposed to cuts in leisure spending.
Already this week, the troubled women-only fitness chain, Lady in Leisure, called in the administrators and De Vere, the hotels group, put its premium health and fitness clubs business, Greens, up for sale for pounds 50m to pounds 70m. Likely buyers of the 10 club- package include Canons, Esporta and Whitbread, all rival operators of premium fitness chains.
For now, however, the current desire to fight the flab shows little sign of abating. The health and fitness industry is buoyant and there is no evidence of a downturn. Interim results last week from Holmes Place, an operator of 56 premium clubs, saw like-for- like sales in UK clubs open more than a year surge by 14 per cent as membership levels rose 38 per cent to 228,000. Its retention rates were among the highest in the industry at 60 per cent.
Leisure analysts argue the sector is well positioned to deal with a downturn because health and fitness spending is no longer considered a luxury but a necessity. Hugh-Guy Lorriman, a sector analyst at HSBC Holdings, said of fitness clubs: "They've become a lifestyle product rather than a discretionary product."
Simeon Singer at Investec Henderson Crosthwaite said: "What we're seeing in the UK is significantly more people getting into health and fitness, which says there is significant latent demand in the market."
The most recent figures from Mintel, the market research group, predict that the proportion of the UK population that are gym members will rise to 8 per cent by 2003 from around 6 per cent today. The industry expects to make pounds 1.68bn in revenues this year, rising to pounds 3.2bn by 2006.
Although there is no historic parallel in the UK of how fitness operators will fare if the economic downturn escalates, evidence from the US, which is some six months further down the line, suggests consumers will be reluctant to cut healthclub spending. Bally Total Fitness, the world's biggest fitness company, recently reported strong second-quarter results with like-for- likes surging ahead across the board. During the last recession, in the early Nineties, membership of US health clubs declined by just 5 per cent.
Mike Balfour, chief executive of Fitness First, said: "Health club membership is not something that people just suddenly give up. In times of problems, health club usage increases."
This could help operators drive up those all important retention rates - currently running at 50 per …
Questia, a part of Gale, Cengage Learning. www.questia.com
Publication information: Article title: As Economic Downturn Bites, Can Britain's Health Clubs Keep in Shape? ; NEWS ANALYSIS: Recession? What Recession? the Country's Fitness Industry Is Still Gearing Up for Growth. Contributors: Mesure, Susie - Author. Newspaper title: The Independent (London, England). Publication date: September 12, 2001. Page number: 19. © 2009 The Independent - London. Provided by ProQuest LLC. All Rights Reserved.