Smaiyra Million, CEO of Millennium Partners Sports Club Management LLC, has helped the company's six Sports Club/LA locations weather the recession and is now moving the company into expansion mode. Photo courtesy of Millennium Partners.

The first rule to surviving in the luxury club market during a recession is to stop calling your club a luxury club. Instead, call it a lifestyle brand.

That’s what Smaiyra (pronounced Smy-ra) Million, CEO of Millennium Partners Sports Club Management LLC, has learned. After 25 years in the hotel business (with the Ritz-Carlton Hotel Co.), the spa business (with Candelas Spas) and now the high-end club market (with Millennium’s Sports Club/LA clubs), Million knows a little something about luxury and branding. And with the recent recession, she’s learned how to market that luxury so that it is not perceived as a discretionary spend.

Efforts put in place by Million and former CEO Art Curtis, who now works for real-estate developer and Millennium’s parent company Millennium Partners on mergers and acquisitions of health clubs, plan to grow the company at a time when many club companies have chosen to drop their membership prices or open low-priced club alternatives.

Instead, Million and her team repositioned the Sports Club/LA brand from a luxury brand to a lifestyle brand after market research showed that people had a negative response to the word luxury during the recession. So, the company, which previously had referred to its six clubs as “urban country clubs,” stopped using that phrase and “luxury” in its ad campaigns.

“We don’t try to downplay the fact that we do have extras and that we do pay attention to the individual needs of our very discerning customers, but we just don’t talk about it as a luxury because a luxury is something that most people think they should be doing without,” Million says. Instead, the company’s ad campaign focuses on how health and fitness are essentials of life and, therefore, must be commitments rather than à la carte items that can be easily removed.

“It’s something that you need to do as a part of living and breathing,” she says.

The campaign is beginning to pay off. Prior to the recession, attrition at most of the Sports Club/LA locations, which are in New York, Boston, San Francisco, Miami and Washington, DC, averaged about 30 percent, with the Reebok Sports Club/NY location averaging about 21 percent. In 2009, at the height of the recession, attrition rose as high as 37 percent, but by the end of 2010, it had dropped to 35 percent, Million says.

That attrition was partly the cause for a 10 percent drop in revenue in 2010. Million would not reveal revenue numbers for the private company, but Millennium reported its 2008 revenue was $114.7 million when it submitted for Club Industry’s Top 100 clubs list. The company did not report its 2009 revenue for the next year’s list, but Club Industry estimated a 4 percent decline that year due to the recession, bumping it down to $110 million.

Another factor in the loss was a decline in ancillary revenue as members purchased smaller private training and programming packages. The hit was perhaps larger for Millennium than for some other companies, as 35 percent of its revenue is from ancillary services.

To overcome these obstacles, Million, Curtis and their team implemented several initiatives that Million projects will increase revenue in 2011 by 5 percent over 2010. Most of those efforts involve focusing on the customer.

NEXT PAGE: IMPROVING ATTRITION

Want to use this article? Click here for options!
© 2012 Penton Media Inc.