De Leede on Regionalization

Tony de Leede, head of Australian Body Works, knows what it's like to be a strong regional player. Starting with one location in 1982, he has grown his business to 23 clubs in the Atlanta area-with clubs 24, 25 and 26 currently under construction.

"If you are a club group in a large city, you really only have two options: grow rapidly and become a strong regional player, or roll up and sell out," says de Leede.

Australian Body Works went with the former option. With so many locations bearing its name, Australian Body Works has become almost synonymous with fitness in the Atlanta market. Furthermore, de Leede has made Australian Body Works an active member of the community. He and his team have also cultivated relationships with the local media.

"We get more coverage from the media than all of our competitors combined," de Leede claims. "There is nothing more credible than getting endorsements from the media."

All of the attention given to Australian Body Works has barred some would-be competitors from the Atlanta marketplace, according to de Leede. He reports that some club operators have sniffed out his market but decided that there are easier battles to fight elsewhere.

This doesn't mean that Australian Body Works owns Atlanta. Last year, Crunch bought out Sportslife, a six-club chain in the Atlanta area. And both Bally and Gold's Gym have a strong presence as well.

Although Bally and Crunch are larger than Australian Body Works in terms of members and revenue, de Leede finds that most people don't seem to notice. Australian Body Works may not have the biggest numbers, he says, but it does make the biggest noise. "The perception is that we are the biggest," he claims.

With its 23 and growing locations, Australian Body Works has been able to build strong regional relationships with local HMOs and corporations, two markets that promise high growth, in de Leede's opinion. When Australian Body Works signs up a corporation, the club chain will probably have a location near all of its employees. This convenience has been a boon for the chain's corporate business. "We have more than 400 companies," de Leede reports.

This convenience has also aided Australian Body Works' HMO business. When HMOs subsidize, they want their members to be able to get to the club. With so many Australian Body Works locations to choose, they can.

In addition to locations, Australian Body Works' Heart Smart Program has been a tremendous benefit to its corporate and HMO business. The program teaches members how to exercise for a healthy heart. This interests HMOs, since heart-related problems are very expensive. And corporations sit up and take notice because heart attacks are common killers of upper-level executives with high-stress positions.

Visibility, publicity, locations, programming-all of these things can turn a club into a powerful regional force. There's one other thing to add to the mix: people.

Australian Body Works rewards both management and loyal, long-time employees with stock and stock options. This is a good way to build a solid team, while giving employees an incentive to see that the company performs optimally. Optimum performance is a must for any club that hopes to become a regional leader.