The news the health club industry and the rest of the country had been yearning to hear all year finally arrived on Sept. 20, courtesy of the National Bureau of Economic Research: The recession had ended.

In fact, the official recession ended in June 2009 after 18 long months, according to the organization.

That was little solace to the fitness industry, which continued to struggle with a lagging economy in which unemployment remained at 9.5 percent or above nationwide. Although some clubs opened, others closed, and Americans thought long and hard about keeping their club memberships or joining a health club at all.

Whether as a result of the recession or the growth and popularity of $10-a-month Planet Fitness, the industry made a definitive push in the low-price arena, highlighted by new Crunch franchise clubs on the West Coast and Equinox-branded Blink clubs on the East Coast. A chain of North Carolina clubs, ZX Fitness (formerly Peak Fitness), also went the low-price route.

Other brands began offering discounted memberships as well. 24 Hour Fitness, San Ramon, CA, offers a two-year membership to Costco members for $299, which comes to $12.50 a month. Bally Total Fitness, Chicago, offered memberships for as low as $19.99 without the three-year contract it had required in the past. Town Sports International (TSI), New York, introduced a $20-a-month model at one of its underperforming clubs in September.

The surge in low-price clubs was Club Industry’s top story in 2010. On the following pages, we also outline the other top headlines and review the big stories in the nonprofit, university and military sectors.

Low-price clubs are nothing new to the industry, as Crunch CEO Jim Rowley points out. Rowley and Mark Mastrov, co-founders of New Evolution Ventures, Lafayette, CA, have operated New York-based Crunch since acquiring it out of bankruptcy last year. Rowley says he and Mastrov tested a low-price model when they were at 24 Hour Fitness and had a low-price version of Crunch in mind when they took over the brand.

“This low-price thing, everybody tries to act like it’s been around for five years or so,” Rowley says. “There have been low-price offerings for the better part of 25 years in the fitness space. Family Fitness was one of the pioneers of low-price offerings in the 1980s and into the 1990s.”

However, there hasn’t been a period in the industry’s history in which so many low-price options have popped up so quickly. For that reason, and for the reason that the new low-price model is predicated on a high volume of members, it is hard to gauge how long this trend will last or how successful it will be, says industry consultant Rick Caro, president of Management Vision.

“There’s no guarantee that because someone opens up a facility in a different segment, such as the high-volume, low-price segment, that it automatically will work,” Caro says. “Like all businesses, it requires not only the fundamentals—having the proper market characteristics, having proper capitalization, having proper business acumen and systems, and staying differentiated over time—but the challenge also is one of a long-run solution. This segment is still very new to the club industry. This one is still in its infancy. We don’t know what happens after five years, seven years or 10 years.”

NEXT PAGE: TYPICAL LOW-PRICE CLUB MEMBERS 

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