What is in this article?:
To reach out to a new market, health clubs must make a more concentrated effort to approach members’ well-being as a whole, rather than focusing solely on exercise.
The Bottom Line
The costs and benefits of expanding a club’s scope vary greatly, depending on the level of services offered and how they are managed.
A partnership like this one has a relatively low financial expense. Aside from marketing costs shared by the partners, the greatest commitment is in time. The additional membership revenue resulting from hospital referrals is easy to measure, but the financial impact of the public relations boost that the club receives from its community events is incalculable.
Adding services incurs more of an outlay. Medical rehab machines, such as those used at Gainesville, can run $50,000 to $60,000. Hiring qualified therapists is another expense. However, when managed well, these services can eventually become very profitable. When Cirulli first took over the hospital rehab facility that is now part of ReQuest, it grossed twice what Gainesville’s rehab services did but still made less money. Cirulli says Gainesville’s rehab services now yield 20 percent profit.
It can take years to realize the profits from incorporating a new program or service, especially if the revenue comes indirectly. PREP, which ACAC started in 2004, has enrolled 2,000 participants in the Charlottesville facility to date. Wendel says that the approximately $120,000 in gross revenue from the program sales covers just the amount it takes the club to run the program. The true value to the club comes from the new members PREP brings in.
“Based on our historical data, we know that at least 40 percent of PREP participants become club members,” Wendel says. “Their average tenure is 30 months, and their average dues and peripheral sales are $135 a month. Therefore, our long-term projection for the 1,979 participants in Charlottesville in 2010 is $3.2 million.”
With such significant revenues possible, encouraging those who need these wellness services to step through the doors of fitness clubs could not only benefit the millions of Americans suffering from what Pilzer calls “voluntary poor health,” it could make the club industry’s bottom line a little healthier, too.
