This quartet of industry experts will be among those leading the way in the new year.
President of Management Vision Inc., New York, and chairman of Spectrum Clubs International, Los Angeles
You would be hard-pressed to find someone more knowledgeable in the health and fitness industry than Rick Caro. He spent his first 11 years in the industry as an owner/operator of health clubs, and the past 15 years as a full-time consultant. Recently, Caro has undertaken a new endeavor in the industry. He has created a new company - Spectrum Clubs International - along with the Los Angeles-based investment firm of Brentwood Associates.
The company's goal is to grow by acquiring existing, well-managed club clusters with a strong presence in a local market, history of financial success and growth potential. Currently, Spectrum Clubs International has 18 clubs for a total of $60 million in club revenue. "Our goal is to be $300 to $500 million in revenue in three to five years," states Caro. "And my role is to help identify growth opportunities in existing and new regions, and to develop value-added opportunities and strategic alliances for the company."
Caro emphasizes that the goal of Spectrum is not to acquire a club and take over complete control, but rather serve as a support mechanism. And as the company grows, it will look for the best practices outside of the industry and inside its own clusters of clubs to build strength and consistency within its facilities. "When you have critical mass behind you, that allows you to invent or at least edit how things were done before to find new way of operating and give members a fuller fitness club experience," explains Caro.
As for the future of the fitness industry, Caro speculates that the concept of exercise is going to gain much greater favor among people of all ages, abilities and ethnic backgrounds. And due to this he thinks we will see a greater emphasis by insurance companies to support exercise in the form of special insurance rates or subsidized membership rates for corporations. He also sees consolidation within the industry continuing, and an increase in international and global companies, as well as other sectors of the fitness industry such as apartments/condos, parks and recreational facilities, corporate fitness facilities and senior centers.
President and CEO of Gold's Gym Investments, Washington, D.C. area
Kirk Galiani and his brother jumped feetfirst into the club business in 1990 when they bought their first Gold's Gym and grew their small organization to 10 Gold's Gyms. Now as the new president and CEO of Gold's Gym Investments, he 34-year-old Galiani is ready to take the industry by storm.
According to Galiani, Gold's has evolved into an American icon despite some of the management and financial backing it has had. "It was really a small kind of sleepy company that was internally divided in many ways," he explains. "They didn't give their gyms a lot of support, just the rights to use the name."
But that is all in the past, and Galiani is ready to turn the company around with his new goals. "We want to increase the amount of clubs that franchise from 535 to 1,000 and the number of corporately owned facilities from nine to 150 in five years," he emphasizes. "I see the company as made up of three tiers: franchising, corporately owned facilities and licensing. We have to do a much better job in the licensing area, and we have a number of people who want to come on board to help us grow this area."
Galiani and his partners are doing a lot of serious negotiating with national companies to get national accounts so that their gyms can expand, renovate or open a new facilities at a greatly reduced cost. "We are saying to companies, 'If you want to be part of this major growing company, we want better customer service, better warranties and better discounts,' " he states. "We are also going to give our clubs a lot more training. I know how to run clubs."
As far as the Gold's gym image goes, Galiani believes that the company's name stands for serious fitness. On the other hand, he realizes that the company's image needs to be more main-stream and has hired a firm to help with Gold's branding.
"We feel that Gold's has a great name and is still a very good brand that is just going to get better," Galiani states confidently.
CEO, Town Sports International, New York
When Mark Smith joined Town Sports International (TSI) in 1985, it consisted of five squash club that were starting to add fitness services. In 1996, when Smith and his partners did a management buyout and brought in venture capital money to grow the chain more rapidly, the number of clubs was 28. Since the buyout, TSI has grown to 83 clubs.
"We operate under localized brand names [New York, Boston, Philadelphia and Washington Sports Clubs]," explains Smith. "A localized brand name fosters recognition in the community that we are a local network of quality fitness clubs rather than a big national chain."
Smith states that while TSI is content at the moment with being a super regional chain between the Massachusetts and northern Virginia area, the company isn't finished yet. "We want to be the dominant health club in that market, and we selected that market because of the strength of the demographic population density and income," he relates. "There is a lot more we can do in that area, and we intend to rapidly penetrate that market and dominate it. But we also believe there are other metropolitan areas that we can focus on and develop that strategy."
Smith adds that TSI won't enter a market unless it believes it can develop a cluster of units with at least 12 to 15 clubs in that area. TSI also won't do niche marketing. All of TSI's branding, equipment, layout and structure is designed to cater to the broadest possible market - in as non-threatening an environment as possible.
That fits in with Smith's view of where he see the industry going. "I think it's an umbrella concept where a health club can become a fairly complete health and fitness provider to its member base, if the health club community is behind the IHRSA goal of 50 million members by 2010," notes Smith. "We have the ability through the technology that the Internet and web bring to us to really act as the focal point for our customers' health and fitness needs."
Jill Stevens Kinney
President/COO, Club One, San Francisco
Jill Stevens Kinney started Club One in 1990 with her husband, John, and expanded the company from two fitness centers in downtown San Francisco to 43 sites. Over the years the company has also become a dominant player in on-site corporate fitness. "We've grown from about $12 million in sales a year ago, and today we are running at $45 million in sales," details Kinney. "We are anticipating doubling the size of the company next year. We plan to become a $300 million club company that specializes in the high-quality fitness segment of the marketplace."
In addition to a regional base in San Francisco that serves the company's northern clubs, Club One recently started a second regional base in San Diego that serves its southern sites. To expand into this latter market, Club One acquired seven leading health clubs in San Diego: Frog's, a four-club company known for its innovative fitness program, and Fitness Advantage, a three-club company known for its exceptional aquatic centers.
And Club One's growth isn't over. "We plan to grow both of those regions and add additional regions," says Kinney.
Part of Club One's success has been its marketplace focus: high-quality fitness for successful baby boomers. "We tend to offer programs that are results-oriented, and [baby boomers] look for result-driven programs, and they also tend to be more particular about the quality of service and level of amenities," Kinney says.
Kinney notes that the best part of the industry's future is that everyone is learning to take advantage of market segmentation. "[The industry] hasn't put a lot of emphasis on it until now. The nice thing that is happening is that people are learning how to segment a specific niche and develop a business around that specific market."