Q: Can you tell me about the deal you recently announced in relation to the club you are building in Carlsbad, CA?
A: We are buying an additional six acres next to it and remodeling an existing 80-room hotel and banquet/meeting space to go with it. It might be named Pacific Sports Resort. We are buying the whole thing and focusing it on the club and marketing it through our membership. Carlsbad is a terrifically dense (in population), light-industrial area. All the golf manufacturers are there and a lot of ski manufacturers. As a result, there are plenty of demands for meeting space, and they'll enjoy the benefits of the meeting space. The club will be 100,000 square feet with tennis, swimming, dining and what our typical resort product is.
Q: Do you plan to purchase/build more clubs in the next two years?
A: Yes, we do. That club (Carlsbad) is still empty land. It will take two years to be up and running. We are also working on another piece of raw land, and we are working on the purchase of another club.
Q: Is expansion important to you?
A: We've always focused on thoughtful expansion. Not expansion for expansion's sake, but when we find clubs that make sense for us, we expand. We've never not tried to expand. But we are also always willing to sell and move in and out of clubs. We sold three clubs in Seattle last January (2006). But we're expanding into existing markets that we're in with bigger clubs.
Q: Why are you expanding with bigger clubs in those markets?
A: The question is, why do you want to expand at all? You either expand or shrink. It gives employees a lot more room for growth. We have a low attrition rate for employees. When they are here for five to 10 years, it gives them more job opportunities.
Big clubs make sense for us. They are hard to duplicate. We know how to build them and what demographics we need. Once you do them, they pretty much control a market.
Q: What changes do you foresee for Western Athletic Clubs during the next five years?
A: The only thing that I know we are going to do is add more of a medical component to our clubs. As our (Baby) Boomers age, I think there's more interest in using our clubs as upstream health care or preventative health care and having a medical component. Staff working closely with personal trainers and behaviorists and nutritionists on staff will add a continuum of care.
Q: Your club company has a philanthropic mission and raised $2.25 million last year for charities. Why is that important to you?
A: Why wouldn't it be? We think it's every business's responsibility to be involved in the community as it is with every individual. We have a mission statement and six value statements, and one is to be involved. Every club has a community outreach director who champions that.
We picked three areas of involvement. One is healthy aging, so we are involved in lots of senior exercise programs in the community. The second is disadvantaged children in our area in need of opportunities.
The third area is disease prevention and care. We focus on breast cancer. One of the things we found out is that when a patient and oncologist talk about treatment programs, one (program they talk about) is to exercise. We offer that at no cost, and we pay for the trainer. We've taken 350 women through that. It's a six-month program for free and then a low-cost program beyond that. Women have raved about that. It helps them during chemotherapy and radiation.
One area that enhances these three is continuing education for our staff. If we “spot” them free training in something — like the cancer training program — then it's implied that they have to go out and do community outreach to pay us back. So it's been a great, successful venture on our part.
Of that $2.25 million, we raised about $1.1 million and matched about that much. So we are involved in cash but also in doing fundraisers.