It all started with squash. No, not that vegetable that sneaky neighbors dump on your front steps when they have a surplus. Squash — the racquet sport traditionally played by the upper crust.
Town Sports International (TSI) began as the first commercial squash club in New York City in 1974. Before that, people could play only through private clubs. Soon after, the company opened two more squash clubs in New York and one in Washington, D.C. The focus on squash changed when CEO Bob Giardina joined the company in 1981. He brought with him fitness industry experience from his work at health clubs in Florida.
“I started to bring some of the [health club] concepts to TSI,” he says, and the company started converting the squash clubs into fitness clubs.
TSI grew slowly from 1981 to 1996, expanding from four locations to 28 locations, but that slow growth took off after a management buyout of the company in 1996. Since then, the company has grown to 132 facilities operating under the brand names New York Sports Clubs, Boston Sports Clubs, Washington Sports Clubs and Philadelphia Sports Clubs. “At that point, the management team was strong, the model was perfected, and we understood the markets we wanted to be in,” says Giardina. “The opportunity came up to do a management buyout, and we found the right sponsor. So we knew what we wanted to do, and we finally had access to the capital.”
Today, there are 90 New York Sports Clubs, 19 Boston Sports Clubs, 16 Washington (D.C.) Sports Clubs, and six Philadelphia Sports Clubs. And although it's a regional player, the company has become the country's third largest health fitness company (based on revenue). The company's successful growth over the years is a result of many things, including its innovative fitness programs, well-trained staff, dedication to quality and service and continual facility improvement.
It's also a result of the company understanding the market, which is what helps TSI keep its membership numbers strong — 365,000 members strong to be exact. “We spend a lot of time looking at the demographics of different locations, as well as surveying our existing members and members who are leaving to find out their likes and dislikes,” says Giardina. “A lot of our clubs will have unique programs based on markets. We have 150 different types of classes, and we mix them up depending on the market.”
Suburban locations get more into family activities while urban locations are more into core fitness, he says. TSI offers Sports Club for Kids in 20 suburban locations, which includes gymnastics, kids' spinning classes, birthday parties and swimming parties.
For markets with time-strapped members, TSI instituted the XpressLine two years ago. The XpressLine is a 22-minute workout using nine machines — one per body part — that is trainer supervised.
Another part of TSI's approach to keeping its markets happy is to keep up with what's new. The company continually researches new classes and equipment, evaluating techniques to learn what works and what doesn't. The clubs encourage new members to sign up for a free session with one of the trainers for a personal fitness workout during which a customer's goals, habits and needs are evaluated.
As TSI grew, it could have gone the easy route and required its members to sign long-term contracts. Instead, TSI instituted a month-to-month payment plan where members could pay by the month and leave at any time.
“Most clubs were selling only one- to three-year plans, and for consumers, it was an obstacle. Our plan made it easy for the consumer to make a decision,” says Giardina. “And it put the pressure back on us; if we didn't deliver the product they wanted, they could leave.”
About six months ago, TSI started offering one-year and two-year contracts in addition to the month-to-month plan. “If members want to make a commitment, we give them a discount,” says Giardina. “It's all about giving consumers more choices.”
Besides offering a variety of membership plans, TSI was one of the first to offer electronic funds transfer in the early 1980s. “So first we had to convince people to buy a membership, and then to use EFT, which is what everyone does now,” Giardina says.
Although the TSI clubs range from 10,000 to 200,000 square feet, the equipment in each club is the same, with only the amount of each type of equipment changing. Because 55 percent of the club's members use more than one location — and many of their clubs are in the commuter area between Boston and Washington, D.C. — consistency is key in programming and equipment, says Giardina. Gym layouts and equipment are similar at TSI clubs so that members know what to expect, but each club has its own personality.
TSI changes out its equipment every three years. The company trades the old cardio equipment back to the manufacturers and donates the used strength training equipment to fire houses, police stations and schools.
TSI boasts 150 types of classes. Members can try a different group fitness class every day of the week if they like, including classes such as total body conditioning, boxing, ballet, jump rope jam, power funk or Pilates. More than 5,000 classes are offered weekly throughout the TSI network. The company focuses on creating exercise classes that are accessible to every member, no matter what his or her current fitness level or experience. TSI has developed exclusive programs that give members classes — such as the New York City Ballet Workout and Club Series classes — that they won't find at any other gym.
A business is only as good as its employees, so TSI makes sure that its workers have every opportunity to learn and grow. TSI has developed an in-house training and development program that provides staff with the fundamental skills, training and enthusiasm necessary to deliver TSI's programs and services. TSI offers mandatory and optional trainings on specific TSI programs that afford additional work opportunities. All members of the TSI staff have many opportunities to continue their education and to increase their current skill set. In addition, the company has formed strategic relationships with industry educational leaders to ensure that employees are coached to do their best.
TSI believes in giving back to the communities it serves. Over the years, the company has made substantial donations to organizations such as the American Red Cross and the Make-A-Wish Foundation. In addition, TSI has been actively involved with the Fire Department of New York, providing firefighter candidates with free memberships along with training to prepare for the Fire Department of New York physical exam. That involvement is worth more than $4 million.
“We're committed to making a difference in the cities we live in and serve,” says Giardina.
And Giardina plans to stick to the communities TSI already serves. When asked if TSI planned to expand to other markets, the answer was a resounding “No” — even though Giardina hopes to expand the company by 10 percent over the next five years.
“We see opportunity within this market,” he says. “We have strong mapping software to see where our members join and where they live, and we can look at markets we're not serving right now. We get more economies of scale if we operate within our markets because we use the same management, the same advertising and so on.”
On the other hand, a club entering a new market must start from scratch building brand awareness — and why do that when there are untapped markets in the company's current locations?