The largest health club chains look for ways to boost revenue and membership in 2007 through new programming, services and expansion.
Expansion is the target this year for some of the biggest revenue-generating clubs in the U.S. fitness industry.
The editors of Club Industry's Fitness Business Pro asked five of the biggest revenue-generating club companies (based on our 2006 Top 100 club list, which is published each July) about their plans for expansion, renovation and programming; membership pricing; marketing; technology; and their key initiatives for 2007. Although some were reluctant to share their business plans and, therefore, only shared pieces of information, most were open about their goals.
Expansion was one of the biggest efforts cited for the new year by four of the five companies contacted — Bally Total Fitness, Chicago; Crunch Fitness, New York; Town Sports International, New York; and Western Athletic Clubs, San Francisco.
The big players' expansion efforts aren't far from the plans of many fitness facilities this year. A Club Industry's Fitness Business Pro survey of 199 fitness facility owners and managers revealed that 46 percent of owners plan to expand their facilities this year either through acquisitions, expansion of an existing building or opening of a new location (for more details on this study, read “Go Fish,” the 2007 State of the Industry Report on page 32).
However, expansion plans are varied for each of the club companies. Although The Wellbridge Co., Denver, would not reveal any specific expansion plans except that the company was renewing its focus on the club management side of the company, JoAnna Masloski, director of marketing for the company, says Wellbridge expects 5 percent in capital improvements and a projected $70 million in revenue. Wellbridge decreased from 32 owned and seven managed clubs in 2005 to 16 owned and four managed in 2007.
Crunch plans to build as many as four to six clubs annually in its current markets. The company recently invested $13 million in club renovations and will continue to invest in club upgrades.
Town Sports International (TSI), which owns and operates New York Sports Clubs, Boston Sports Clubs, Washington Sports Clubs and Philadelphia Sports Clubs, plans to open 16 clubs this year in Massachusetts, New York, New Jersey, Washington, DC, and Maryland. TSI recently opened its 100th location in Manhattan, NY.
“Our goals are simple: to put health and fitness within easy reach of each and every one of our members,” says Susan Gerson, spokesperson for TSI. “We want to make getting fit convenient, enjoyable and effective for our members.”
Bally, which came in second on the 2006 Top 100 club list and has been dealing with debt and accounting issues for the past several years, plans to expand overseas in 2007, but its expansion plans in the United States will be limited, says Matt Messinger, spokesperson for the company.
“We will look to possibly build in areas where we have a larger presence, but not much will happen in the short term,” he says, noting 2007 expansion will be similar to 2006 efforts. Instead, the company, which has more than 400 owned and franchised clubs, will invest in cosmetic upgrades at its top performing clubs in major U.S. cities.
Although Bally didn't reveal any concrete plans to add any facilities this year, Western Athletic Clubs is steaming ahead with plans to build a new 100,000-square-foot, multipurpose facility in Carlsbad, CA. The facility, which will be built on 12 acres, will feature seven tennis courts, a family pool, an adult pool, a children's wading pool, a basketball gym, multiple group exercise studios and a pro shop. The club, which will focus on youth fitness programs, will also have a full-service day spa offering massage, facials, manicures and pedicures.
Western Athletic Clubs, which opens new clubs every few years, will break ground on the Carlsbad location in 2007 with completion scheduled for the end of 2008.
Each of the Western Athletic Clubs is designed for the community it serves, says Sandy Hoeffer, vice president of Western Athletic Clubs.
“We don't have a cookie cutter formula,” she says. “We take time to develop and market each club. What works in San Francisco won't work in the suburbs of Carlsbad, CA.”
The nation's largest health club chains aren't just expanding physically. Many of them are also looking to expand their demographics. Rather than targeting just the young professional market, they're now targeting more Baby Boomers, seniors and children. Western Athletic Clubs, which has eight clubs in California, focuses on families in its suburban clubs and young professionals in its urban clubs, but seniors are increasingly becoming part of the membership mix.
To capture more of the Baby Boomer market, Western Athletic Clubs will roll out an alternative and traditional medical division within each of its clubs in 2007. The alternative medicine division will include everything from chiropractic services to acupuncture. The clubs will also partner with existing providers in the local community to offer more traditional medical services.
“It's always been important for us to continue to follow and anticipate our members' needs,” says Hoeffer. “Making a medical division available is something that the Baby Boomer market has expressed an interest in and a need for.”
Bally, which has traditionally focused on its core market of 18- to 24-year-olds, will also look for different ways to pull in the senior and children market this year, says Messinger.
To attract these markets to health clubs, however, fitness facilities must broaden the scope of their marketing efforts. Rather than depicting young, fit models and bodybuilders, more club companies' advertising and marketing campaigns are appealing to out-of-shape, everyday clientele.
Bally launched its Meet Your Potential campaign in 2006 to show how real people can get real results from 30 days of exercise. The campaign followed the weight loss and muscle gain of seven participants from 30-year-old new parents looking to lose baby weight to a woman trying to fit into a strapless bridesmaid dress. On the company's Web site, potential members can read their success stories, create a personalized fitness plan and print a pass for a free, two-week membership. This year, the company plans to develop different versions of this campaign, air weekly fitness segments on I-Village Live, an NBC show, and partner with the Discovery Health National Body Challenge.
Crunch, a high-end club chain that was sold by Bally last year, plans to return to its roots for its marketing.
“We are focusing on a resurgence of the core of the Crunch brand when it was first founded — community, diversity, the place where fitness meets entertainment,” says Rebecca Rothman, vice president of marketing for Crunch Fitness.
Rather than focusing its marketing efforts on pulling in new members, Western Athletic Clubs is instead directing its energy on its existing members. Because the bulk of its new members come from referrals, the clubs will offer member referral incentives. The clubs also plan to invest in print advertising rather than radio or TV spots and communicate with their members through targeted e-mail messages. For example, members who express an interest in squash will be added to an e-mail listserve and will be sent messages about upcoming tournaments.
“Our members are in California, and they're very tech savvy, and we have to respond to that,” Hoeffer says. “They expect to be communicated with electronically.”
Technology upgrades are also going beyond member communication at some health clubs nationwide. Crunch plans to improve its audio-visual options at the club level and offer unique programming and equipment. The company will also enhance its Web site and its functionality to better develop the Crunch community, Rothman says.
Each January, new members crowd fitness facilities to keep their health-related resolutions. TSI is targeting people who made healthy New Year's resolutions by launching its Rock the Scales challenge, a free nutrition and fitness program for members.
“This is something new for us,” Gerson says. “We have never offered any type of nutritional advice in the past.”
The eight-week program will help members lose one-two pounds per week via a healthy eating plan and exercise. And if looking and feeling good isn't enough motivation, TSI clubs will also give out prizes to program participants.
TSI, which ranked fourth on Club Industry's Fitness Business Pro's Top 100 club list, will also continue to offer group exercise classes such as the Action Hero Workout, which runs participants through movements and fundamental stunt techniques.
Crunch plans to continue its original group exercise classes, targeting urban dwellers in New York, Los Angeles, San Francisco, Miami, Chicago, Washington, DC, and Atlanta.
Small group training, weight loss programs and specialized training will be part of Western Athletic Club's three-pronged approach to programming in the New Year. The clubs are offering programs that target specific interests such as triathlete training and new mom exercise classes. Hoeffer also expects personal training to be hot this year.
“Members are really embracing personal training, and it often happens in two's or three's rather than one-on-one,” she says.
The Wellbridge Co. also plans to expand its personal training and Pilates programming in 2007, says Masloski of Wellbridge.
All of this physical expansion and increased investment in marketing and programming efforts might lead one to believe that membership rates will rise for the large players. However, most of the big clubs kept their membership pricing plans under wraps.
Hoeffer of Western Athletic Clubs was the only one to reveal that the club company, which has 30,000 memberships and will celebrate its 30th anniversary this year, plans to hold its membership pricing this year. The clubs offer individual, couple and family memberships, and fall on the high end of the pricing scale, she says. The clubs only offer month-to-month memberships, don't require members to sign annual contracts and allow members to quit at any time with a 30-day notice.
“Our emphasis is on the service and value they receive rather than on the sale itself,” Hoeffer says. “That's a big difference from some of the sales models that are out there.”
Regardless of the sales models used at each of the biggest clubs mentioned, these clubs are offering expansion and marketing plans that could help lead them to the profits they are privately projecting for the year. In an age when most fitness facilities are competing with at least one of these big players, knowing where the competition is going can be a guide for other clubs — guiding them to either follow suit or to go in a completely different direction.
Improve member experience through brand expansion
Significantly enhance ancillary services
Grow the Crunch community
Western Athletic Clubs
Implement a medical division to make it easier for members to access complimentary and traditional medical services
Continue to improve technology and communication with members
Focus on the core market and continue to meet their needs
| Rank on 2006 Top 100 List | Company | Headquarters | 2005 Revenue (millions) |
|---|---|---|---|
| 2 | Bally Total Fitness | Chicago | 1,071.0 |
| 4 | Town Sports International | New York | 388.6 |
| 5 | The Wellbridge Co. | New York | 139.9 |
| 6 | Western Athletic Clubs | San Francisco | 92.0 |
| 7 | Crunch Fitness | New York | 90.0 |