While club members work to get in better physical shape, today's economy is requiring many fitness facility operators to watch their costs and tighten their financial belts. Perhaps the most obvious areas for cost-cutting are the biggest expense items—rent or lease payments on land or buildings, payroll and equipment costs—but savvy club owners and managers are looking beyond the "big-ticket" expense items to discover other ways to trim expenses.
"It is back to the basics, with the economy continuing to be soft," says Steve Spearman, CFO of the Laguna Niguel Racquet Club in Laguna Niguel, CA.
Spearman watches managerial spending closely and has charged all managers with looking for ways to cut expenses wherever possible.
"We shop everything really hard," Spearman says. "You watch the little things and get multiple quotes. Do that, and soon you are watching pennies become dollars."
One of the first places Spearman looked for savings was with his suppliers. Earlier this year, he saved 30 percent by finding a lower-cost vendor of cleaning supplies.
"We had a long-term janitorial supply company that was just soaking us," he says.
Across the country in Bethel, CT, Tom Pear, general manager and owner of Sportsplex, found a new paper towel vendor who cut his cost on a case of paper towels by more than 25 percent, he says.
"We go through a lot of paper towels," he adds. "It all adds up."
Telecommunications can be a source of even further savings. Spearman pocketed savings by bundling Internet access, telecom and cable television service throughout the club with a single cable provider.
Pear saved money by buying servers and hosting Internet services (e-mail, Web hosting) in-house rather than outsourcing. This alone, he says, saves his club an estimated $5,000 to $10,000 per year.
However, larger companies may find even more savings. 24 Hour Fitness, San Ramon, CA, migrated to a converged data and voice VOIP service for its more than 400 locations and worked with Ecova, an energy and sustainability management company, to audit and prioritize lines. Ecova, Spokane, WA, audited more than 5,000 lines for 24 Hour and placed information about those lines into a common system to simplify tracking and maintenance. The result was disconnection of more than 2,500 lines no longer needed by the company and cancellation of erroneous carrier fees on more than 1,600 lines, which saved 24 Hour $1.5 million annually. In all, 24 Hour has saved $4.5 million from the audit, according to Ecova.
Doing preventative maintenance can be another cost saver, Pear says, noting that early in the year he cleaned the condensers on his rooftop heating, ventilation and air conditioning (HVAC) units himself.
"I did not have to call for repair on them all year long," he says. "Just taking care of this equipment is important. Otherwise, you are just flushing money away."
Even bigger savings may be had on club energy bills. By their very nature, clubs are usually open long hours and have significant demands for cooling and heating—not only space heating but heating water for pools, spas, showers and perhaps food preparation. That said, energy auditing firms say perhaps the first place to look for energy savings at a club is in lighting. Clubs can cut electricity costs by adding natural light, moving to more efficient, energy-saving fixtures as well as by introducing motion sensors and lighting controls.
"We find a lot of clubs still have the lighting the building came with, sometimes two generations behind where they should be," says Chip Goudreau, director of business development for Marlborough, MA-based Guardian Energy Management Solutions, a company that has identified fitness clubs as a strong market for energy-saving upgrades.
"You might have old lights high above a gymnasium floor that are very inefficient," Goudreau continues. "Clubs should upgrade sensors and controls. I see gymnasiums with rooms that don't get used except maybe early in the day and then again at the end of the day or night, and still the lights are on all day. When no one is in that room for more than 15 minutes, turn the lights off."
Goudreau also suggests clubs look at variable frequency drive (VFD) motors wherever possible—namely on pumps for heating and circulating pool water. Many clubs may have pumps with older engineering that are running too frequently and at much lower efficiency than today's VFD motors and pumps.
Pear makes sure staff puts covers over his club's pools at night to hold in heat and humidity to help lower energy costs.
Destratification turbines and fans that recirculate heated air (higher up) into lower areas of the club also can save on heating or cooling costs, Goudreau says.
The first step, Goudreau adds, is for a club to engage an energy consultant or auditor to look at where the club currently is using energy and identify areas for savings.
Those savings can add up. Bruce Buckbee is vice president of energy efficiency for World Energy of Worcester, MA, a company that works with many fitness clubs on energy savings. Buckbee also happens to be a former fitness club owner. At one 25,000-square-foot club, energy savings came to $50,000 per year, he says. A new energy contract with a Boston-area club saved it $400,000 in energy costs over three years, Buckbee adds, and World Energy took over all energy purchasing for a large East Coast chain of clubs and did a three-year contract worth $2.1 million in energy savings. Electricity-deregulated states such as Texas and those in the Northeast and Midwest offer significant opportunities for energy savings, he says.
"The utilities are driven to help fund the cost savings," he says. "We essentially go in with the utility's checkbook in our back pocket."
Buckbee continues: "The thing about fitness clubs is that there are such long hours of operation and such energy intensive use—HVAC, pools, heaters, saunas, cooling and heating over large facilities—that whether it is around procurement or energy efficiency, we love working with them. We can get great returns on energy investments. Not only do I come out of this business, and thus understand what they do, but the savings we provide put a smile on their faces."