New members of The Houstonian Club will attend the Taylor Swift concert in November at Minute Maid Park in Houston, compliments of the club. The four-ticket package, valued at $600, was included as a promotion for all members who joined the club in June.
The promotion, along with the start of summer, the oppressive Texas heat and the completion of club renovations, factored into a record-breaking month for the high-end club. Even with initiation fees of $14,000 and $24,000 (depending on the type of membership and services purchased), the club brought in $720,000 in initiation fees in June on a budget of $352,000, says Colleen Kennedy, director of membership sales at The Houstonian.
The aggressive marketing perks are not limited to new memberships. The Houstonian has offered existing members a new iPad 2, a $400 hair dryer, concert tickets and tickets to a Houston Texans football game as gifts for referrals.
“Most clubs think, ‘We’ll give personal training or we’ll give nutrition or we’ll give the things that you are selling,’ because that’s what you think goes with the membership,” Kennedy says. “Sometimes, it’s nontraditional things.”
High-end clubs such as The Houstonian have remained afloat even as the economy remains sluggish. In-city private membership clubs that offer high service levels and expensive pricing also have fared well during the past few years, says Rick Caro, president of Management Vision Inc., New York. Among those clubs are the New York Athletic Club, the Los Angeles Athletic Club, the Washington Athletic Club in Seattle and the Multnomah Athletic Club in Portland, OR.
“They require current members to sponsor new members,” Caro says. “The fitness component is at least adequate, if not huge, depending on the facility. They benefit from history, positioning, pricing and their social component, often tied to the food and beverage element and the facilities.”
Caro adds that even with membership cancellations at some of these facilities, they often have waiting lists to tap for new members. Kennedy says that The Houstonian has used waiting lists until certain facilities have become available after renovations. Although a waiting list can sound prestigious, Kennedy says it can be “a nightmare to manage” as people on the list who have paid their money get impatient, lose interest or join another club.
“You lose a portion of your people on your waiting list that were really ready when they were ready to join,” Kennedy says.
According to the International Health, Racquet and Sportsclub Association’s (IHRSA) Health Club Consumer Report, industry membership rose by 10.8 percent in 2010 from 45.3 million to 50.2 million. More than 14 million members joined a health club in 2010 while less than 10 million members left their clubs. Overall, clubs had an attrition rate of 22 percent, according to the IHRSA report.
The Houstonian has about 6,000 memberships from five membership levels. Kennedy says she wants the capacity of the club to be around 6,250 memberships. The club might sell 22 memberships in a month but may also lose 22. Of the 22 members that leave, 19 may have moved, she says.
Lower-priced or mid-sized clubs can keep their attrition rates down and their retention levels up even without fancy promotions. Kennedy says five keys that any club can use are keeping staff turnover low, using frequent mailings and public relations, taking care of the members, using subliminal advertising to piggy-back on some of the hottest trends and news of the day, and making sure that the product is good enough to match the membership price and experience.
“You can’t sell anything without a good product,” Kennedy says. “You just can’t.”