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With more mergers and acquisitions, sales and club growth expected, 2013 is looking to be an exciting year in the fitness club industry.
The Economy
Mastrov, for one, acknowledges the growth of microgyms, but he wonders how long people will pay hundreds of dollars a month to those gyms. Others in the industry wonder how much discretionary income people will have in 2013 to pay for those memberships.
The employee Federal Insurance Contributions Act (FICA) payroll tax is expected to revert back to 6.2 percent in 2013 after it was reduced to 4.2 percent in 2011 and 2012. The current maximum wage base for the calculation is $110,100 for 2012 and is set to rise to $113,700 for 2013, according to StaffMarket.com. The reduction in the FICA tax has saved the average family $933 each of the last two years, but it has also cost the government $120 billion per year, according to the website.
Health care costs have been on the rise for many Americans, too. According to a report last month by The Commonwealth Fund (a private foundation that supports independent research on health care issues), average premiums for employer-sponsored family health insurance plans rose 62 percent between 2003 and 2011, from $9,249 to $15,022 per year. Health insurance costs rose faster than incomes in all states, according to the report. Employee payments for their share of health insurance premiums rose by 74 percent on average, and deductibles more than doubled, up 117 percent between 2003 and 2011.
Insurance costs only will get higher, as family premiums will reach $24,740 by 2020, an increase of 65 percent from 2011, according to the report.
"To some extent, 2013 is going to be a wake-up call—and a scary one—for people who have taken no interest and have no knowledge of medical expenses because their employer has really taken care of the brunt of that," says Rick Caro, president of consulting firm Management Vision, New York. "It will be the beginning of educating people about the fact that they're going to have to make choices not only where to have their insurance but also how to spend money on preventive rather than just direct medical or rehabilitative services."
Statistics such as these could lead to partnerships between corporations and the fitness club industry to help lower insurance costs.
The New York Times, citing information from the U.S. Labor Department, reported that from 2001 to 2011, the numbers of personal trainers increased by 44 percent, to 231,500. Furthermore, the Bureau of Labor Statistics (BLS) reported last summer that the employment of fitness trainers and instructors is expected to grow by 24 percent from 2010 to 2020, faster than the average for all occupations.
"As businesses and insurance organizations continue to recognize the benefits of health and fitness programs for their employees, incentives to join gyms or other fitness facilities will increase the need for workers in these areas," the BLS reported.
Health club members and prospective members also have to factor the rising costs for basic necessities, such as food and gasoline, into their purchasing decisions.
"The middle-income family has less discretionary income now than they had in 2006 and 2007, and they will have even less discretionary income in 2013," Scudder says.
Other concerns focus on the U.S. unemployment rate, which showed signs of improvement in 2012. The national rate dipped to 7.7 percent in November 2012 from 7.9 percent in October 2012. Economists cautioned, as reported by The New York Times, that the decrease in the unemployment rate was the result of a shrinking labor force as opposed to the creation of jobs. With so many seasonal jobs in December and many corporations continuing to lay off workers at year's end, the industry will have to continue to monitor the unemployment rate early this year.
"I personally believe that our real unemployed rate—not unemployment, but unemployed rate—is probably more like 11 to 12 percent," Scudder says. "We have thousands of people who are now not officially being counted because they're two years without work. I really wish Washington would tell us the truth about unemployed numbers. And of course, they won't, because the minute that they did, we'd have a run on the stock market."
