Investing in Facilities: The Payoff


By Phillip Mills
September 10, 2006

Phillip Mills is the Chairman of Les Mills International, a provider of group-fitness programs to health clubs. The company offers more case studies at its GroupFitPROFIT Web site: http://groupfitprofit.lesmills.com/. See also http://www.lesmillsusa.com



If our work in the fitness industry is part theater, then our clubs are our stage—and therefore the starting point in creating a compelling environment for our members.

Here is a case study showing how to make your investment in facilities pay off, plus some key points.

The Gold’s Gym in Lorton, VA, proves the value of getting the group-fitness environment right.

Lorton was in danger of becoming a ghost town in 2002 when the local prison, a big employer, closed down. Nonetheless, Lori and Jeremy Lowell put their faith in the town’s redevelopment plan by investing $1.5 million in a new Gold’s Gym in 2003.

With a new town unfolding around it, the Gold's in Lorton was designed to offer a sense of invitation to new and existing members. The reception area includes a fireplace with couches, and the warm colors of terracotta, copper, bronze and wild grasses flow through the facility.

The Lowells planned their group fitness studios as destinations in their own right. The three group ex rooms comprise 15 percent of the gym’s floor space and a similar percentage of the owners’ capital outlay.

In the main group ex studio, up to 100 people at a time enjoy 3,100 square feet of unimpeded space with a large stage and great sound. The 1,000-square-foot mind-body studio offers beige colors, an oriental rug and dimming lights for a calming atmosphere that complements a workout. The 900-square-foot group cycling room includes a projection system that creates the illusion of riding with Lance Armstrong. Other club members are drawn in to the sheer buzz of group fitness via a discrete viewing platform on the mezzanine floor above the largest group fitness room. Thus group exercise becomes a major contributor to the social dynamics of the club.

The results? About 25 percent of club visits take place in the 15 percent of space dedicated to group fitness, so the Lowells believe the studies are punching above their weight in contributing to the club’s success.

Membership has grown from zero to 3,900 in only three years. Retention (calculated by the International Health, Racquet and Sportsclub Association’s standard formula) stands at 76 percent. Just as importantly, the owners are on track with aggressive loan repayments and their profits are on target.

The Lowells are firm that group fitness drives higher profits by both creating a retention powerhouse to which members return repeatedly, and group fitness programs incur less maintenance costs than other parts of the facility (such as cardio machines).
As Lori and Jeremy Lowell have shown, the quality of your club’s studio has a significant effect on how today’s demanding consumers perceive the experience you provide.

With inspiration and planning, you can turn the investment in your studio from an expensive chore into a profitable adventure.

Key Points

Consider whether your studios are world-class.
Identify specific changes that would add to the appeal of your group exercise classes and other areas of your club.

Hire the best designer you can afford to provide a grand vision for your club.
Look for someone who can give your club that wow factor. Deliver great lighting, interior design, sound system, stage arrangements and other amenities.

Implement the vision over a three- to five-year period. Create an incremental studio improvement plan, and budget to address the most urgent priorities first. You might start by putting in a world-class sound system, and follow up with a new stage or some outstanding décor.