Based on his experience at IHRSA 2019, Consumer Group Vice President Zach England is enthusiastic about the prospects for the global health and fitness industry. “This has always been an exciting event and industry, and a show we look forward to every year,” says England.
“Fitness today is evolving well beyond health clubs and equipment,” he adds. “It sits at the intersection of several major industries, including wellness, technology, healthcare and services, which were all represented at the show. Throughout the show, one of the key themes we continued to see and hear among operators is that there was plenty of sharing of ideas and best practices, which is truly unique to this industry and helps drive it forward.”
Indeed, this year’s show attracted more than 12,000 industry professionals, representing nearly 80 countries. Steadily growing revenue in the space supports this increasing interest. Between 2015 and 2017, global health club revenue climbed from $81 billion to $87 billion (Figure 1), while membership climbed from 152 million people to 174 million (Figure 2).1
Figure 1: Global Health Club Revenue Shows Steady Climb
Source: 2016, 2017 and 2018 IHRSA Global Reports
Figure 2: Global Health Club Membership Continues to Grow
Source: 2016, 2017 and 2018 IHRSA Global Reports
Fit for investment
This growth is attracting the attention of buyers and investors in the U.S. and globally. In particular, England notes strong interest in the success and growth of high-value, low-priced (HVLP) concepts such as Planet Fitness. He also has seen attention focused on innovative team-training and studio concepts such as Orangetheory Fitness, and on regional and super-regional concepts that are establishing a unique value proposition for their members.
“There was significant buzz at the show about the way those brands are growing and performing,” says England. “They each do a great job of meeting specific consumer needs, whether the consumer is joining a gym for the first time in their life, pursuing a passion or interest, or getting serious about working out and looking for more.”
He says geographic expansion is another key element of their success: “These businesses are bringing modern fitness concepts to areas that either have never had a gym, or have only had a single facility with very few amenities. There continues to be more and more white space for these concepts than people thought, particularly in the small and secondary markets. Growth also continues to be strong in more populated areas too.”
Consistency and increased professionalization are also driving success for Planet Fitness and Orangetheory franchisees. “They’re sticking to their models, staying true to their brands and building depth in their management teams,” says England. “That’s driving unit growth, investor attention and higher valuations.”
England says the opportunities are not limited to a handful of fitness brands. “The total gym member base continues to grow, so there’s plenty of runway for solid offerings that appeal to consumers. That’s a key reason why global investors and strategic buyers are so eager to put money to work in this space,” he says.
Three fundamentals for fitness companies
England says fitness companies looking to go to market should focus on three fundamentals. “First, develop a clear roadmap for the next 5-10 years for the business. That should include a compelling case for how many units you can open and when, as well as a plan to keep your existing units up to date, competitive and performing at a high level. Also be sure you are tracking key metrics and KPIs so you can clearly sell the proof of your concept.”
“Second,” says England, “make sure you have a solid management team in place, as well as a second level of management to run the business at the club level as the business scales.”
England says the third fundamental has to do with your culture and the mission statement behind your business: “Stay true to your brand and what got you here today. When you are thinking about a partner, make sure you are considering not only what is best for the business, but also looking for someone who aligns well with you and your goals for the company, and can be a good partner and ambassador for your brand.”
Overall, says England, the fitness segment continues to create solid opportunities for a wide range of participants: “There's a lot of excitement, innovation and growth in the industry, and both strategic buyers and financial investors see a long, bright future there.”
Published May 2019
1. 2016, 2017 and 2018 IHRSA Global Reports