Health Development Corporation

Health Development CorporationSubmitted by: Group 4, Sec BMonika Khetan 13P088Nancy Pahuja 13P151Anusha S 13P164Vikrant Sharma 13P180

Health Development CorporationOwned nine health and fitness clubRapid growth between 1994 to 1999Revenue doubled and operating margin tripledFitness, personal training, tennis, swimming, child careThree of its largest clubs were reason for its success Main Clubs Name of the ClubFacility Area (in Square foot)Number of membersAnnual Revenue (in $) in year 2000Wellesely Center

75000 45006.3 MnLexington Club

6200040003.9 MnColonial Club

55000250002.7 MnLexington Club Real StateUntil 1999, 9 acres of land leased for lexingtonLease terms linked to revenue generatedLease payments was 23.5 % for lexingtonRevenue and lease payment expected to grow by 5% a yearHDC previously didnt purchased real state becauseIt used its limited capital to add, expand , enhance clubsLeasing allowed them to reduce the riskBiddingFive potential buyers submitted bidsTSI was the top bidder which had large share of New York health club marketHDC was disappointed from the initial offered pricesBidders viewed Lexington purchase by HDC as a negative step and calculations supported them$ 6.5 Mn used in buying Lexington was 5 times more than the resulting increase in EBITDA