Industry Trends, Research & Benchmarking

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Industry Trends, Research & Benchmarking

Bill McBride, Founder, President & CEO Active Wellness & BMC3

Melissa Rodriguez, Senior Research Manager

IHRSA

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Objectives

•  Discuss the latest health club consumer trends

•  Examine recent benchmarks

•  Review available resources for research and trends

•  Learn how to apply research findings to differentiate your business

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Trends

²  More specialization ²  Studios, SGT, HIIT, “Boutique”, Segmentation ²  Specialized Variety

²  Continuation of consumer demand for “ease of use” ²  Relevant Simplification

²  Further “comfort” of members becoming expressive on social media and the importance of online brand

²  Continuation of emergence of “quantified self ” ²  Will increase HR Training growth

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Trends

²  Women / Group Fitness growth will continue

²  Physical space choices becoming critical ²  Traditional strength equipment under “attack” ²  Open “functional training” spaces a must

²  Accountable Care Organizations (ACO) emerging as big opportunity ²  Health Insurance Portability and Accountability Act (HIPAA)

precautions

²  Customer Engagement

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The Global Health Club Industry A Snapshot

Global

²  Members: 144.7 million

²  Revenue: US$84.3 billion

²  Clubs: 183,919

U.S.

²  Members: 54 million

²  Revenue: US$24.2 billion

²  Clubs: 34,460

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Fitness & Health Club Industry Trends

²  Business Transactions ²  USA ²  Europe

²  Anticipated Growth ²  Latin America

²  Asia-Pacific

²  Obesity Rates ²  United States: 35%

²  Mexico: 32% ²  UK: 25% ²  EU Average: 17%

Sources: IHRSA Global Report; OECD; HSCIC UK

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New Models Emergence

²  Increase in franchise clubs

²  Decrease in “accidental middle” clubs

²  Consolidation

²  Residential, corporate, multi-tenant locations on an increase

²  Public Access fitness will continue to grow

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What Won’t Change?

²  People will always need credible expertise

²  People are social creatures and will want to be around other like-minded people (groups / energetic environments)

²  People need accountability – no one can push themselves like they can with a coach, trainer, supporter, friend, etc.

²  People will pay for results and life-style enhancements

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Health Club Benchmarks

Industry Data Survey

•  Club operating benchmarks

•  Membership growth & traffic

•  Club prices

•  Payroll & staffing

•  Profit center analysis

•  Financial statement data

ihrsa.org/profiles

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Health Club Benchmarks

Benchmark All Clubs Multipurpose Fitness-only

Revenue Growth 5.0% 2.6% 6.5%

Net Membership Growth

4.0% 0.8% 6.2%

Non-dues as a % of Revenue

31.7%

34.0% 31.0%

Revenue per member

$793.40 $843.70 $700

Source: IHRSA Profiles of Success

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Growth Coming From Different Sources

²  Multipurpose seeing challenging net membership growth

²  Non-dues revenue continues to grow for multipurpose ²  Necessity is the mother of invention

²  People are paying for programs that they identify with and that deliver habits and results

²  Multipurpose is now focusing on programming ²  Historic facility and sales myopic approach

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Member Retention Measures IHRSA One Million Strong

Member Retention Study

•  Conducted by Dr. Paul Bedford

•  1.5 million member records

•  U.S. & Canada

•  Retention

•  Membership Duration

•  Retention Impact on Revenue

ihrsa.org/one-million-strong

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IHRSA One Million Strong Retention Results

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Member Retention – Lifetime Value IHRSA One Million Strong

ihrsa.org/one-million-strong

Generate +$93,924

in 24 months

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Retention

²  Enrolling (Selling) the right way is critical – relationship not transaction (Enrollment)

²  Getting someone past 3 months is critical (Member On-Boarding)

²  Getting them plugged into areas of interest (Connection)

²  Catching them when they fall/fail (Intervention)

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Retention

²  360 degree feedback loop – Member Engagement ²  Listen, Respond, Act – Repeat

²  Measure / Operationalize Feedback – Use Software

²  Build Loyalty

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Life Time Value

²  We all know that it is more cost effective to keep a member than get a member

²  Focus member acquisition and retention efforts on keeping your “best” members

²  Life Time Value (LTV) of membership should be measured and focused upon

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Health Club Consumer Research

Annual Health Club Consumer Survey: -  19,240 online interviews

from a nationwide sample of individuals and households in the U.S

-  Weighted and compiled to analyze results and subgroups

ihrsa.org/consumer-report

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11%

21%

15%

19%

9% 8%

6% 6% 6%

3% 2%

22%

26%

19% 18%

14%

10% 8%

7% 7% 7% 7%

4% 3%

U.S. Health/Fitness Club Members Activity Participation (Percent of Total Members)

2013 2014

Source: IHRSA Health Club Consumer Report

®#IHRSAIns)tute Source: IHRSA Health Club Consumer Report

42%

36%

28% 27%

21%

29%

21% 21%

16%

12%

7%

42%

36% 36%

30%

33%

28%

23% 22%

17% 15%

8%

U.S. Health/Fitness Club Members Equipment Usage (Percent of Total Members)

2013 2014

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Knowledge Is Power

²  Knowing what people are enjoying and participating in is very important

²  Notice increase in Calisthenics and Stretching ²  These require open spaces inside and outside of your club

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Knowledge Is Power

²  Notice increase in hand weights, dumbbells and barbells ²  All functional training type activities

²  Balance traditional and functional equipment needs ²  Treadmills, resistance machines remain Top 2

²  Rowing, cardio cross trainers show increase in popularity


19%

31%

21%

27%

6% 5% 6% 5% 4%

3% 3%

22%

29%

21%

26%

6% 4%

15%

9%

7%

4% 4% 3%

U.S. Health/Fitness Clubs Membership by Club/Studio Type

2013 2014


84.1%

72.9%

80.3% 80.5%

70.4%

60.3%

15.9%

28.3%

21.5% 23.9%

31.8%

44.0%

Industry Overall Commercial Multipurpose

Commercial Fitness-Only

YMCA/YWCA/JCC Not for Profit Corporate/Business

U.S. Health/Fitness Clubs Members Single Club Compared to Multiple Club Membership

% One Facility 2014 % > One Facility 2014


84.1%

35.9%

26.1%

20.5%

13.7% 9.0%

22.3%

15.9%

64.1%

73.9%

79.5%

86.3% 91.0%

77.7%

Industry Overall Personal Training/Small Group

Training

Yoga/Pilates/Barre Indoor Cycling/Rowing

Boot Camp/Cross Training

Boxing/Martial Arts/MMA

Sports Specific

U.S. Health/Fitness Studio Members Single Club Compared to Multiple Club Membership

% One Facility 2014 % > One Facility 2014

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Knowledge Is Power

²  Notice studio and specialization growth

²  Consumers have diverse interests and fitness goals

²  Opportunities for multipurpose and fitness-only clubs to create a targeted/studio-like experience within their facility

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Knowledge Is Power

²  Many members, possibly as many as 40% or more belong to multipurpose and specialized offerings

²  New offerings are also increasing participation for all ²  Class Pass as an example

²  Members reserving classes in both studios and clubs

²  Members reserving “work-out” time at clubs

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Questions

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Contact Details

Bill McBride Founder, President & CEO

Active Sports Clubs & BMC3 +1 415 299 9482

[email protected] activesportsclubs.com

BMC3.com

Melissa Rodriguez IHRSA Senior Research Manager

+1 617 951 0055 [email protected]

ihrsa.org/research

Industry Trends, Research & Benchmarking

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