Stephen Tharrett and James A. Peterson
According to the most recent data from the International Health, Racquet and Sportsclub Association (IHRSA), Boston, Mass., approximately 66 percent of fitness centers reside outside North America, which collectively generates 65 percent of all revenues in the industry ($36,388,733). Although the U.S. remains the No. 1 global market, generating revenues of approximately $17.6 million and boasting 29,357 fitness centers, its domination of the industry is being slowly eroded by operators from countries such as the United Kingdom, Germany, Italy, Japan and Brazil. Somewhat surprisingly, the Netherlands has a higher percentage of its population as fitness facility members (17.6 percent) than the U.S., while countries such as Norway, Sweden, Spain and the United Kingdom have member penetration levels that are rapidly approaching those that exist in the U.S. (16 percent). The global market has also overtaken the U.S. market when it comes to acceptance by both public and private investors. Perhaps even more noteworthy, nations such as the United Kingdom, South Africa and Switzerland have been able to develop synergistic relationships with insurers and healthcare organizations that would make most facility operators in the U.S. envious.
The Rise Of The International MarketUntil recently, the international fitness industry has long been overlooked by U.S. operators, particularly when viewed from a resource perspective. It is interesting to note that the fitness industry originated in Europe in the 1800s, and later migrated to the U.S. However, only in the past decade has the international market really captured the attention of U.S. operators, as evidenced by IHRSA's initial efforts to establish a significant international presence in the mid-90s. In the late 1970s, several fitness club companies entered the Asian market and, subsequently, became significant players on the global scene. Two of these Japanese operators, The People Company of Japan and Central Sports of Japan, have been around for more than 30 years. Currently, each generates revenue that easily puts them among the top-10 fitness club companies on the globe. In the 1990s, companies such as David Lloyd Leisure, LA Fitness, Esporta and Fitness First of the United Kingdom generated an incredible buzz in the industry by entering the public domain. By the first part of this century, Europe had become the fastest growing fitness facility market. By 2006, Fitness First of the U.K. was the largest club company in the world, and Virgin Active of the U.K., with its purchase of Holmes Place, was emerging as a top global player, as well.
Over the past few years, considerable discussion has taken place among investors and demographers concerning the emerging global economic powers of the BRIC (Brazil, Russia, India and China). Not surprisingly, these four nations are quickly becoming important players in the global fitness industry. With less than 3 percent of their populations currently members of fitness centers, this block of nations represents a phenomenal opportunity for both local fitness center operators and international players, including operators from the U.S.
Use Of TechnologyWhile the U.S. remains a powerful and important innovator in the fitness industry, a number of international operators are bringing new innovations to the market, as well as pushing boundaries that U.S. operators have tended to shy away from in the past.
Fitness facility operators in Brazil, Turkey and other countries have leveraged technology in ways U.S. operators have just begun to explore. In Istanbul, Turkey, for example, several top operators use eye scan technology for checking in members. In Sao Paulo, Brazil, operators such as Companhia Athletic, Ecofit, Pele Club and Bio Ritmo employ finger scan technology to check in members. At the Pele Club, when members check in at the front desk (via a fingerprint scan), the information is relayed to PDA devices carried by the facility's personal trainers. As a result, the trainers know when their clients arrive. These PDA devices also allow the trainers to design and monitor clients' exercise programs, and then upload them, so members can view them online.
The Internet has also become an integral part of the fitness industry's marketing efforts in many foreign countries. For example, Ecofit in Sao Paulo has a two-minute video clip that can be viewed both on the facility's website and on YouTube. Many of the operators in Brazil, as well as operators throughout Europe, make highly effective use of flash and related technology to create dynamic websites that members can interact with.
ProgrammingThe U.S. continues to play a leading role in fitness programming, but some international operators have begun to explore this area. While personal training continues to be the predominant programming effort in the U.S., some international operators have taken a different approach to the personal training concept. At World Class Fitness in Russia, for example, members can reserve a private room for personal group exercise instruction or space for a private aquatic training session. In the World Class facilities, private aquatic and group training are nearly as popular as the standard form of personal training in the United States.
Group exercise programming is immensely popular in South America, Russia, Italy, France and Spain. The percentage of facility members who participate in group programs in these nations exceeds what is seen in most U.S. fitness centers. Les Mills, created in New Zealand, is popular worldwide. In fact, in some countries, such as Brazil, it is far more popular than in the U.S. Dance-oriented group exercise programs are also popular in many international countries. Many international facilities provide disc jockeys and even live music to accompany activities such as group classes and workouts on the fitness floor.
The creative use of facilities and programming is further illustrated by a fitness center in Istanbul, Turkey, that has an open-air rooftop exercise classroom for conducting yoga and tai chi. Pilates is extremely popular in both South America and Europe, with club-based, private Pilates studios being more common internationally than they are in the U.S. Some activities, such as ping pong, badminton, squash and other sports, that might otherwise seem out of place in a U.S. facility, are quite common in many Asian and European fitness centers. In Japan, aquatic programming and aquatic elements receive a more significant emphasis than in the U.S.
The spa experience in many European fitness centers is more akin to a true resort experience. While massage is still the most significant element of spa services in the U.S., in Europe, it often takes a back seat to facials and body treatments, some of which can't be found in the U.S. Another important element of the spa experience in these international facilities involves the use of time. While U.S. members typically want to get in and out of their spa experience quickly, the international spa experience is designed to last longer. Wet spa therapies are also more common in Asia, Europe and Russia. In the U.S., we have the standard saunas, steam rooms and whirlpools, but the spa experience in Europe includes Turkish Saunas, Russian Banyans and more intensive hydrotherapy environments.
Value Of A MembershipIn the international market, particularly in Europe and Brazil, many fitness operators have been able to capture higher dues than their counterparts in the U.S. Most international operators garner a far more significant percentage of the average household's per-capita income than their counterparts in the U.S. Operators such as World Class in Russia and Companhia Athletica in Brazil have dues that are anywhere from two to four times what members pay in the U.S.
At least one reason for the disparity in percentage of dues per-capita income is that many international organizations focus more on the benefits of the club experience, and less on the features that characterize the facility. It appears that this focus on the experience and service enables these facilities to command a higher price point. Only recently has the concept of a value-driven, low-price dues model hit the international market. Fortunately for the organizations involved, when these lower-priced, value-driven operators have appeared (e.g., Mcfit, Germany; LA Fitness, U.K.; Planet Fitness, Russia; and Fitness First, U.K.), their prices have not been as low as the prices in the U.S., nor has there been as many competitors fighting to succeed in this low-priced market segment.
Facility Design And CleanlinessFacility design is more of an art form in Europe, Asia and South America than it is in the U.S. Design is actually considered an important element of the membership experience in the international marketplace. As a result, fitness operators try to create a more environmentally appealing, modern and uplifting design to their fitness centers. Rather than create "fitness boxes" that are common in the U.S., many international facilities set themselves apart by offering unique, contemporary and edgy facility designs. For example, many European fitness centers use wood and other interesting flooring elements in the fitness areas, rather than the typical rubber flooring so frequently found in U.S. facilities.
While "green" is a topical buzzword in most parts of the U.S., some European and South American operators have taken green design to a new level. One excellent example is Ecofit in Sao Paulo. Ecofit was designed and developed to be entirely environmentally conscious, with solar power for lighting, and reclaimed rainwater and pool water used to provide water in pools, whirlpools and showers. This particular facility also uses recycled products, such as paper and plastic, in many areas of the fitness center.
Cleanliness seems to take on an entirely new role within the international market. For example, in many fitness centers in Asia, Europe, South America and the Middle East, it is common practice to require visitors to wear special booties before entering the facility. To these operators, cleanliness is essential. In addition to their focus on preventing outside dirt from entering the club, most international operators allocate more resources to keeping their facilities clean on a constant basis.
Qualifications For InstructorsIn many international markets, the qualifications for personal trainers and instructors are far more stringent than they are in the U.S. For example, in Brazil and Russia, trainers must have a college degree. While the U.S. market is generally focused on the certification model, the international market puts more emphasis on traditional education and experience in combination. It is interesting to note that personal trainers in many of these countries have a significantly stronger understanding of the underlying principles of exercise training than do those in the U.S. As such, they are less prone to follow the "flavor of the month" training protocols that are so prevalent in this country.
A Lot To LearnThe U.S. fitness market is still the largest in the global marketplace, and is still viewed by its international counterparts as the worldwide industry leader. On the other hand, it would be a grave mistake for U.S. operators to sit back and think that their position of global dominance and leadership will continue unabated. The signs of change are everywhere. For example, collectively, the international fitness industry is now larger than the U.S. market. By the same token, the largest fitness operator in the world is not a U.S. company. In fact, it is not a foolhardy projection to hypothesize that, in the next decade, the largest club company in the U.S. will be an international company. Furthermore, U.S. fitness centers no longer generate the highest dues and personal training revenues. And, U.S. facilities no longer appear to be on the cutting edge in areas such as technology, green design, facility design, club programming and themed experience delivery.
Given the current global economy, fitness centers in the U.S. must do everything in their power to learn from those in the international arena if they are to continue to be a noteworthy force in the global fitness business.
Facility of the Week
Ithaca College Athletics and Events Center