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Home / Blog / Beauty : Fitness Center Operations: Three Keys to Success – by Caleb Jarrett

he Fitness Center Industry in 2014

Fitness centers as we know them today have only been in existence since the 1970s. Since that time, the industry has experienced steady growth. There were 17,000 clubs at the beginning of the decade, and over 30,000 by 2010. About 50 million Americans are members of a fitness center- these include commercial health clubs, non-profit clubs like the YMCA, or miscellaneous for-profit clubs such as corporate clubs, country clubs, and spas.

Nearly 40% of these 50 million people attend health clubs on more than 100 days out of a year. The overall industry generated 22 billion dollars in revenue during 2013, and employed approximately 400,000 workers. The industry is highly fragmented – the fifty largest companies control only about thirty percent of the market, and there are only a few dozen companies that own more than ten centers.

Major services typically include facilities for aerobic exercise and weightlifting. Running, swimming, yoga, karate, basketball, and swimming may also be offered. Smaller fitness centers may cover just a few thousand square feet, while multi-activity operations can cover over 100,000 square feet. The operations of all fitness centers are similar- the operator makes space and equipment available for customers to engage in various types of fitness activities, provides staff to help customers properly use the equipment, maintains the facilities, and provides various other services such as professional trainers and class instructors, child care, food and drinks, showers and lockers, hot tubs and saunas, and sales of sports clothing and equipment.

Competition in the fitness industry is high. Particularly during recessions there have been increases in people running for exercise, with the appeal being that it is free. Non-profit gyms may not offer as comprehensive a set of services or the highest-quality equipment, but they can still be a lower-cost alternative to commercial fitness centers. In addition, consumers can decide to buy their own home fitness equipment, such as treadmills and elliptical machines that can steer them away from gyms altogether.

Other challenges include the fact that fitness centers must continue to buy equipment to keep up with the latest trends- this can be a crippling capital expense. Also, there is a degree of seasonality to fitness center revenues as well that must be accounted for- more people join during the first quarter, largely due to New Year’s resolutions. Finally, there is a danger of liability if people get injured in the gym.Fitness Centers and Weight Loss

Perhaps the most significant factor impacting the fitness industry is the obesity epidemic. Obesity has taken the U.S. by storm and has created a sort of counter-culture that has resulted in increased fitness center memberships. The rate of obesity in the U.S. has grown steadily since the 1980s, and all states with the exception of Colorado consider at least one fifth of their population to be obese. Today, over 80 million Americans are considered clinically obese. Indeed, one billion people worldwide are considered over their ideal weight.

There are a number of different weight-loss programs used in America. Diets, exercise, and surgery represent just some of these methods. Over 30% of Americans were on diets in 2013, and about two-thirds were women. Because of this, the weight-loss market is generally aimed at women.

Because so many in the U.S. are feverishly interested in losing weight, the weight-loss market is rampant with fraud. The Food and Drug Administration has had to crack down on a great deal many products posing as legitimate mechanisms for weight loss. These fraudulent products have created a sort of hive U.S. mindset that weight-loss programs and products are a gimmick. Americans have dropped out of these plans at high rates, feeling program and product claims to be misleading. Additionally, because of the typically less than ideal health of people starting these programs, there are real risks of litigation if there are pre-existing medical problems before participation in weight-loss programs. Furthermore, businesses closely associated with the weight-loss industry are subjected to onslaughts of federal regulations affecting supplements.

Obesity in America shows no sign of slowing down, and because of this there is promise for the continued future growth and success of the fitness center industry, particularly at the expense of the less substantial and more fad-driven weight-loss industry.Finding Success in the Fitness Center Industry

Regardless of the size and type of fitness center, the following three points can guide fitness center success in 2014:

Focus on weight-loss programs- most members join fitness centers for the purpose of losing or maintaining weight

Emphasize high intensity interval training- the proven success of HIIT as a weight-loss method should be leveraged to retain memberships

Embrace new technologies- equipment with modern amenities and features underscores the quality of the fitness center

Competition in the fitness industry is fierce. Big, all-inclusive clubs battle with small gyms and non-profits. Additionally, competition comes from other recreational activities as well as home fitness programs, such as the popular P90X and Insanity.

This is not to say competition is bad for the fitness center owner. Competition is good. It means more people are working out. It emphasizes the reality that, to stay strong in a competitive industry, fitness center operators must focus on what makes their club stand out.

The fitness centers that succeed to the highest degree are the ones that know who they are and do not try to be all things to everyone. They reinvest in their facility, update their equipment, and bring in the best staff- they do not compete on price alone. Above all else, they focus on customer service- placing an emphasis on ensuring they deliver an environment and services that will help their members meet their health and fitness goals.

Barnes Reports: Worldwide Fitness & Recreational Sports Centers (NAICS 71394). (2013). Worldwide Fitness & Recreational Sports Centers Industry Report, 1-106.

Fitness & Recreational Sports Centers Industry (NAICS 71394). (2013). United States Fitness & Recreational Sports Centers Industry Capital & Expenses Report, 1-216.

Williamson, M., & Tharrett, S. (2013). Emotional Quality and Service Quality Are Important in All Types of Clubs. Club Industry, 29(2), 58.
About the Author

10 years business experience; 2014 MBA candidate

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