» Canadian Forum
The State of
Club Business
A new survey provides troubling results.
BY MICHAEL SCOTT SCUDDER
recently completed a survey of 26 Canadian fitness clubs and gleaned some valuable informa- tion that I’d like to share with you.
I
Here are some details about the survey, The Independent Canadian Health Club Survey, conducted January 1-10, 2009.
Club locations: Alberta, British Columbia, Nova Scotia,
Ontario and Quebec. Club size: from small (less than 900 sq. m.)
to very large (more than 10,000 sq. m.). Memberships: 48% had fewer than 1,000
club members; 42% had 1,500 to 2,499 mem- bers; and 10% had 5,000+ members.
Gross annual revenues: 25% reported
Michael Scott Scudder
under $500,000; 45% reported $500,000- $999,999; 10% reported $1 million -$2 mil- lion; 10% reported $2 million - $4 million; and 10% reported $4+ million.
Net memberships (2008): 15% increased; 80% stayed
about the same, and 5% decreased.
New membership sales (2008): decreased in 25% of
clubs, stayed the same in 50% and went up in 25%. Financial status: Presently, 60% are profitable opera-
tions; 35% say they are at breakeven and 5% are losing mon- ey. (Interestingly, while only 5% reported operating in the red, 25% of all respondents said that “2009 will be a ‘make or break year’ for our club.” )
Club predictions:
• Three-quarters predicted there would be fewer clubs in
their competitive areas by the end of 2009; 25% predicted there would be “about the same number as present.” • 95% of respondents thought the 2009 Canadian econ-
omy would have some negative effect on club operations, while 5% thought the economy would have no effect.
Club concerns (in order of frequency reported): • holding onto present members • the economy’s effect on new membership sales • staffing
54 Fitness Business Canada March/April 2009
• producing ancillary income to offset lesser revenues from membership sales
Future spending:
• Most respondents said they will make “small purchases”
of equipment, mostly cardio pieces, in 2009 • Several said they will invest in better software for mem-
bership tracking and customer relationship management • A few will spend more on marketing
My comments on the above data:
1. The Canadian fitness facility industry is much like its
U.S. counterpart, being nearly 50% dominated by small-size clubs with less than $1 million annual revenues and with about 1,000 members.
2. Doing business the way clubs have done it for better
than two decades is now paying scant dividends. 3. Clubs will have to ramp up retention efforts as they suf-
fer from fewer advertising responses, thus fewer prospects and need to close a higher percentage of sales interviews.
4. Clubs dependent on membership payments for 85% or
more of their annual revenues are likely headed for serious trouble. Operators who pay attention to the creation of ancil- lary income sources may ride out the storm.
5. Last December, I concluded (using date from a recent
from U.S. survey I conducted) that up to one-quarter (over 7,000) of U.S. health clubs could go dark by mid-2010. The Canadian economy seems to be headed for the same dol- drums, but at a slightly slower pace.
6. If the results of this survey are representative of the
Canadian club market as a whole and if the maple leaf econ- omy moves in the direction that several experts are forecast- ing – 800 or more Canadian clubs could close before the re- cession is over.
Future articles this year will be devoted to solutions for
some of these operating challenges, and to strategies which may support survival of many on-the-fence clubs. FBC
Michael Scott Scudder operates Club Management Education & Training Online [CMETO], an internet-based consulting and training service special- izing in delivery of educational webinars, management training and club consulting. Contact him at 505-514-0294, on Skype at michael.scott. scudder or at
michaelscottscudder@yahoo.com.
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