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Virgin Active: For Sale? Going Public? Sir Richard Branson sets the record straight


U


.K. newspapers have recently been speculating that Virgin Active, the 187-facility club chain that’s 76% owned by Sir Richard Branson’s Virgin Group,


was considering either a possible sale or a public offering. One reported that a number of private-equity groups might be interested in purchasing the business; another reported that Branson had instructed three investment banks to begin work on a public listing, which, it said, could conceivably generate $1.5 billion.


| CBI’s Eye On The Economy | Nondues services rank high on


consumers’ discretionary-spending list For three consecutive months, the fees for lessons and instruction increased at a greater pace than the prices for all items, suggest- ing that, when it comes to discretionary spending, health club services rank high with consumers. Nondues fees increased by 1.94% in June and 2.2% in July, while fees for all items rose by just 1.2% and 1.37%, respectively, during the same months. Factors that may have contributed to this development


include: declining unemployment rates; increases in real total disposable income and personal consumption; the seasonal popularity of outdoor and youth programming; and “last-min- ute” training to prepare for summer’s bathing-suit demands.


1.00% 2.00% 3.00% 4.00% 5.00%


-5.00% -4.00% -3.00% -2.00% -1.00% 0%


Branson, however, discounted all of the rumors during an


interview with the Business Spectator, an Australian publica- tion. “Virgin health clubs are a new baby, and I do not sell my babies, basically,” he explained. “We’ll be building them; we may well bring an investor into the Virgin health clubs, but that’s as far as they go… I would most likely never sell them, but if I did, they’d have to be fully grown adults, and that’s a good 21 years from now.” Virgin Active currently has locations in the U.K., South


Africa, Italy, Spain, and Portugal, and approximately one million members. For 2009, it had revenues of $613.2 million, a 15% increase over 2008, and core earnings of $158.4 million. —|


At the same time, dues fees continued to drop for the ninth


consecutive month, falling 1.67% in June and 1.08% in July. A possible strategy for dealing with this persistent problem: innovative membership plans. Clubs might, for instance, consider offering a base-fee membership, with optional, monthly add-ons for services such as seminars, massage, or personal training. They might also consider offering a “punch card,” allowing consumers to pay up front for a specified number of visits. —|


For more detailed monthly information and additional Producer Price Indexes, please log on to www.ihrsa.org/research.


Consumer Prices & National Economic Trends (% change same month previous year)


Club Dues (NSA*) Fees for Lessons (NSA) All Items (NSA)


10/08 11/08 12/08 *NSA: Not Seasonally Adjusted www. ihrsa.org | OCTOBER 2010 | Club Business Internat ional 23 1/09 2/09 3/09 4/09 5/09 6/09 7/09 8/09 9/09 10/09 11/09 12/09 1/10 2/10 3/10 4/10 5/10 6/10 7/10


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