|News & Know How| News
IHRSA Index Reflects Industry
Strength Clubs’ 2010 financial performance shows marked improvement
I
HRSA recently released the findings of its Financial Index for 2010, and, despite a weak economy, the indus-
try’s metrics, the results show, were surprisingly good. “Our survey of 16 leading U.S. health
and sports club companies, represent- ing a total of 498 facilities, shows that performance was robust among com- mercial health clubs last year,” reports Jay Ablondi, IHRSA’s executive vice president of global products. The Index documented marked
improvements in revenue, membership dues revenue, nondues revenue, and EDITDAR (earnings before interest, taxes, depreciation, amortization, and rent). Overall, results for the full calen- dar year ending December 31, 2010, compared to those for 2009, showed that total revenue rose 5.9%; member- ship-dues revenue climbed 3.5%; nondues sales increased 11.8%; and EBITDAR grew by 4.9%. “Even though the year started with
performance comparable to 2009 indi- cators, the quarterly-index participants finished the year with strong fourth- quarter results,” points out Melissa Rodriguez, IHRSA’s manager of research. Nondues revenue posted the strongest increase, up 13.4% over the same quarter in ’09, and EBITDAR was up by 9.1% over 4Q ’09. For complete results, visit
www.ihrsa.org/research.—|
>CORRECTION: Todd Galati was incorrectly identified as being the new director of the American Council on Exercise (ACE) in the March issue of CBI (pg. 34). In fact, Galati’s title is: Director of Credentialing for ACE. CBI regrets the error. —|
Todd Galati 22 Club Business Internat ional | JULY 2011 | www.
ihrsa.org Marketing
The Power of Group Buying By Liane Cassavoy
T
hanks to group-buying services, such as Groupon, shopping is no longer a solitary activity. These deal-of-the-day services, which have recently exploded in popularity, are changing the way people shop—and the way
merchants, fitness clubs among them, sell their wares. These services offer clubs a new marketing platform, and a novel way to get first-time customers in the door. Groupon, LivingSocial, and the just-launched Facebook Deals work by offering
a limited-time special, which must be purchased by a minimum number of users in order for everyone to reap the savings. Groupon’s approach, says spokesman Chad Nason, works because its “tipping-point” concept guarantees a certain number of customers. Groupon works with businesses to
create the deal and determine the tipping point, then sells the vouchers and collects payments. After taking its 50% commission, it hands the rest of the money over to the business. Nason says that “virtually all” of its deals reach their payoff point now that the service has more than 70 million subscribers. The Chelsea Piers Sports and Enter-
tainment Complex, a high-end sports and entertainment complex in Manhattan, uses Groupon to offer discounts on programs that could bring in potential new members, notes Dana Thayer, the senior vice president of marketing and sponsorship. Because customers have to redeem their Groupon once they enter a gym, opera-
tors can track the results of the promotion. “You can see exactly who they are, and provide the great experience that will turn them into repeat customers,” says Nason. Amy Peddycord, the owner of Invoke, a yoga and Pilates studio in Indianapolis,
Indiana, agrees. Her first deal, last year, resulted in the sale of 404 Groupons, 70% of which were sold to newcomers to her studio. Peddycord says that 50% of the Groupon customers went on to purchase additional classes or merchandise from the studio, and 40% became regular students. Groupon does allow businesses to impose a cap on their offers, a welcome
relief for those wary of being overrun by bargain hunters. And clubs should consider how to cover the cost of the deals they offer. Peddycord says she made the decision not to pay her teachers—who are typically compensated per student—for the Groupon users who attended their classes. Both Thayer and Peddycord agree that, while using a service like Groupon is
extra work, the effort is worthwhile. The concept of group buying and discounting has become so prevalent that
now industry-specific versions, such as
FitnessCouponClub.com, have begun to appear, as have business-to-business versions, including Motionsoft’s fillMyGym, which allows gyms to purchase discounted equipment. The overwhelmingly large scope of Groupon is one of the primary reasons
that John Spencer Ellis started
FitnessCouponClub.com. “Sometimes fitness services get lost in the mix,” he explains. “Now, an offer for a gym won’t be overlooked between the chimney-sweeping and restaurant appetizer specials.”—|
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