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THE IHRSA CANADIAN HEALTH CLUB REPORT


Excerpted from The IHRSA Canadian Health Club Report, produced in cooperation with Fitness Business Canada, canfitpro and the Fitness Industry Council of Canada.


The IHRSA Canadian Health Club Report (48 pages) is available for purchase at ihrsa.org/research-reports in PDF format for IHRSA members ($69.95) and non-mem- bers ($129.95). Fitness Business Canada readers receive a 20% DISCOUNT: enter code CANADA20.


CLUB OPERATING BENCHMARKS As was the case with much of the overall econ-


omy, the health club industry was optimistic that 2012 would continue to build on the improve- ment of the previous year to try to get back to and/ or exceed pre-recessionary levels. Clubs looked to 2012 with optimism. While there were pockets of strength, consumer spending and unemployment continued to be a headwind that health clubs are struggling against on a daily basis in a battle to increase revenues. Respondents to this study are showing they are planning with optimism as the majority reported increasing fitness equipment reinvestment expense as a percent of revenue. Despite the economic environment, the clubs in this


study reported modest improvements in some areas and were able to maintain the status quo in other areas. Although we would like to see great improvements from year-to-year, the current economic environment makes that very difficult. In this climate, it becomes more important than ever to manage expenses. It is important to remem- ber that the club industry is a semi/fixed cost business and as a result an increase or decrease in sales often translates directly to the bottom line. This operating leverage is sig- nificant and a small change in sales can produce a larger change in earnings. When looking at those clubs who had


“While there were pockets of strength, consumer spending and unemployment continued to be a headwind that health clubs are struggling against on a daily basis in a battle to increase revenues.”


24 Fitness Business Canada March/April 2014


an increase in revenues from 2011 to 2012, they also expe- rienced an increase in operating profits as a percentage of total revenues. On the other hand, those clubs who had a decrease in revenues from 2011 to 2012, experienced a de- crease in operating profits as a percentage of total revenues. Responding clubs reported a slight decline in net mem-


berships at -1.3% for 2012. Revenues per member decreased from $720 for 2011 to $686 for 2012. Although revenue per member declined, participants were still able to effectively manage their operating expenses. Operating expenses de- clined from 2011 to 2012, with the typical respondent re- porting an operating profit of 20.0% of total revenue. Expense management can make the difference between a


successful and marginal club. The largest operating expense is typically payroll, which can sometimes be the hardest to manage during financially challenging times. Clubs in this study reported a slight decrease in total payroll as a per- centage of revenue from 45.1% in 2011 to 44.9% in 2012. Additionally, smaller expenses, such as sales/marketing and general/administrative, can add up quickly if not tightly watched and managed. Clubs reported earning more than three out of every ten


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