looking at a number of markets. As a result of our work over the last few years, we now have good visibility of a number of possible sites and would expect to open our fi rst new club in Europe in 2012.”
opco-propco Talk has been of DLL adopting a management contract approach to achieve its international ambitions; indeed, DLL’s operating company has already been separated from its property company. So is the property side of things taking a back seat going forward? “Our business is still wholly owned at
a ‘top-co’ level,” says Lloyd. “The capital structure is now opco-propco, and we function within that as an operating company, but the property side of the business remains relevant. However, the way we’re looking to fi nance our development is more on an operating model as opposed to developing our own wholly-owned freehold sites. “Even on the new clubs in the UK,
we’re working with property developers who fi nance the building, with DLL then investing in the fi t-out and taking on long-term leases. It makes the whole model more scalable in terms of the availability of capital. However, we’re not looking to pass on responsibility unless there are signifi cant benefi ts to our business of having strategic partners.”
september 2011 © cybertrek 2011
Strong pipeline: The DLL Exeter club, which opened late last year, is part of an ongoing plan to open one or two clubs in the UK each year
With that in mind, the company’s
international expansion plans will adopt two different models. For European markets such as Spain, where DLL already has expertise, as well as in neighbouring European countries, the company will continue to invest its own capital. However, in markets such as Russia and the Gulf, DLL will indeed venture into management contracts. Says Lloyd: “We’re beginning to look
at using our brand and our management expertise to set up management contracts, much like the four- and fi ve-star hotel operators who develop their hotel portfolios on a management contract basis. We’re also fi nding that local property investors want to own high quality assets, such as our type of club, within their developments. “That’s the sort of model we’re looking
to take further afi eld, to territories such as Russia and the Gulf where it’s harder for us to really know the local market without having a strategic partner or an investment partner – markets that we would fi nd less easy to prioritise for our own capital.”
Interestingly, other operators such as
Fitness First have also held back from running their own clubs in countries such as Dubai, instead opting for a franchise model in these markets. Lloyd is, however, quick to stress the difference between this approach and the DLL management contract model: “We’ll have a much greater involvement in these businesses – it’s a much more operational model. We’ll be applying our brand and taking on a bigger management role than would be the case in a franchise, which essentially creates a framework from which other people can run the business.” He continues: “We haven’t got as far
as outlining number of sites or exact timings, but discussions are ongoing with a number of interested parties. It may take a little longer to launch our fi rst management contract site, as obviously our partners will need to arrange the fi nancing; we’re less in control of the timings. However, we’re in a very positive position and I’m confi dent DLL will grow its international business in 2012.”
home and away DLL also has a strong UK pipeline, with the £11m Exeter club opening late last year and a new £15m site scheduled to open its doors in Farnham in December
Read Health Club Management online at
healthclubmanagement.co.uk/digital 31
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