TALKBACK
Kath Hudson • Journalist • Health Club Management EVERYONE’S TALKING ABOUT . . .
Expanding overseas O
ne year ago in this panel feature, we looked at how health and fi tness brands could go global. At that point,
however, the situation was not overly positive: Fitness First was the biggest global player but had sold off clubs in Benelux, France, Spain and Italy, as well as the UK. Few companies seemed to have ambitions to become big global players. A year on, things have changed. The UK
economy is growing again, house prices and consumer confi dence are on the up and the health club industry appears to have toughed out the recession. There’s certainly a buzz about, but
will this translate into the next wave of international expansion for operators?
A number of chains have announced
they are looking at opportunities overseas. After some tough times, Fitness First is growing again, especially in Asia. Virgin Active is also expanding across borders, and Holmes Place has announced it’s stepping up expansion in central Europe and the Iberian Peninsula; with 31 per cent of its membership now in continental Europe, the chain has designs on being the leading premium health club in the region. Meanwhile, in the budget sector,
easyGym says it’s setting its sights on countries where easyJet has a strong presence, leveraging brand recognition. It expects to have 200 gyms, and one million members, in multiple countries
MARK HUTCHEON Director of communications • Fitness First
“M
any operators are already expanding overseas: if you have
a solid base in one territory, it makes it easier to go into markets with parallels. At the moment, a lot of places are
ripe for expansion. Fitness First looks for sites with rising populations and rising incomes – because of this, we think there will be a wave of expansion on a city by city basis, rather than country by country. Delhi, Istanbul and Rio are currently looking like they can be future hotspots. If you get in early with a flexible model and competitive proposition, when the penetration rate is still only about 5 per cent, there are good opportunities for expansion. However, the risks are high. Overseas expansion is
not a quick buck: it’s a long-term proposition so plenty of capital, patience and above all integrity is essential to long-term success. Companies have to invest in service and standards – they can’t cut corners and must continually differentiate to meet consumer demand. Going forward, Fitness First’s international expansion will
be more about digital products and services, with differently priced online memberships that take our expertise beyond the gym to a potentially larger audience.
”
JOHN KERSH International development • Anytime Fitness
“I
’m not sure we’re set for a rash of overseas development. Expansion
across borders requires an immense amount of capital and the risk of failure is high. It’s difficult enough for fitness operators to stay relevant and successful within their own borders, much less when spread thin across multiple countries. A major challenge when expanding is to not divert attention
from domestic business, while also devoting adequate attention to localising the brand in new markets. Local competitors know the market much better than a foreign operator and can more easily exploit local opportunities. A foreign operator can run into unfortunate challenges by misreading the market or making mistakes with legal or financial assumptions. Although we’re seeing lots of interest from the Middle
East and Asia, the challenge in both regions is the very low awareness of the benefits of exercise and joining a health club. I view these markets as a very long-term growth opportunity. At least one Australian company is expanding into Europe
now, and several Asian and Latin American companies are crossing borders within their own continents. A handful of American and British companies are dabbling with foreign expansion, although very few are making great strides.
” 34 Read Health Club Management online at
healthclubmanagement.co.uk/digital October 2014 © Cybertrek 2014
As the economy improves, will health and fitness operators start to eye new markets, bringing about the next wave of international expansion, or will they build on their current bases?
within the next six to seven years. And The Gym Group has also recently announced plans to expand into “Europe and beyond”, kicking off in 2015. Is this a trend more operators will
follow? Will more budget chains look for new markets for their concepts as the competition gets tougher in mature markets? Or will barriers such as local market knowledge and capital costs make players more conservative? Where are the main areas of
opportunity, and will all the operators be fi ghting over the same territories? How risky is an overseas development strategy, and what part might technology play in international expansion? We ask our panel of experts for their thoughts.
ARE YOU LOOKING TO EXTEND YOUR OPERATION OVERSEAS? EMAIL US:
HEALTHCLUB@LEISUREMEDIA.COM
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