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Monday, Mar 18, 2024
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Fitness Clubs Shaping Up For Healthy Profitability

Investments, stocks, mutual funds and housing prices may be down, but bench presses, crunches and curls are still up.

Fitness centers such as 24 Hour Fitness, Lava Sport & Fitness and FIT Athletic Club find that despite the economy, they not only maintain sales, but experience growth.

In a February 2009 Money Magazine poll asking readers what five things they would give up to save money and trim their budgets, 48 percent of respondents said they would not give up their gym memberships.

“People are going to search for the best value (for their money) but not cut it out,” said Scott Lutwak, owner of the FIT Athletic Club in downtown San Diego. “I knew the economy would go down, but that fitness would remain a priority in other people’s lives.”

With fitness holding tremendous staying power at a time where discretionary spending is being slimmed down, local clubs such as Lava and FIT focus on retention of members and word-of-mouth advertising to keep them buoyant.

“We’re building upon being a full-service fitness club,” said Steven Wade, CEO of Lava. “At the same time we do mixed martial arts, boxing or kickboxing and we also pull from the 500 group classes per month per location.”


Boutique Offerings

Lava and FIT’s models of combining boutique offerings , pilates, yoga, gravity classes, boxing , under one roof and including those services in the monthly price instead of charging like larger chains has kept members and has been a plus.

“The amount of value, the programming, having more amenities and the convenience factor are a big draw,” said Debbie Lichter, general manager of Lava’s Point Loma location. “There’s no secret sauce, the club sells itself and people immediately see the difference.”

The difference has been felt in Lava’s checkbook also. With revenues of more than $5.5 million, Wade’s self-financed fitness venture has expanded to five clubs in San Diego, three of which have opened in the last 18 months.

“We’re profitable,” said Wade. “Obviously, there’s a lag with revenues because three of the clubs are so new and going from two to five clubs put a huge drain on the chain’s resources, but right now we’re digesting the growth we’ve made, planning our next move with programming and then in 2010 looking to resume plans to expand.”


Challenging Environment

Profitability in the fitness market hasn’t been exclusive to smaller, more high-end chains like Lava and FIT. Major fitness centers seem to not have been overlooked either.

“It’s been difficult; it’s been a challenging business environment for everyone, but we’ve continued to grow membership,” said Carl Liebert, CEO of 24 Hour Fitness. “We’re pretty affordable, about a dollar a day to be a member, and people are still focused on staying healthy.”

Liebert said that emphasizing personal training and certain services has been difficult because they aren’t as affordable as the basic membership. Yet 24 Hour has found group exercise classes are popular and proven a big draw.

“Our job is to take care of every member,” said Liebert. “If we do that, I think, we’ll be able to weather the storm.”

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