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Monday
Jul132015

Asia-Pacific Overview: From Mature to Emerging Markets

While the regional economy in the Asia-Pacific has maintained the sound momentum of growth on the whole, the Asia-Pacific fitness market continues to be stratified, according to the 2015 IHRSA Asia-Pacific Health Club Report, which was developed in cooperation with Deloitte and sponsored by Precor.

Mature markets, such as Australia, have rebounded from the impacts of the global financial crisis and the relative downturn in the fitness industry from 2010 to 2011, and have returned to their previous growth patterns. The industry has seen growth in total fee revenue due to higher demand, however, profitability remains stable given the high competition level, higher rental fee, and payroll expenses. The market is slowly transiting toward the 24-hour gyms, which also tend to emphasize affordability over services. Over the next three to five years, the fitness industry is expected to reach a plateau, and market growth is expected to be limited.

In emerging maturing markets, such as Jakarta in Indonesia, Kuala Lumpur in Malaysia, and Taiwan, major players such as Fitness First, Celebrity Fitness, Gold’s Gym, True Fitness, and others have established solid scale and market presence in the region. These players are gradually professionalizing and gaining market share, compared to 2011. These players have succeeded in offering a consistent product, but have tailored their offerings at regional markets in efforts to seek differentiation from competitors.

For less developed markets, such as India, Tier 2 and Tier 3 cities in Philippines and Indonesia, structured exercise is not an indispensable part of the general population’s habits. Industry players have little presence in rural areas of these countries compared with top tier cities and thus are not accessible to consumers. However, the rapid economic growth in India and China signals the market potential for the health club industry.

In China, the growth of the fitness industry is not in proportion with the growth of the overall economy of the country, due to a disproportional role that real estate plays in the industry and aggressive expansion and unsustainable fee models (such as dues paid in full up front and multi-year contracts). In particular, rents tend to be high and the fitness industry does not have preferential real estate pricing it may have elsewhere as developers tend not to appreciate the potential a fitness club has in driving traffic.

Across the Asia-Pacific, health clubs are diversifying in their business models and product offerings. Small-sized, budget gyms and studios specializing in personal training, Yoga and Pilates instruction, and cardio programming are gaining more popularity among operators and members. There is an increasing awareness of integrating technology into service offerings among the leading players. For instance, Fitness First launched applications in Australia and UK, which allows members to find clubs and view classes quickly and easily. Celebrity Fitness has introduced RFID for lockers, gym membership card and access. Fitness equipment suppliers have designed platforms that allow users to integrate technology into their fitness routines, share activities online, monitor workout progress, and manage training programs.

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