12 On 2012

The year past, the year ahead, the economy, new challenges, emerging opportunities—industry leaders reflect on these and other issues 

What’s the outlook for 2012? A slow turnaround? Another recession? An economic rebound?

Our guess is as good as yours, respond the 12 industry leaders that CBI surveyed this year. Or, as Richard Bilton, the president of Companhia Athletica in São Paulo, Brazil, put it: “That’s the trillion-dollar question.” 

On some level, though, the answer may not matter as much as some people might think—if the impre

ssive results our sources report are a reliable guide to the industry’s performance as a whole.

Economic and other business challenges, notwithstanding, these proactive, highly successful club operators and industry suppliers continue to reorganize their teams to improve customer service; create innovative products, programming, and services to motivate members and help them achieve their goals; leverage technology and social networking to energize the public; and generously share their ideas and insights with others in the industry.

At any time and in any business environment, those are best practices.           

Trina Gray, owner, Bay Athletic Club, Alpena, Michigan

A 12,000-square-foot, privately owned, full-service, medically-based health club in northeast Michigan. Revenues for 2010 were $650,000. Estimated revenues for 2011 are $1 million; projected revenues for 2012 are $1.3 million.

“Last year, I was named the ‘Change Agent of the Year’ by our chamber of commerce and a ‘Top Three Rising Star in the Fitness Industry’ by FitnessBusinessInterviews.com. That tells me that my team is making a significant mark in our community and in our industry. We help people transition from rehab into lifelong fitness, offer topnotch corporate wellness, and celebrate fitness year-round.

            “This year, I plan to inspire others by sharing our story of having overcome the odds in a financially downtrodden region. I’m also developing more partnerships and alliances to make our Corporate Challenge program a ‘household name,’ not just here, where 80 businesses, schools, and organizations have participated, but worldwide.

            “Unfortunately, many industry leaders make use of ‘shock-factor’ advertising to scare clients into training, or hammer away about fat loss or the coming bikini season—that should scare us. With the healthcare crisis looming, we should be inspiring others to move more and eat better.

            “As for the economy, I don’t have any predictions. I just know that we can’t afford obesity.

            “Once our industry begins to care more about people than pounds, and more about connecting than cash flow, the money and the success will follow. We operate in one of the poorest counties in one of the unhealthiest states in the nation, and, yet, we’re booming, because we aren’t just building better bodies—we’re changing lives.”

Kay Yuspeh, owner, The Elite Sports Clubs, Brookfield, Wisconsin; a member of the IHRSA board of directors 

Four high-end suburban, multipurpose family clubs with a total of 29 indoor tennis courts in Greater Milwaukee; two with indoor or outdoor pools. After losing members in 2008, membership is now growing. Revenues for 2011 increased

9% over 2010, and are projected to rise 5%-10% in 2012.

“In 2011, I reorganized my club and senior staff and began doing more marketing online. We’re growing because our new and existing members have made a conscious decision to stay. In addition, our Quickstart tennis program for ages 10 and under has proven quite successful.

            “This year, we’ll be instituting paperless billing. In addition, I plan to continue developing my senior and middle managers, and to acknowledge them more. Our most pressing issue is getting the word out about the value we offer as a high-end, high-touch club.           

            “Overall, I don’t see much change this year except, unfortunately, for more dirty politics. Both parties need to compromise and work together. I’d also love it if people realized that exercise is preventative healthcare and received insurance benefits for exercising.

            “In our industry, the well-managed clubs and suppliers are stable or growing again. However, many markets are over-saturated. We need to grow the market instead of going after each other’s members. Some clubs in the U.S. may fail, while some international markets will continue to grow.

            “In the future, I’d love to see a five-star program for our industry, similar to the one utilized by hotels, so potential members could distinguish the difference between clubs. A Motel 6 and a Four Seasons both have beds, but they differ dramatically—the difference has to do with price, ambience, and service.” 

Jasmin Kirstein, owner, My Sportlady Fitness GmbH, Munich, Germany; a member of the IHRSA board of directors

A 20,000-square-foot club for women that emphasizes holistic health and fitness. Revenues for 2011 increased 5% over 2010; revenues are projected to increase another 10% in 2012.

“Last year, I restructured my team because two key managers were pregnant. In Germany, employees receive family leave time of up to 14 months at 6

9% of their salary, and have the right to return to work within three years. During this period of adjustment, my staff showed its commitment to My Sportlady’s values and ideals.

            “Still, I wasn’t able to increase revenue as planned. This year, my goal is to increase memberships by 10%, while strictly maintaining quality. While we’re developing more in-depth campaigns to increase sales, this may prove a challenge because German businesses may not grow significantly because of the problems in Europe.

            “I’d like to see the economy expand, and I’d like to see banks provide more capital for small and medium-sized businesses.

            “German clubs performed well in 2011 by becoming more innovative and specialized. This year, our industry will grow and increase its impact on society. The benefits of fitness can become part of everyone’s life if we think beyond calories and exercise, and implement holistic solutions, such as yoga, meditation, and healthy-cooking classes. We have to consider the ‘whole person’ and serve both the body and the mind.”

Kent Stevens, executive vice president, Matrix Fitness, Cottage Grove, Wisconsin

As the premium commercial brand of Johnson Health Tech, a global fitness equipment manufacturing and multibrand marketing company, Matrix offers a complete line of cardiovascular and strength-training equipment. Matrix’s 2010 revenues were $120 million. Estimated revenues for 2011 are $210 million; projected revenues for 2012 are $300 million.

“In 2011, our dedicated focus on innovation, quality products, and delivering an exceptional customer experience produced significant growth for us. However, because of our commitment to robust product development and field-testing, we didn’t launch a couple of exciting new products, as we’d planned.

            “I was a bit surprised that the fitness industry grew last year—especially the low-cost/express sector—despite the sluggish economy.

            “This year, Matrix will invest even more in people and systems to support our growth and serve our customers better. We’ll continue to focus on meaningful innovation in strength and cardiovascular products and console technology. We’ll also collaborate with our customers to identify market problems and develop appropriate solutions.

            “Looking ahead, I’d like to see more favorable macroeconomic conditions and greater consumer confidence. Fortunately, even in this economy, people continue to value health and wellness, and, as healthcare costs constrain the global economy, prevention will become even more important.

            “Matrix foresees further growth in the areas of active aging, functional training, personal/small-group training, and digital workout tracking. We’ll continue to focus our efforts on developing products that motivate people, increase retention, and, in the process, improve the health and well-being of society.”

Alberto Perlman, CEO, Zumba Fitness, LLC, Hallandale, Florida

The largest branded fitness program in the world, now in 125 countries, with 12 million people taking classes every week. Revenues for 2011 rose 80% over 2010.

“In 2011, we officially hit 2.3 million Facebook fans, making Zumba the only fitness brand with such high levels of online engagement. Zumba is a movement, largely because we’re bridging the gap between music and fitness, which is great news for clubs. Outstanding artists like Pitbull and Wyclef Jean have created music for us, attracting millions to our community.

            “The Zumba Fitness video game has become No. 1 in the U.S. and Europe.

            “Among our important new initiatives is Zumbatomic for kids. We can help fight childhood obesity by getting more schools to incorporate it into their curriculum, and more clubs to add it to their class schedules. Recently, we partnered with Nickelodeon for its World Wide Day o

f Play initiative, and we’ve also launched Zumbatomic classes in conjunction with the First Lady’s Let’s Move campaign.

            “One of our goals this year is to convince more corporations to send their employees to Zumba classes at clubs. Human-resource managers have called us to report that, not only does it help employees stay fit, but that the ‘Zumba happy factor’ keeps them smiling all day.  

            “We’d like to see 15 million people taking Zumba classes every week.

“If I had my way, people would be as excited to go to a health club as they are to go to nightclubs.”

Scott Goudeseune, president & CEO, American Council on Exercise (ACE), San Diego, California

One of the largest nonprofit fitness certification, education, and training organization in the world, with nearly 50,000 certified professionals who hold more than 55,000 ACE certifications. ACE is also a valuable resource that consumers turn to for health and fitness information.

“In 2011, we released several innovative research studies, and I was appointed president-elect of the board of directors of the National Coalition for Promoting Physical Activity (NCPPA). We became involved in the Joining Forces Initiative through First Lady Michelle Obama and the President’s Council on Fitness, Sports, and Nutrition (PCFSN), and we’ve begun to encourage other certification organizations to join this initiative, though we still have bridges to build.

            “These efforts support one of ACE’s principal goals, that of combating America’s obesity epidemic—a personal goal for me, as well.

            “We’ve experienced significant growth as we’ve worked to create programming that elevates the knowledge and credibility of our certified professionals, while providing consumer benefits that support our mission. This year, our goal is to continue delivering instruction that’s progressive, rooted in sound research, timely, and relevant. We’re also identifying partners to expand into new markets, including allied health, healthcare, and wellness.

            “Still, we’re considering the possibility of a renewed recession and less discretionary spending during the coming year. Financial concerns, compounded by an obesity epidemic, are creating more demand than ever for physical activity, stress relief, and mind/body strength. At the same time, employers are becoming more aware of the business benefits of fitness, and technology is providing new ways to encourage consumers to enjoy an active lifestyle.”

Richard Bilton, president, Companhia Athletica, São Paulo, Brazil; a member of the IHRSA board of directors 

A 16-club chain of multipurpose facilities located throughout Brazil. Revenues in 2010 were $48.8 million. Estimated revenues for 2011 are $52.9 million, and projected revenues for 2012 are $58.8 million. 

            “This year, we plan to open a facility in northeastern Brazil, the only area where we currently don’t have a club. Overall, I don’t know how the year will play out—that’s the trillion-dollar question!

            “Looking ahead five years, it’s clear that we do face some challenges. The tax situation in Brazil is the most critical problem—it’s extremely expensive and requires a lot of work. We also need to work with the government to reduce the taxes in our sector. In addition, the relationship between the fitness and medical and insurance industries has to improve a lot—that’s very important to our nation’s health.”

Nerio Alessandri, founder and president, Technogym, SpA, Cesena, Italy; Technogym USA Corp., Seattle, Washington  

Technogym is a world leader in products and services for psychophysical wellness and rehabilitation. The company has also championed a comprehensive lifestyle based on regular physical activity, balanced diet, and a positive mental attitude. Revenues for 2010 were $460 million. Estimated 2011 revenues are $545 million; projected revenues for 2012: N/A.

“Last year, we introduced Visioweb for all our cardiovascular products, which offers TV, Internet, and iPhone connections during workouts, and represents a revolution for clubs in terms of attracting new clients and retaining existing ones.

            “We also launched our patented Kinesis Station Line, which combines the stability of a seated exercise station with the movement versatility of free cables. Now, users can train for flexibility, strength, and core balance at the same time in personal-training, group-training, or individual fitness-floor training sessions.

            “After years of working to raise awareness about the social opportunity that wellness affords, I’m really proud that the most important organization in the world has come to our side. During the Davos World Economic Forum, I was invited to sit on the board of the Wordwide Wellness Alliance, a workplace wellness initiative promoted by 36 world-class firms. The alliance has already helped organize a U.N. forum on noncommunicable diseases.

            “This year, we’ll serve as the official supplier for the London Olympics, and will inaugurate Technogym Village, which will include our headquarters, research and manufacturing centers, and a venue open to anyone who’d like to learn about wellness.

            “What’s our biggest goal? To help our customers make money. While innovation in products, design, programs, and content has always been key to our growth, we’ve always been focused on this final result.

            “As for the world economy, governments need to fix the current unsustainable public finance problem quickly. However, the outlook for our industry is positive, thanks to strong consumer demand for wellness.”

Todd Durkin, owner, Fitness Quest 10, and Todd Durkin Enterprises, San Diego, California; 2005 ACE and 2004 IDEA Personal Trainer of the Year 

An 8,000-square-foot facility offering personal training, sports performance, Pilates, massage therapy, and chiropractic/physical therapy to adults, young people, and professional and elite athletes. Clients schedule approximately 600 private and small-group sessions per week. Projected revenue increase for 2011-2012: 8%-10%. 

“Last year, we launched three levels of the Todd Durkin Mastermind coaching program, including one program for women only. Mastermind is designed to take passionate, hungry, success-driven fitness professionals to world-class levels in business and in life. This advances my mission of inspiring greatness every day, and my vision of creating a worldwide impact.           

            “This year, I’m working on my second book, a collection of short bedtime stories designed to encourage children to fall sleep while feeling empowered. My first book, The IMPACT! Body Plan, published in 2010, outlines a 10-week body and life transformation program. We’re also investing in ToddDurkin.com, which offers more than 40 DVDs for consumers and fitness professionals. My team and I will be producing additional consumer products this year.

            “In general, I think people are much more cost-conscious today than they were five years ago. That said, fitness practitioners can reinvent themselves, create a new niche, and market their services more effectively. Many club owners and managers, especially those with small studios, need to learn more about business. It’s essential that, in addition to knowing about exercise, yoga, Pilates, massage, etc., they also understand marketing, client acquisition and retention, customer service, systemization, and leadership.

            “I’d also like to see more industry collaboration. While competition keeps us laser-focused, many people require our help. Whatever your niche, work with others in your community; offer adjunctive therapies and services so you can refer clients to one another.”

Rachel Cosgrove, co-owner, Results Fitness, Santa Clarita, California

A 7,000-square-foot functional training facility that offers expert fitness coaching with every membership and guarantees results. Revenues for 2010 were nearly $1 million. Revenues for 2011 are estimated to be 10% higher; revenues are projected to grow an additional 10% in 2012. 

“We’re proud to say that, in 2011, while many companies were struggling in this economy, we achieved record numbers, hired more people, and gave raises to many members of our team. While we accomplished everything we set out to do, we’re constantly learning, and, every three months, we set new goals. For us, it’s about pushing the envelope and staying ahead.

            “Because we tend to implement ideas frequently and quickly to maintain our lead, the biggest challenge for us is keeping the lines of communication open with our team, so that everyone always knows what’s going on.

            “As for the economy, it’s clearly separated clubs with strong business practices and good customer service from those that don’t have what it takes. Surprisingly, many gyms remain wed to what they’ve been doing in the past—even though it’s no longer working.

            “Our greater mission is to change the way fitness is offered, and we’re mentoring 60 gyms around the world that employ our systems. People want clubs with a supportive culture and a strong customer-service focus. We believe that, to create this sort of atmosphere, the industry needs to move from one-on-one to semi-private training, and from fixed machines to functional training protocols.

            “Most people require a coach to help them meet their goals, and I hope that, in the future, making use of a personal trainer becomes as important as seeing your doctor. I also hope more gyms become that much discussed ‘third place’—a real community that people enjoy and feel comfortable in.”

Mark Miller, vice president, Merritt Athletic Clubs, Baltimore, Maryland

A chain of nine multipurpose clubs in Greater Baltimore, including three that are open 24 hours a day. Revenues for 2011 grew an estimated 8% over 2010. Revenues are projected to grow 11 % in 2012.

“Last year, we had a great start, followed by a stall in the summer, which was then followed by a rebound—it was a real roller coaster ride. What we wanted, though, was to create steady growth. Although our cancellations fell, we would have liked to have trimmed our attrition rates more.

“Apparently, many people haven’t yet placed health and fitness at the center of their lives.

            “This year, our goal is to produce a breakthrough. My objective, as a leader, is to transform our organization. We’re now focusing more on purpose—that is, on the drivers specified in our mission statement. I believe we’re on the edge, the crest, of a great tipping point; it’s just a matter of being very intentional with respect to our actions.           

            “The challenge for us now is to continue to find and empower people to develop the right team—one that will deliver a club experience that makes us the best part of our members’ day. Doing so will make it possible for us to reduce cancellations, and drive revenues through greater sales, member engagement, and programs and services.

            “As for the economy, I think that we’re actually in a phase of slow growth. As the world gains confidence and the country creates more jobs, I believe we’ll see more people employed and able to invest in their health.”            

Skye Kaiss, director of operations, Gold's Gym Regina, Saskatchewan, Canada

Two Gold’s Gyms franchises, with combined 2010 revenues of $5.5 million. Estimated revenues for 2011 are $6 million; projected revenues for 2012 are $6.3 million.

“In 2011, we had a good year. Our personal-training revenues, for instance, grew by 25%. In addition, I teamed up with a software developer to create Club Vitals, a fitness-equipment-maintenance software program. We created it initially to meet our own needs, but, now, we’re selling it to clubs in Canada, the U.S., Australia, and Ireland.           

            “Our goal, for a while, has been to open a third Gold’s Gym in Regina. However, the Canadian economy, especially in Saskatchewan, is growing, and so land and construction costs have gone through the roof; also, our franchise royalties have increased significantly since we opened our first club in 2006.           

            “This year, we plan to continue to grow our membership base and our personal-training department, while maintaining a slim hope of opening that third location.

            “Overall, compared with other sectors, the fitness industry has fared well in Canada, with most operators experiencing growth. However, I’d like to see more innovation. It seems that we’ve taken a step back with so many high-volume, low-priced clubs popping up. This model depends on members not using clubs. That hurts all operators, as well as people’s health.

            “Over the next five years, I think we’ll see more industry consolidation and the emergence of innovative technologies that will motivate people to use clubs and add even more value to their membership.”