Index Shows Slight Improvement in 2008 Club Performance

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BOSTON -- A survey of 14 leading U.S. health club companies found that membership dues revenue and nondues revenue improved slightly in 2008, according to the International Health, Racquet and Sportsclub Association (IHRSA) Annual Financial Index. The companies in the index, which demonstrates the financial performance of a sample of the commercial health club industry, represented 183 facilities.

Membership dues revenue for these club companies increased by 3.4 percent over 2007, while nondues sales improved by 1.3 percent. Total membership accounts increased by 1.7 percent in 2008 and EBITDAR (earnings before interest, taxes, depreciation, amortization and rent) also improved by 3 percent.

“Despite a less-than-stellar performance in the third and fourth quarters of 2008, clubs were able to improve annual results in 2008 over 2007 due to strong performance during the first and second quarters of 2008,” Katie Rollauer, IHRSA senior manager of research, said in a release from IHRSA.

While health clubs improved performance over 2007, clubs in the IHRSA survey reported only a slight increase in total membership accounts in the fourth quarter of 2008 compared to the fourth quarter 2007, up 0.4 percent. However, total dues revenue dropped a marginal 0.7 percent compared to the fourth quarter in 2007, while total nondues revenues were down by 5.6 percent.

“It is not uncommon for members to slow spending on non-dues revenues during the fourth quarter when there is plenty of competition for their dollars and time during the holiday months,” Rollauer said.

EBITDAR decreased by 1.6 percent in fourth quarter 2008 compared to fourth quarter 2007, indicating that clubs must continue to explore expense management options during the current economic climate, Rollauer said.

"Sophisticated expense management will help carry a club through challenging times, when revenues may decrease or remain stagnant due to discounted services or reduced consumer spending,” she said.

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