U.S. health club revenue fell to $15 billion in 2020, a 58 percent decrease from its all-time high in 2019 of $35 billion, according to estimates from IHRSA. The industry lost $5.5 billion in revenue in April and May alone.
IHRSA shared a rundown of some of the losses the industry faced in 2020 due to the temporary closures of health clubs and studios caused by COVID-19. Those closures lasted for a few months for many states, but states such as California, Oregon and Washington faced almost a full year of closures or restrictions on capacity and indoor workouts.
As of Dec. 31, 2020, 19 percent of boutique studios and 14 percent of health clubs had closed permanently, according to data that IHRSA collected from payment processing companies.
Eight major health club brands have filed for bankruptcy: 24 Hour Fitness, Gold’s Gym, Town Sports International, In-Shape Health Clubs, YouFit, Cyc Fitness, YogaWorks, and Flywheel.
“Health club operators were holding off lenders seeking debt payments, landlords seeking full rent payments, [and] members still on freeze, [all] with an increased cost of operations related to safety and cleaning,” Pete Moore, founder of Integrity Square, told IHRSA. “Larger club groups used Chapter 11 bankruptcy protection to reorganize, shed creditors, reject bad leases in order to reset and survive. Smaller footprint clubs and studios had to strongly consider filing for bankruptcy.”
The pandemic also affected employment with 1.4 million people, or 44 percent of the fitness industry workforce, losing their jobs in 2020, according to IHRSA.
Visits to health clubs also decreased last year, particularly in second quarter 2020 when visits dropped by 80 percent for some of the largest brands (compared to second quarter 2019), according to data from Placer Ai. Visits also were lower in third quarter by 50 percent and in fourth quarter by 38 percent.
IHRSA is urging health club operators to contact their federal Congress members to urge them to support the Gym Mitigation and Survival Act (GYMS Act), which would create a $30 billion recovery fund in the form of Small Business Administration (SBA) grants that would be available to fitness business owners similar to other previous relief programs.