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The Club Operator's Guide to Consolidation

McCarthy on Staying Competitive

"I'm not one of those who fears for the future of independent clubs," says John McCarthy, IHRSA's executive director. In fact, he believes the industry has plenty of room for independent clubs and global chains.

There is a reason for this optimisim. McCarthy bases his beliefs on the restaurant industry.

What do health clubs have to do with eateries? Plenty, according to McCarthy. Both are in the hospitality industry, and both serve up an experience, not a product.

If our industry can learn anything from its restaurant counterparts, it's that small, independent businesses can coexist profitably with chains. For example, restaurant chains do well, but few people will name The Olive Garden or Houlihan's as their favorite place to dine out. Instead, they'll probably pick a small, neighborhood restaurant, where everybody knows the owner and the customers and waitresses are on a first-name basis.

This type of camaraderie helps smaller businesses, but location plays an important role as well. Note that popular dining destinations are often close to frequent customers. In other words, these establishments are convenient, an important factor in the health and fitness industry as well. "Fundamentally, this is a convenience business, and people want to go to a club where they work and live," McCarthy says. "Chains can't negate that advantage."

Independent clubs have another advantage: The owner can concentrate all of his efforts on a single location. Someone who owns 500 clubs, on the other hand, has to divide his resources appropriately among all of the facilities. And he certainly can't get to know every single one of his members.

McCarthy recommends that independent operators use this to their favor. They can, and should, think 24/7 about ways to make their single operation the best it can be. They should concentrate on improving service, providing the freshest facility and offering the best equipment. However, there's one thing indepedent operators shouldn't concentrate on: price.

"The worst thing an independent club can do is say, 'I'm going to beat the chains on price,'" McCarthy stresses. "That's pure stupidity. They have to beat them on the experience."

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