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Clubs Report Steady Growth in First Quarter 2006

BOSTON - Commercial health club financial performance improved for the quarter ending March 31, 2006, compared to the same period last year, according to a recently conducted survey of 26 North American health and sports club companies. The 26 small to mid-size clubs represent 175 facilities or an average of seven clubs per company. The survey was conducted for the International Health, Racquet & Sportsclub Association (IHRSA) by Industry Insights Inc.

The IHRSA index found that on a per club basis, a club grew its revenue an average of 3.8 percent to $1.2 million in revenue per club for the quarter. The participating companies also reported improved same-store revenue for clubs that have been in operation for at least two years, by an average of 5.1 percent to $1.2 million.

“The commercial health club industry typically shows growth during the first quarter, as Americans begin their new year’s resolutions and make a commitment to get fit,” said Joe Moore, president and CEO of IHRSA. “However, the results from this quarter indicate that even with a low to moderate rate of growth in total number of members, there was a highly respectable rate of growth in non-dues revenues. Clubs are realizing the importance of retaining their current members and offering them more quality cost oriented services.”

A 10.6 percent increase in the club’s same-store non-dues revenue is a testament to clubs successfully offering more at cost services. However, the IHRSA index found that the average earnings before interest, taxes, depreciation, amortization and rent (EBITDAR) increased by a moderate 1.5 percent to $0.25 million per club. As a percentage of revenue, EBITDAR was 21.1 percent of revenue for the first quarter of 2006 and 21.6 percent of revenue in 2005.

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