Mixed Results for Second Quarter Club Performance

BOSTON -- The majority of participating clubs in the International Health, Racquet and Sportsclub Association’s (IHRSA) 2009 Second Quarter Index report showed improved performance in that quarter over first quarter, but performance was still worse than second quarter 2008, according to IHRSA. The index, which demonstrates the financial performance of a sample of the commercial health club industry, is a survey of 18 U.S. health and sports club companies, representing a total of 632 facilities.

For second quarter 2009, participating clubs in IHRSA’s Index reported increases in three key performance metrics when compared to first quarter 2009. Total revenue increased by 0.2 percent, non-dues revenues improved by 2.8 percent, and EBITDAR increased by 7 percent. Total membership/dues revenue dropped slightly by 1.7 percent.

Additionally, EBITDAR as a percent of total revenue improved. In the second quarter of 2009, EBITDAR was 30.7 percent of total revenue, while first-quarter 2009 EBITDAR was 26 percent of total revenue.

“Improvements in these metrics signify that club operators are marketing and profiting from non-dues services as well as employing cost management strategies in the short term,” Katie Rollauer, IHRSA’s senior manager of research, said in a release from the nonprofit association.

However, when results from second quarter 2009 are compared to second quarter 2008, the IHRSA Index indicated decreases in total revenue, membership dues/revenue, and non-dues revenue. Declines have been under double-digits, with total revenue dropping by 5.2 percent, total membership/dues revenue down by 5.3 percent, and non-dues revenue decreasing by 3.5 percent. These decreases in club profit centers could reflect the national drop in gross domestic product by 1 percent in the second quarter, as consumers have limited their discretionary spending over the past year.

IHRSA’s Quarterly Index also reported a drop of 8.1 percent in EBITDAR for the second quarter 2009 compared to the same quarter last year.

“It is evident that further cost-cutting may be necessary for clubs to improve EBITDAR relative to 2008,” Rollauer said.

IHRSA cautions that this data is intended to provide a snapshot of U.S. health club industry performance. The results are based on a small sample of companies, and care should be taken when making comparisons of these findings to the overall industry-at-large. Industry Insights Inc. conducted the survey for IHRSA.

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