50 Million Served

50 Million Served

IHRSA's goal is to have the fitness industry reach 50 million members by the year 2010. Can we pull it off?

For those involved in the health and fitness industry, the “Golden Arches” represent the archetypical enemy, packing on the pounds in a country that has tipped the scales as the fattest nation on earth. One in two adult Americans — 97 million — are overweight, and 58 million are obese. Compare these stats with McDonald's, the epitome of unhealthy nutrition, bragging of “billions served.”

While it would be overly simplistic to blame Ronald McDonald and friends for obesity (certainly inactivity is also at fault), it would be egregious not to try to understand the fast-food giant's success with consumers. For the sake of the health industry, we need to target those “billions” and get them into health clubs.

Well, maybe billions is setting the bar a bit high. Millions would be sufficient — 50 million, in fact. That's the number of members that IHRSA would like to see in U.S. health clubs by 2010. Globally, the goal is 100 million.

A noble plan, but is it realistic? John McCarthy, IHRSA's executive director, thinks so.

“We wanted to set a goal that we felt we had a reasonably high chance of reaching,” he says.

Consider the numbers. As of 2000, there were 32.8 million health club members (about 11.6 percent of the total U.S. population of 281 million) in the United States, according to the most recent IHRSA/American Sports Data Health Club Trend Report. The United States Census Bureau projects that there will be as many as 311 million people living in this country by 2010. So in order for our industry to hit the 50 million mark, fitness facilities must bring in 16 percent of the total population.

Gary Cooper — leisure research analyst for Banc of America Securities, and author of its October 2000 Fitness Industry Overview — estimates that clubs must grow 5.2 percent annually to achieve this goal: “That strikes me as aggressive, but it's definitely doable.”

Doable if clubs remain aware of changing demographics. For example, baby boomers currently comprise nearly 40 percent of the health club population, according to the Fitness Industry Overview. As boomers age, their needs will change. To retain the boomer market through 2010, clubs must add more low-impact programming (e.g., yoga, Pilates, water exercise classes), argues Herb Lipsman, vice president of development for the Texas-based Houstonian Hotel, Club and Spa, as well as an IHRSA board member.

“It doesn't take a crystal ball to predict what will happen — 10,000 baby boomers are reaching age 50 every day,” he says.

Young at Heart

Boomers won't be the only population driving clubs toward 50 million members. To achieve long-term growth, clubs must also look at younger generations, who could prove a bonanza for the fitness industry. Although people between the age of 18 and 34 currently comprise 33 percent of the club membership, the echo boomers — a demographic between the ages of 6 to 24 that currently numbers 74.7 million — will be bulking up this segment during the next decade. That's why IHRSA has singled out echo boomers as a big part of its 50 million initiative.

By recognizing prospects (such as echo boomers) and taking steps to attract them, clubs increase the likelihood of reaching the 50 million goal. As Ed Trainor, vice president of fitness services and product development for the Town Sports International (TSI) chain, points out, clubs can't stick to “business as usual” and expect to hit the mark.

For starters, Trainor, like IHRSA, suggests that clubs concentrate on kids' programming, to assure the financial longevity of the fitness industry. “If we work at both ends and get them in the clubs when they're young, then we'll have them when they're middle-aged,” he reasons.

Trainor also believes that clubs must demonstrate their expertise to the medical community, which typically dismisses the fitness industry as unprofessional. By showing doctors and other specialists that clubs can help improve the health of patients, clubs can develop business-building medical partnerships that result in referrals.

“We've improved through education and training, and we're now qualified to be able to handle special populations,” Trainor says.

These special populations include physical therapy patients and people suffering from conditions such as diabetes and heart disease. As McCarthy points out, these and other health problems are rampant, and, by contributing to the continuum of care, the fitness industry can move closer to 50 million members.

A Feminine Touch

While Lipsman suggests that clubs look toward special populations to reach 50 million, he believes that the fitness industry can increase participation by concentrating on an obvious demographic: women. “If you focus on the women, who are more predisposed to thinking about fitness, then the men and children will come,” Lipsman says. “I don't think the industry has really taken that approach before.”

Other approaches include offering something more than just a membership. Certain people will never sign up for a regular membership, but that doesn't mean that health clubs can't serve them. “I think the way in which we'll get to [50 million members] is to broaden the options that we have for people in joining a fitness club,” says Jill Kinney, the COO and co-founder of Club One Inc., a large, California-based health club chain.

To reach people who aren't exercising in a traditional club setting, clubs must share their expertise in nontraditional fitness setting (e.g., corporate fitness sites, community centers, etc.), Kinney reasons. She speaks from experience. While Club One owns 20 commercial centers with a membership base of 80,000, it also manages 50 corporate fitness centers that collectively serve 500,000 people. This works out to be 4,000 people per club, and 10,000 per corporate location.

The Call of Convenience

Kinney believes that convenience attracts more people to the corporate centers. Plus these sites have a somewhat “captive audience”; in other words, the employees and the fitness center are in the same location.

As Kinney demonstrates, convenience is often what people need to get started on an exercise program — and to stick with it. In fact, the convenience (or location) of a facility is the No. 2 reason why people join clubs, according to the Fitness Industry Overview.

Not surprisingly, convenience also accounts for the popularity of fast-food chains. Still, there's a big difference between the convenience of, say, a McDonald's and the convenience of a health club. You don't need to go far to find a cheeseburger. So should there be a health club on every corner?

That may be taking things a little too far, but McCarthy does believe that the industry requires 8,000 new clubs to handle the growing membership base. However, at first glance, this doesn't seem to leave much growth for existing clubs. Current estimates indicate that the 17,000 fitness facilities in the United States serve approximately 1,900 members each (on average). If, by 2010, membership grew from 32.8 million to 50 million and the number of clubs grew from 17,000 to 25,000, then each club would average 2,000 members each. This only equals compounded annual growth rate of 0.007 percent, or 118 more members per club within 10 years.

This begs the question: Does this industry really require more clubs?

Yes, Trainor answers: “I think there's more room for more clubs and there's a need for more clubs.”

McCarthy, himself, argues that, while certain geographic locations are congested with clubs, there are still many marketplaces in the country being underserved. An expansion of existing clubs, or the opening of new facilities, would benefit both the industry and the consumer, he points out.

Gene LaMott, COO of Gold's Gym International, offers one caveat. If clubs decide to expand, they must not overlook their own capacity. “I would just caution the businesses as they expand that they don't expand outside of their abilities,” he warns.

More clubs would mean more convenience, but what about people who have never tried a club? Will convenience alone draw them in? Probably not. That's why McCarthy stresses that, in order to reach the goal of 50 million members, clubs must improve community-based programming, as well as the current industry standards and ethics — to make people comfortable in health clubs.

Fortunately, if IHRSA's “Fitness American-style” survey is any indication, people are interested in the benefits of exercise. Even though many Americans are overweight, 97 percent of the people who participated in the survey placed maintaining good physical health at the top of their personal priorities. In addition, 91 percent ranked keeping up their physical appearances highly.

If the majority of Americans value health and physical appearance, then they can learn to value health clubs. “The industry is on the right path,” says McCarthy, “but there are two or three areas where we need to work together and improve together. We really have to reach out in our communities because there are millions and millions of Americans who are uncomfortable walking into a health club.”

Charley Swayne, owner of the Valley View Fitness & Racquet Club in Wisconsin, would like to see IHRSA invest in a national initiative that will draw these “uncomfortable” prospects into clubs. Possible ideas, he says, include a nationwide IHRSA Club Day or Month in which members of the public would be encouraged to tour their local health club.

Dealing With Intimidation

Swayne would also like IHRSA to find out what intimidates people about clubs and then come up with solutions. “As an association, they've got the money,” he says. “They can set up the focus groups. It's just a matter of throwing the money on the table…. They can figure out what they need to get those groups.”

Finally, Swayne would like to see IHRSA raise its 50 million goal by 25 percent. He feels that the association has aimed too short with 50 million, that clubs can hit that number without even trying.

“It will happen if everybody just does nothing,” he argues. “The rate of growth right now…it's going to happen. If anything, the goal is too low.”

Lipsman disagrees. “When we set the goal, we wanted a goal that would push us as an industry, but we'll still be able to claim victory,” he explains. “I'm very confident we'll achieve [50 million] and then some.”

But again, that achievement will only come by reaching out to the people who avoid health clubs, while making plans to work with key demographics. And, at the same time, clubs must not become so consumed with growth that they forget about their loyal customers, McCarthy reminds.

“We really have to, on a daily basis…, just appreciate the members that we do have,” he says. “It's a daily challenge to treat members well.”

The Top 10 Markets for Industry Growth

IHRSA's 50 Million Members by 2010 report recognizes 10 unique opportunities — called “mega-opportunities” — for beefing up club membership.

These market targets are as follows:

  1. The Age Wave Opportunity.

    The largest population group in this country presently is the baby boomers. In the year 2000, there were 78 million Americans between the ages of 37 and 54. By the year 2010, this group will range in age from 47 to 64. Programming that targets aging boomers is crucial.

  2. The Special Populations Opportunity.

    People who experience chronic health conditions (e.g., arthritis, obesity, depression, hypertension, etc.) fall under this category. As exercise is known to alleviate or even cure these conditions, clubs should reach out to these people.

  3. The “Benefits of Exercise” Opportunity.

    The Surgeon General's Report on Physical Activity and Health touts the benefits of exercise for our society's collective health. Clubs need to take advantage of the report's message in their marketing.

  4. The “Sales and Service” Opportunity.

    In order to handle 50 million members by 2010, clubs must look within and make sure their personnel possess the sales and hospitality skills necessary to serve a growing membership.

  5. The “Member Integration” Opportunity.

    Each year, the club industry sells 11.1 million memberships but loses roughly 9.4 million memberships. With more than 48 million former club members living in the United States today, the industry should try to a) recapture those members who have recently left, and b) better integrate those members who have recently joined.

  6. The Health Care Industry Integration Opportunity.

    By creating partnerships with the health care industry, clubs will have powerful allies in membership recruitment and referrals.

  7. The “Easy Access” Opportunity.

    Clubs need to make membership more accessible to a wider variety of clients. By providing alternatives to one-, two- or even three-year memberships (such as trial opportunities and short-term programs), clubs can reach more people with their marketing.

  8. The “All of America” Opportunity.

    The industry has never significantly penetrated the rapidly growing and important Asian, African and Hispanic American market segments. In certain markets (Florida, New York, California, Texas, Washington, D.C., Atlanta, and Chicago), these population segments already represent immediate potential.

  9. The “Generation X” Opportunity.

    There are 46 million Americans who fall into this category. This young adult population runs the risk of being the forgotten generation in the health club arena, sandwiched and overshadowed by the larger echo boomer and baby boomer markets.

  10. The Multi-Generational “Family Club” Opportunity.

    In the past 10 years, multipurpose athletic clubs have enjoyed the greatest amount of success out of the entire club industry. By appealing to the entire family, and demonstrating a competence in youth programming, these clubs have much to teach the industry as a whole.

By the Numbers

Do you think the club industry can grow to 50 million members? Let us know. Mail us at: Letters to the Editor, Club Industry, One Plymouth Meeting, Suite 501, Plymouth Meeting, PA 19462. E-mail: jerry_janda@intertec.com Fax: (610) 238-0992

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