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Small IHRSA Study Shows Positive Results for First Quarter 2008

BOSTON -- Despite a slowing economy, a recently conducted survey of 18 leading U.S. health and sports club companies shows that financial performance improved for the first quarter ending March 31, compared to the same period last year.

These 18 small to mid-size clubs surveyed represent a total of 193 facilities, with an average of 11 clubs per company. The survey was conducted for the International Health, Racquet & Sportsclub Association (IHRSA) by Industry Insights Inc. Because the study is small, the results may not apply to the overall industry, according to a statement from IHRSA.

Companies grew their total revenue by an average of 15 percent to $17.5 million for the first quarter. Similar growth was reported during quarter ending Dec. 31, 2007.

“We are very pleased that this sample of club operators has been able to post increased revenue numbers for two consecutive quarters,” Katie Rollauer, IHRSA’s senior manager of research, said in a statement.

The participating companies reported increasing non-dues revenues by 17.5 percent to $5.5 million for the first quarter. In addition, companies also reported improved same-store revenue for clubs that have been in operation for at least two years, by an average of 2.9 percent to $6.5 million.

“Positive same-store growth bodes well for the industry, indicating that even mature locations are still growing,” Rollauer said. “Additionally, we are pleased to see club companies improve their non-dues revenues by double-digit growth during the first quarter. Clubs typically show growth during the first quarter as Americans begin their New Year’s resolutions and make a commitment to get fit.”

Participating companies reported an average increase of 9.7 percent in total membership accounts over the same period last year. As a percentage of total revenue, EBITDAR was 33 percent of total revenues for the first quarter of 2008.

“Not only are clubs able to put 33 cents of every dollar to the bottom line, but clubs continue to have success in collecting more non-dues revenues, increasing membership and are doing an excellent job managing expenses during these uncertain economic times,” Rollauer said. “While it is apparent that businesses are operating in a challenging economy, if health clubs are able to report another increase in total revenues and non-dues revenues in the second quarter, it will be a strong testament to the resilience of our industry.”

IHRSA, a nonprofit trade association, has more than 9,100 member clubs in 72 countries, along with more than 730 industry suppliers.

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