Weathering the Storms


Despite the destruction of the late summer hurricanes that swept across the Southeastern United States, Geoff Dyer insists his company was fortunate. As president and CEO of Florida-based Lifestyle Family Fitness, he knows that the damage from hurricanes Charley, Frances and Ivan could have been worse.

As is, only one of his 20 clubs was destroyed by the hurricanes (As of press time, we were unable to reach Dyer about any damage that Hurricane Jeanne may have caused to his clubs). Hurricane Charley dealt the fatal blow to that one club, which was a 28,000-square-foot, $2 million facility in Winter Park, FL near Orlando. It blew out the club's windows and peeled back the roof to expose the interior of the building to the downpour that followed. The rain filled the club like a bucket and destroyed everything inside.

Other facilities in the Florida area were affected by the hurricanes — either from damage to the structures or lost business due to evacuations and people staying home waiting for the hurricanes to arrive. The total cost to the fitness facility industry in that area (due to lost ancillary revenue) is difficult to calculate. However, Dyer has said that the destruction of his club cost him about $1.5 million to $2 million including lost members (his membership is month to month with a 30-day cancellation notice). Numbers on how many members had cancelled their membership at the destroyed club were not available at press time.

“We lost business in the first six days of September,” said Dyer. “That's 20 percent of our calendar days for that month.”

However, the loss for the whole company is minimal, he said. “We have a lot to be thankful for,” he added.

Ken Reinig, president and owner of Association Insurance Group (which insures 385 clubs in Florida), estimated that his company will pay out $2 million-$3 million to his clubs for all four hurricanes. He estimates that for all insurance companies that cover health clubs in the area, the pay out will be an estimated $30 million.

“To give perspective, we collected about $500,000 in property insurance premiums this year, and we will pay out an estimated $3 million, which is six times the premium collected,” said Reinig.

Reinig said that half his clubs don't carry wind or flood protection because the cost to add that coverage often is more than the insurance premum. In addition, the deductibles on that coverage are based on a percentage of the building value so a $500,000 building with a 2 percent wind deductible would mean a $10,000 deductible. Flood insurance is generally provided by a national flood insurance program, he said.

“Because costs and deductibles are so high, most business owners elect to self-insure anyway,” Reinig said. “It's a lot cheaper to buy strong plywood than pay for insurance.”

Clubs constructed within the past 10 years tended to weather the hurricanes better than those in older buildings, he said. Unfortunately, the premiums for coverage on older buildings is higher, which means club owners in older stip malls and shopping centers often are underinsured.

“We recommend to our clients that you insure a minimum of four months of gross revenue,” says Reinig. “Our reasoning is that clubs will need a month of clean up, two months to reconstruct depending on the building size, a month to get back up to speed and recontract members.”

However, Reinig said that often it is not the physical damage that hurts a health club as much as the economic damage from mandatory evacuations and electricity outages that cause loss of business income.

Bruce Carter, consultant and owner of Optimal Fitness Systems International, which is based in Weston, FL, agreed, saying that the biggest impact of the hurricanes was fear. “It just kept people from getting out of their homes; it kept them from acting,” he said. The TV news coverage was so intense that those who didn't evacuate just stayed put and didn't bother to venture to the gym.

Carter said that business at clubs catering to the unfit had been affected more by the hurricanes than at clubs that cater to the fit.

Carter's club, GetCyced Fitness, has a lot of fit people as members, he said. He went into the club on the Monday after Hurricane Charley hit and found the club was packed with people.

“That was the fit coming in saying, ‘I missed a workout and I've got to get back in.’ For those [that cater to] the unfit, they fall out because they haven't fallen into [an exercise routine] yet.”

Dyer, who was insured for the physical damage to his facility, knew that the faster he could open a facility, the less likely that members and staff would leave the club for another one that wasn't damaged. Within six days of Charley, Dyer had managed with the help of staff and his equipment supplier to open a 3,100-square-foot club near the destroyed facility. Seven days later, Dyer opened a 12,000-square-foot club just two miles away. By doing so, he was able to retain all his staff and many of his members. Dyer has already started working on plans to rebuild a permanent facility in the same spot as the original facility.

Other fitness facilities are glad that the damage from the hurricanes wasn't worse for them. The Gainesville Health & Fitness Center in Gainesville, FL didn't see much of Hurricane Charley, but Hurricane Frances caused flooding in the area. However, the only damage that the club sustained was some fallen trees that blocked streets and parking lots, according to Debbie Lee, marketing director at the club. Staff that could make it to the club the following day helped cut up the trees so they could be hauled away and the club could reopen after being closed for two days.

Tony Hopkin's Gold's Gym in Melbourne, FL weathered Frances with little damage other than part of the first “G” in its Gold's Gym sign blowing away. (The extent of damage to his club from Hurricane Jeanne 20 days later was unknown since calls to Hopkin's facility as of press time did not go through because of downed phone lines.)

Little damage was done to the University of Florida's athletic and fitness facilities. On campus in Gainesville the only damage reported was debris, fallen trees and flooding to the golf course. The stadium was in good condition except for the missing air conditioning unit that had been on its roof.

Because the stadium was the safest of all of the University of Florida's facilities, it was open to athletes needing a protected place during the hurricane, according to Natalie A. Gonzalez, staff assistant of auxiliary services/operations at the University Athletic Association.

People also took shelter in some of the fitness facilities. The Melbourne Gold's Gym was open during Hurricane Frances for those who needed shelter. About 15 people took refuge there.

While the Lifestyle Family Fitness centers were not open as shelters during the hurricanes, Dyer has plans to open them as shelters during future hurricanes.

“I think people would feel comfortable in our clubs because they are well built and they feel better protected than in their mobile homes,” he said.

After the hurricanes moved out of the area, many of the facilities opened their doors to the community. The university provided ice and water to those in need and has plans to donate money to local residents.

“We did the same thing for Hurricane Charley that hit three weeks before,” Gonzalez said after Hurricane Frances struck. “We sent a truckload of water to Southeast Florida to help with that.”

She also said that for the next few football games 25 cents would be added to the sale of concessions and that extra money would go towards relief efforts.

Dyer's clubs opened their showers to members and people in the community who were displaced by Charley. The Gainesville club did the same after Hurricane Frances and had 70 community members come in to use the showers on the first day it reopened. Club members also started pouring in once they found out that the club was open. On the first day the Gainesville club reopened (Tues., Sept. 7), 2,251 members came in to workout, said Lee. That number is a little light for the 24-hour club, which normally averages about 3,000 visits on a Tuesday.

“What I've heard most commonly is, ‘I really needed this,’” Lee said. “We were trapped in our houses for days. We have curfews at night so people aren't out. It means we're all sitting in our houses with cabin fever.”

The Gainesville Health & Fitness Center also allowed those who came in to get online to e-mail family and friends that they were okay since many of them were without electricity or phone service. The Gainesville club never lost electricity or phone service, said Lee.

The Melbourne Gold's Gym opened just a few days after Hurricane Frances passed, and members were happy the club was open with full power and water, said Customer Service Representative Cathy Peluso. Some members got back to their workouts right away and others just came in to shower. Some community residents paid a day fee to come in, workout and shower.

Hopkins also offered food, water and whatever else the gym could give to those in need.

“We're doing great,” Peluso said. “We're just going to pull together and get through this.”

From adversity, lessons often are learned. For Lifestyle's Dyer, that lesson was that a club must have an emergency plan in place and the ability to communicate with all staff. His club had an emergency phone number for staff and members to call about the club's opening or closing. Much of the staff also communicated through cell phones and Blackberries. “The ability to communicate through e-mails on Blackberries was great,” Dyer said. “Communication was one of our strengths through this crisis.”

He also learned that family comes first. “It is difficult to staff in times of panic, and we shouldn't expect staff to come in to take care of members when they are concerned about their family,” said Dyer.

For Lee, the lesson learned was one she already knew. “What we do with every storm is that we get together and realize how awesome our staff is,” Lee said. “You just drop everything to get done what needs to get done whether to help the club or help another staff member…It's reinforcement of how critical a great staff is when something like this happens.”

Hurricane Timeline

Aug. 13 - Hurricane Charley blew into southwest Florida at 145 mph causing 27 deaths and $6.8 billion in damage.

Sept. 5 - Hurricane Frances made its barreled onto the state's eastern coast, causing 16 deaths, flooding and an $4.4 billion in damage.

Sept. 16 - Hurricane Ivan hit the coast of Alabama and the panhandle of Florida with 130 mph winds, killing more than 12 people and causing an estimated $3 billion to $6 billion in damage.

Sept. 25 - Hurricane Jeanne hits near Stuart, FL, causing an estimated $4 billion to $9 billion in losses.

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