January 2015 Shows Slow But Promising Turnaround for Health Clubs

Independent survey results show slow but promising growth in the health club industry Photo by Thinkstock
<p>Independent survey results show slow but promising growth in the health club industry. <em>Photo by Thinkstock.</em></p>
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In my Feb. 23 Idea Xchange, I discussed the more positive numbers from the Fitness Business Council (FBC) January 2015 vs. January 2014 survey. Now, we look at some of the less-than-encouraging results.

Respondents from just under 350 independent health clubs answered progress questions for 11 key business categories. Clubs reported increases in member retention and upward movement in membership sales. Net profit overall moved up 1/10 of 1 percent to 8.7 percent. However, the retention percentage statistics probably don't tell the whole story. Averaged retention January vs. January actually dropped from 63 percent to 62 percent¾the same reading that full-year 2014 reported. The lowest overall retention statistic in eight years of FBC Surveys was 61 percent for full-year 2013. The highest was 68 percent in mid-year 2011.

Correlating retention percentages with membership revenues, statistical evidence suggests that the average club has lost nearly 100 net memberships in the past three years, approximating a total of $60,000 less in annual income. Looking strictly at historical year-end retention percentages vs. the previous January's numbers, January 2015's 62 percent suggests that retention will drag its heels this year unless the industry makes a concerted effort to address monthly member attrition.

In January 2015, the number of clubs growing profit margins was down nine full points (41 percent contrasted to January 2014's 50 percent). Historically, a comparison drop in number of clubs growing their profits precursed an actual drop in profit margins for the ensuing year.

Comparing  opersonal training growth and small group training growth on a January vs. January basis yields some interesting results. Personal training continues a downward slide with only 42 percent of clubs reporting sales growth in 2015 vs. 47 percent in 2014. This is the lowest percentage of clubs growing personal training that has so far been recorded by FBC.

Small group training's month-to-month (40 percent of clubs with January growth in 2015 as opposed to 32 percent in 2014) lags year-end 2014's 51 percent. Generally, small group training sales have picked up as the year progressed.

In retrospect, January's results showed both promise and hesitancy. The anticipated turnaround in the health club industry is still slow in developing. Keys to an upbeat 2015 for independents are likely to be growth in retention percentages and increases in ancillary sales.  

What do you think the key to growth will be? Share in the comments section below. 

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(Editors' Note: For more retention and sales help, attend educational sessions in the Retention and Sales tracks&nbsp;at the 2019 Club Industry Show…