U.S. Health Club Financial Review: 2019-2021

[Editor's Note: Download the free report here. View a photo gallery of the companies included in the report, noting their revenue from 2019-2021 by going here.]

As 2022 comes to a close, many health club and studio owners are seeing revenue and membership increases, even as some estimates put the number of permanent club and studio closures during the past three years at 30 percent, thanks for the COVID-19 pandemic.

2022 was the beginning of the recovery process, Rick Caro, president of consulting firm Management Vision, told Club Industry.

“No one expected the club industry to immediately return to 2019 levels,” he said. “So, the expectations were for increased overall net memberships, EBITDA margins to improve (but slowly) and non-dues revenue to trickle back.”

The key, he said, was liquidity, but liquidity was going to be challenging as clubs needed more working capital, had uncertain and less predictable operating models, and experienced challenges with both current and previously deferred rent.

The high-volume, low-price sector was expected to perform stronger in its comeback, especially private equity-backed franchisees. Caro said.

“The key question for the industry at this point was the role of at-home fitness and its effect on the bricks-and-mortar segment,” he said. 

Before we can look back on 2022, we need to evaluate how the pandemic impacted 2021.

The 2022 IHRSA Health Club Consumer Report, released in November 2021 by IHRSA, reviewed 2021 from the perspective of the consumer. It found that in 2021, U.S. health club member numbers decreased 9 million from 2019, and member visits in 2021 were 68 percent lower than in 2019 although they were up from 2020.

Club Industry gathered 2021 revenues from some of the largest U.S. health club and studio operators — and the numbers showed that waves of the COVID-19 pandemic throughout 2021 along with city- and state-mandated closures or restrictions, and hesitancy by some demographics to return to in-person workouts still impacted the industry in 2021. 

“The health club industry hit its worst nadir by the end of 2021 as fully 25 percent of all health clubs and studios that were open pre-COVID had permanently closed,” Caro said. “The U.S. economy had seen shutdowns, difficult governmental restrictions, increased minimum wages in lots of states and the beginning of inflationary pressures.”

So before closing out 2022 and evaluating this year, Club Industry focused its lens on 2021. Data submitted by 57 U.S. club, studio and wellness brands are included in the four charts included in the free downloadable report to help gauge how the industry is bouncing back from COVID.

This data was initially gathered to be used in Club Industry’s Top 100 U.S. Clubs list, but due to the hesitancy of many of the largest health club and studio brands to submit their data since COVID-19, it was impossible to put out a traditional Top 100 list. 24 Hour Fitness, Equinox, Gold’s Gym and other large brands will not submit data, and Club Industry was unable to obtain revenue for most of them from other sources. In addition, several of the largest franchise groups for companies such as Planet Fitness, Gold’s Gym and World Gym likely belong on the list, but they traditionally have not submitted their data.

For these reasons, the charts included in the downloadable report include companies who submitted 2021 revenue of $1 million or more. This year’s list is not ranked, however, due to the lack of data from so many large companies who deserve to be on the list.

Instead, Club Industry is comparing companies to the 2019 revenue they submitted where possible. 

With this new financial review of the past three years, Club Industry hopes to set the stage for next year when the data will reflect the industry’s 2022 performance, which many people hope will be closer to that of 2019.

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