Health Clubs Find Revenue Streams in Technology-Oriented Ancillary Services

Siblings Skyler Scarlett and Brittaney Scarlett-Torres co-own Glace Cryotherapy, which they operate within space they lease at a City Sports Club in California. (Photo courtesy Glace Cryotherapy.)

In a never-ending quest to add new revenue streams and keep up with the latest technologies, an increasing number of health clubs are offering services not previously associated with health clubs. Those include but are not limited to floating therapy, VO2 max testing, cryotherapy, bioenergy feedback and muscle stimulation. Club Industry recently looked at some of these technologies to explore how they can be maximized for both health clubs and clients.

Floating Therapy

NBA star Steph Curry hasn’t been shy about sharing his love of something other than basketball. In various interviews, he has touted how sensory deprivation therapy, also called floatation therapy, helps him recover, relax and recharge. The Golden State Warrior spends 60 to 90 minutes every two weeks floating in a tank of water with Epsom salts and magnesium. He is not the only athlete who likes to float. NFL quarterback Tom Brady and Olympian gymnast Aly Raisman are just a few of the other athletes who have shared their love of floating.

Floatation therapy tanks have been around since the 1950s when they were invented by physician and neuroscientist Dr. John Lilly. Hotel spas, chiropractors and physical therapists offer floatation therapy tanks as additional revenue sources. And now, health clubs offer them, too.

In fact, one of the largest health club chains in the country, LA Fitness, announced in 2018 an agreement with California-based floating franchise True REST to install three floatation tanks at LA Fitness’ Fountain Valley, California, club. Mandy Rowe, True REST’s sales and development lead, projects that the company will install pods in 40 of LA Fitness’ 690 North American clubs by 2019.

The floatation tanks at the Fountain Valley location are in private suites with a rainfall shower. The tanks are designed to offer clients an environment devoid of external stimulation.

“It’s almost like meditation, but you have zero distractions—not even gravity,” Rowe said of the pods, adding that floating has also been shown to reduce anxiety.

Float therapy allows lactic acid—a compound that can create muscle fatigue—to be transported out of the muscles faster, which helps with muscle recovery and can alleviate stubborn pain in the neck or back, Rowe said.

True REST recommends hour-long floating sessions, but clubs can offer sessions as short as 30 minutes or as long as 90 minutes. New adopters might consider offering shorter sessions initially, Rowe said.

“What we’ve heard from other gyms is they have dead space, like racquetball courts, that aren’t used much, and they prefer to lease that space out [for floating],” Rowe said.

True REST is leasing LA Fitness’ space in Fountain Valley as a sub-licensor and intends to use that model to get into more clubs.

Offering club members more efficiency is one benefit to True REST’s partnership with LA Fitness, Rowe said.

“Taking an hour or 90 minutes [to float] is quite an addition to your workout time, so now at the gym they’d have easy access,” she said.

TrueREST uses Float Pods, designed by Arizona-based Float Pod Technologies. Other float tank manufacturers include California Float Concepts, Float Lab Float Tanks, DreamPod Relaxopod and Zen Float Co.

Float tank sizes vary by brands, but the Float Pod brand measures 102 inches long, 68 inches wide and 51 inches tall, and the pods are filled with 10 inches of warm salt water in which a single client can float.

Tank prices also vary depending on manufacturers, but Float Pods cost franchisees $24,950 for the pod and filter. (The cost to non-franchisees can vary based on upgrade options, according to Rowe.) Additional startup costs include construction, real estate, architecture, permitting and other miscellaneous costs. Everything included to build a four- to six-pod True REST franchise is $450,000, Rowe said. In addition, Epsom salt needs to be purchased on a regular basis, and 1,000 pounds of Epsom salt can cost about $600.

Overseeing floatation tank usage doesn’t require much staff training, and a single person can manage up to four float pods at once, Rowe said. Additional expenditures for a health club operator would include special flooring and wallpaper that can withstand the pods’ moisture.

LA Fitness charges members $59 per month for one 60-minute float per month (plus one shared user), $99 for two 60-minute floats per month (plus two shared users) and $180 for four 60-minute floats per month (plus four shared users). Non-members pay $79 for a 60-minute float and $55 for a 30-minute float.

ROI is at its strongest when marketing efforts center on floating for relaxation, pain relief and improved sleep, Rowe said. Current research indicates that independent businesses can make up to $65,000 per pod per year in revenue.

Float Tank Solutions' 2018 State of the Industry Report shows that True REST franchisees are making up to $125,000 per Float Pod, but that the average for the entire industry is lower.

TrueREST float therapy


The trend toward recovery offerings has led to a growing number of clubs adding services such as cryotherapy, according Skyler Scarlett, owner of Glace Cryotherapy in Mountain View, California. Since late 2017, Scarlett and his sister, Brittney Scarlett-Torres, have been running Glace in a space it leases in a City Sports club in Mountain View, California. (City Sports Club is owned by Fitness International LLC, which also owns LA Fitness.)

“So not only do they make money as we're paying them rent, but they see their club having more value because we're in there offering recovery,” Scarlett said.

Cryotherapy exposes the body to extremely cold temperatures for a brief interval. Proponents claim it reduces inflammation and general pain, which can in turn lead to better performance.

If you're an athlete, you're releasing inflammation, but you're probably releasing way too much, more than your body needs,” Scarlett said. “A lot of times, the pain you have in your knee or your neck, it's simply way too much inflammation, and [clients] can't believe how much better they feel when they reduce that inflammation.”

Most cryotherapy machine manufacturers offer weeklong on-site trainings, Scarlett said. Atlanta-based Impact Cryotherapy manufactures the machine Glace uses, but other companies, such as Cryo Innovations, also manufacture the machines. One machine is plenty for a single club, Scarlett said, noting that Glace can administer 50 to 60 sessions in a single business day.

The upfront investment is hefty, with average cryotherapy machines costing anywhere from $30,000 to $65,000. Machines with the newest technology can top $150,000, Scarlett said.

For Scarlett and Scarlett-Torres, deciding how to charge for cryotherapy sessions was tricky. In 2014 while in their own facility, they charged $600 for a month of just cryotherapy, but after three months, they were forced to drop their price to $300, which proved to be the sweet spot.

Still, the siblings decided they could do better in their quest to offer cryotherapy to the average person. That’s why partnering with City Sports made sense. 

“We charged $99, unlimited, for a whole month, and it included not only cryotherapy but also compression therapy, red light therapy, electric stimulation and other recovery and pain management modalities,” Scarlett said. “So, we really wanted to change the game by saying, ‘Make [cryotherapy] more like a gym membership.’ And we sold, I want to say, almost 80 memberships in our first month.”

After seven months, Glace had sold 400 memberships.

Because of the $99 per month charge, cryotherapy likely would not be a good fit for low-priced clubs since those members may be more price-conscious, Scarlett said.

“A lot of people have never heard about [cryotherapy] or are scared of it or don't think it's going to work,” Scarlett said, which is one reason marketing is perhaps the biggest challenge to this offering whether the business offering it is low-priced or high end.

November marked their first full year inside the fitness club, and Scarlett said they sold over 500 monthly memberships over that 12-month period. “We feel we have perfected the cryotherapy/recovery model,” he said, “and now we are trying to scale it to hundreds of fitness clubs.” 

Drive495 cryotherapy tank.

VO2 Max Testing

A less relaxing source of additional revenue than floating or cryotherapy comes from VO2 max testing. The American Heart Association recommends monitoring VO2 max, a physiological metric for how much oxygen a body can consume during high-intensity exercise. Offering VO2 max testing at a health club allows club operators to leverage solid scientific data and deliver increased value to members, said Karl Etzel, a Silicon Valley wellness technology consultant.

VO2 max analysis usually is performed with the client on a treadmill. To measure the metric, a health club will need to purchase a machine such as Korr’s CardioCoach, which is a spirometer that costs $5,000 to $6,000 and tests fitness based on oxygen consumption. It’s relatively simple to train employees to perform the test, Etzel said.

“It can help the club know the member better in the same way someone’s body fat percentage helps you know where they’re at on their fitness journey,” he said. “Increasing the flow of oxygen can improve your body’s ability to use oxygen, which relates to metabolism as well, which also measures how much oxygen you burn, which correlates to how many calories you’re burning.”

Improving the frequency and intensity of exercise is the main way to increase VO2, Etzel said. Club operators need to be mindful that standard protocol for assessing VO2 is that it be measured at max effort.

“Some may be able to do it sub-maximally, but you have to be careful about that in terms of member safety,” Etzel said. “You want to make sure you’ve got the right person with them [if you are] pushing them to do the max.”

For everyday gym goers with low VO2, a personal trainer could invite them to begin a strength-training program. For professional athletes, a trainer can use the VO2 metric to design a workout with specific power intervals, Etzel said.

“You can work on strength, top-end speed and tailor it per discipline,” he said. “The fit population wants to know how they stack up compared to their peers and where they could get to competitively.”

An elite Nordic skier would have a VO2 max in the 80s or 90s, Etzel said, whereas a male pro soccer player would rate in the low 60s.

Another benefit in measuring VO2 max is that it can be an early indicator for Type 2 diabetes.

“Club owners should understand their potential to play a role in screening for risk and providing higher value health assessments using VO2 max,” Etzel said.

Fitness Formula Clubs, Chicago, is one club company that offers VO2 max testing. The company charges $149 for one test or $325 for a test and two re-tests, according to its website.

Redkore Fitness, which has two locations in Georgia, offers VO2 max testing as part of the club’s $149 elite membership. But for its $99 per month membership, the test is an additional $99 per test. In 2014, Redkore grossed $42,000 from VO2 max testing at one of its locations, according to Korr Medical Technology Inc.’s website.

Pro Club in Bellevue, Washington, also offers this testing. It charges members $250 and non-members $275, according to its website.

Muscle Analysis

MuscleSound leg scan

Getting a leaner body is a goal for many health club members. So technology that helps to assess a person’s body fat and lean muscle mass in a non-invasive manner is another opportunity for revenue.

That’s where companies such as Denver-based MuscleSound can help. MuscleSound’s cloud-based software technology and methodology work with almost any musculoskeletal ultrasound to measure in real time a client’s muscle health and muscle energy, according to Stephen Kurtz, chairman and CEO of MuscleSound.

The data obtained in a single MuscleSound session can alter a client’s training routine for the day.

“It can show the client where they are in terms of reaching their goals and whether they need to modify their approach,” Kurtz said.

MuscleSound, which was founded in 2011, has worked mostly with sports medicine facilities and sports teams, including those in the National Football League, Major League Baseball and the National Basketball Association. However, it also markets its technology to health club operators.

For health club operators, diving into the concept of muscle health is as easy as leasing MuscleSound’s technology (a minimum of $300 per month, based on usage) and purchasing a simple musculoskeletal (MSK) ultrasound machine—which can be leased for about $200 per month from companies such as Phillips or General Electric or which can be purchased from a manufacturer for a few thousand dollars, Kurtz said. The ultrasound must then connect to a tablet or a phone.

“We see the average gym, physical therapist or dietitian or nutritionist break even using MuscleSound with 10 to 15 clients per month,” Kurtz said. “Our goal is to make this technology affordable to provide it to the masses and in the gym setting that’s great.”

MuscleSound’s technology uses echo readings to detect the glycogen that is moving in and out of a client’s muscles, Kurtz said. As a result, one can measure the fuel inside a muscle and how the muscles store energy, as well as any imbalances.

“The larger the muscle, the more fuel it can hold,” Kurtz said.

Although MuscleSound's clients are mostly in the healthcare industry, sports teams, nutritionists, dietitians and club owners are bundling the MuscleSound analyses with personal training assessments. Offering this analyses often helps with member retention because members can see if their exercise and nutrition program is making a difference, Kurtz said.

In addition, MuscleSound supports clubs that lease its technology with promotional activities, marketing materials and online training for employees.

MuscleSound possesses the largest useable collection of ultrasound images anywhere, Kurtz said. Clubs that lease MuscleSound’s technology can access this database so clients can see how their data measures up against other users.

Bioenergy Feedback

A BEMER, or Bio Electro Magnetic Energy Regulation, is a 20-year-old technology that is relatively new to the United States and offers bioenergy feedback. BEMERs can cost $4,000 to $7,000, but they have become a driver of revenue for some clubs that have invested in the concept of bioenergy feedback.

Bioenergy feedback stems from the notion that much of the disease and discomfort the average person experiences today is due to imbalances in one’s energy field. Bioenergy feedback measures one’s vibrational energy to assess overall health. Once the assessment is made and deficiencies are noted, the client lies on a mat attached to a machine that then releases electromagnetic frequencies to rebalance the person’s energyThe user can't feel the machine’s signals, but proponents claim the use of a BEMER harmonizes the body, aiding with blood flow, recovery and relaxation, in addition to alleviating sleep disorders.

Tasso Kiriakes, owner of BodeZ by Tasso, a health club in Ormond Beach, Florida, is starting his third year offering BEMER technology. The biofeedback device he uses is called the Quantum Infinity Genius, which costs $1,900 for the software, the training and an allocated iPad.

“We take a picture and a voice imprint, and the energy that comes off that gives you an idea of what systems are in and out of balance,” Kiriakes said, noting that this area of health assessment has multiple profit centers. The most common upsells from biofeedback assessments are personalized one-on-one training packages and Young Living essential oils, which Kiriakes sells.

Kiriakes charges existing members $125 for a 90-minute biofeedback assessment. For use of the BEMER, Kiriakes charges $200 for a monthly package for members and $250 for non-members (on top of the initial $125, 90-minute assessment).  It is included when a member starts—and adheres to—a personal training plan.

“We pushed up retention and gave value added to one-on-one service,” Kiriakes said. “If you stick to a two-times-a-week workout with us, you receive the BEMER to recover after your workout.”

Revenue from BEMER use alone totals about $2,000 per month, Kiriakes estimated. His club currently has one BEMER, but he said he hopes to acquire a second one.

When he purchased the club’s BEMER, Kiriakes also bought a distributorship to sell the product. So far, about 19 club members have purchased one for home use, giving Kiriakes $24,000 in profits from unit sales. 

“I went out to rotary, a garden club, Kiwanis, and I gave a presentation called ‘The Eight-Minute Energy Secret.’ We invited them to come use it for six weeks for $200. We had 38 people invest in that program, which paid for my BEMER,” he said.

He made $6,100 in 22 days between the nonmembers he sold BEMERs to for home use and the 32 people who joined for $200 apiece.

Tony Vargas, owner of Orlando studio The Healthy Human, has two BEMER machines in his studio. All personal training clients who do training at least twice per week get to use the BEMER for an additional $100 fee. Vargas estimated 30 to 40 of his clients each pay an extra $100 on top of their training fee to use a BEMER, establishing a regular income stream for his club. Non-members can use a BEMER for $150 per month.

Users can operate it themselves after an initial walkthrough with a staff member.

“It’s definitely worth the investment,” Vargas said. “It’s supposed to be used daily, like brushing your teeth.”

Vargas is likewise a distributor of BEMERs. The classic model costs $4,900 and a pro model goes for $5,900.  Vargas has sold about 50 of them, making $1,000 to $1,500 per unit sold.

Bioenergy feedback is a meaningful way for clubs to differentiate, said Casey Conrad, a fitness industry consultant who also offers the BEMER services.

“Clubs that offer real solutions to overall wellness are going to be more successful,” she said. “[Gym members] are looking for places that will give them the solutions.”