WWW.IBISWORLD.COM
Gym, Health & Fitness Clubs in the US November 2013
Workin Work ing g ou out: t: The The industry will remain resilient as demand from health-conscious consumers grows
IBISWorld Industry Report 71394
Gym, Health & Fitness Clubs in the US November 2013
Sarah Turk
2
About this Industry
17 Internat International ional Trade
32 Key Statistics
2
Industry Definition
18 Business Locations
32 Industry Data
2
Main Activities
2
Similar Industries
20 Competitive Landscape
3
Additional Resources
20 Market Share Concentration
32 Annual Change
20 Key Success Factors
4
Industry at a Glance
32 Key Ratios
33 Jargon & Glossary
20 Cost Structure Benchmarks 22 Basis of Competition
5
Industry Performance
23 Barriers to Entry
5
Executive Summary
24 Industry Globalization
5
Key External Drivers
7
Current Perf Performance ormance
9
Industry Outlook
11 Industry Life Cycle
25 Major Companies 28 Operating Conditions 28 Capital Intensity
13 Products & Markets
29 Technolog echnologyy & Systems
13 Supply Chain
29 Revenue Volatility
13 Products & Services
30 Regulation & Policy
15 Demand Determinants
31 Industry Assistance
15 Major Markets
www.ibisworld.com | 1-800-330-3772 | info @ibisworld.com
1
WWW.IBISWORLD.COM
Gym, Health & Fitness Clubs in the US November 2013
About this Industry Industry Definition
This industry operates tness and recreational sports facilities that feature exercise and other active physical tness conditioning or recreational sports
Main Activities
The primary activities of this industry are
activities, such as swimming, skating or racquet sports. Companies are also involved in facilities management and tness instruction.
Operating aerobic dance and exercise centers Operating athletic club facilities for physical fitness Operating body building studios for physical fitness Operating fitness centers, health clubs and gyms Operating recreational sports club facilities Operating ice or roller skating rinks Operating spas Operating squash, racquetball or tennis clubs Operating swimming pools
The major products and services in this industry are Dance centers Gyms and fitness centers Ice and roller rinks Swimming pools Tennis centers Other
Similar Industries
71399 Golf Driving Ranges & Family Fun Centers in the US
Establishments in this industry operate recreational sports clubs (i.e. sports teams) but do not operate sports facilities. 72111 Hotels & Motels in the US
Establishments are primarily engaged in operating health resorts and spas where recreational facilities are combined with accommodati accommodations. ons. 81219a Weight Loss Services in the US
Establishments in this industry are primarily engaged in providing nonmedical services to assist clients in attaining or maintaining a desired weight. 81219c Tanning Salons in the US
Establishments primarily engaged in providing artificial tanning services
2
WWW.IBISWORLD.COM
Gym, Health & Fitness Clubs in the US November 2013
About this Industry
Additional Resources
For additional information on this industry www.ballyfitness.com Bally Total Fitness www.ihrsa.org International Health, Racquet and Sportsclub Association www.sfia.com Sports and Fitness Industry Association
IBISWorld writes over 700 US industry reports, which are updated up to four times a year. To see all reports, go to ww to www.i w.ibis biswor world ld.co .com m
3
WWW.IBISWORLD.COM
Gym, Health & Fitness Clubs in the US November 2013
4
Industry at a Glance Gym, Health & Fitness Clubs in 2013
Key Statistics Snapshot
Revenue
Annual Growth 08-13
Annual Growth 13-18
Profit
Wages
Businesses
$25.9bn 1.4% $2.2bn $8.0bn
Per capita disposable income
Revenue vs. employment growth
Market Share
There are no Major Players in this industry
2.9% 29,501
8
4
6 2 e g n a h c %
4
e g n a h c %
2 0
0
−2 −2 −4
Year
−4 05
07
09
11
Revenue
13
15
17
19
Year
06
08
10
12
14
16
18
Employment SOURCE: WWW.IBISWORLD.COM
p. 25
Products and services segmentation (2013)
Key External Drivers
6%
Participation in sports
5%
Tennis Te nnis centers
Ice and roller rinks
Per capita disposable income
7%
Swimming pools
Time spent on leisure and sports
7%
Number of adults aged 20 to 64
Dance centers
65% 65 %
Gyms and fitness centers
10% 10 % Other
p. 5 SOURCE: WWW.IBISWORLD.COM SOURCE: WWW.IBISWORLD.COM
Industry Structure
Life Cycle Stage Revenue Volatility Capital Intensity
Growth Low Medium
Regulation Level Technology Change
Light Medium
Barriers to Entry
Low
Industry Assista Assistance nce
Low
Industry Globalizati Globalization on
Low
Concentration Level
Low
Competition Level
High
FOR ADDITIONAL STATISTICS AND TIME SERIES SEE THE APPENDIX ON PAGE 32
WWW.IBISWORLD.COM
Gym, Health & Fitness Clubs in the US November 2013
Industry Perf erformance ormance Executive Summary | Key External Drivers | Current Perf Performance ormance Industry Outlook | Life Cycle Stage
Executive Summary
The Gym, Health and Fitness Clubs industry has slightly beneted from the recent onslaught of marketing campaigns and consumer trends that ght obesity and advocate for improved health. As a result, health club memberships are anticipated to grow at an annualized rate of 2.0% to 52.6 million, during the ve years to 2013. While health club club membership has increased considerably since 2008, from about 47.7 million, revenue growth was slightly hampered by low discretionary spending. As per capita disposable income declined at an annualized rate of 0.2% during the
Key External Drivers
Participation in sports When an increas in creased ed number nu mber of people p eople becomee aware becom aw are of o f the impor importance tance of maintaining physical fitness, gyms and health and fitness clubs will experience an increase in demand. Consequently, growth in sports participation will intensify demand for membership in the Gym, Health and Fitness Clubs industry. Participation
revenue, as consumers became more health conscious. In particular, the number of adults aged 20 to 64, the largest gym going demographic, is expected to grow at an annualized rate of 0.7% during the ve-year period, which will benet revenue due to increased increased participation. Revenue is anticipated to grow at an annualized rate of 1.4% to $25.9 billion during the ve years to 2013, and this increase includes 2.5% growth in 2013. However, because of rising competition from industry players that cater to a market niche of local consumers, operators lowered pricing and oered membership on a monthly basis. Therefore, protability is expected expected to slightly contract from 9.8% of revenue The industry will benet from an increase in in 2008 to 8.4% in 2013. per capita disposable income During the five years to 2018, the industry will benefit from an increase ve-year period, consumers became more in per capita disposable income and budget conscious, conscious, which stimulated growth in the number of baby boomers demand for low-cost gym memberships signing up for health memberships. An with few amenities. Consequently, Consequently, during increase in discretionary spending, the recession, small-budget gyms with coupled with continued consumer fewer amenities gained popularity awareness about the health benefits of compared with expensive, all-inclusive exercise, will drive revenue growth. health clubs. Consequently, revenue is anticipated During the period, consumers were to grow at annualized rate of 2.9% to also more likely to participate in sports, $29.9 billion during the five-year which benetted the industry, industry, and period. Moreover, consumers will subsequently caused the sports begin to substitut sub stitutee larger, lar ger, allall-inclu inclusive sive participation rate to grow at an clubs for low-cost memberships, which annualized rate of 0.9% during the ve is anticipated to bolster revenue for years to 2013. This trend slightly slightly boosted the industry.
in sports is expected to increase slowly during 2014. Per capita disposable income Per capita disposable income measures the amount of spending money that a household retains after paying taxes. The higher household disposable income rises, the more likely that a portion of that income will be allocated to visiting
5
WWW.IBISWORLD.COM
Gym, Health & Fitness Clubs in the US November 2013
Industry Performance
Key External Drivers continued
health and tness clubs. Per capita disposable income is expected to increase during 2014, representing a potential opportunity for the industry. Time spent on leisure and sports The total time spent on leisure and sports influences industry demand. The greater the time available for leisure, the more likely that a portion of this time will be allocated to visiting gyms and health and fitness clubs. Nevertheless, time spent on leisure and
Number of adults aged 20 to 64 Gyms, health and tness clubs are used primarily by adults aged 20 to 64. The aging of the baby-boomer generation, and the maturation of their children (i.e. the “echo boomers”) will broaden the market for this industry. The number of adults aged 20 to 64 is expected to increase slowly during 2014. Time spent on leisure and sports
Per capita disposable income
e g n a h c %
sports is expected to decrease slowly during 2014, posing a potential threat to the industry.
4.0
5.4
2.0
5.3
s t i n U
0.0
−2.0
5.1
−4.0
Year
5.2
5.0 06
08
10
12
14
16
18
Year
04
06
08
10
12
14
16
18
SOURCE: WWW.IBISWORLD.COM
6
WWW.IBISWORLD.COM
Gym, Health & Fitness Clubs in the US November 2013
Industry Performance
Current Performance
Improving sales
The Gym, Health and Fitness Clubs industry experienced slight growth during the past ve years, bolstered by public health initiatives that shed light on the importance of tness to ght diabetes, obesity and other health ailments. However, revenue growth will be limited by per capita disposable income, which is expected to decline at an annualized rate of 0.2% during the ve years to 2013. Nevertheless, health club memberships are anticipated to grow at an annualized rate of 2.0% during the ve-year period, as a result of the increased value consumers will place on tness. The number of individuals aged 20 to 64 is also expected to grow at an annualized rate of 0.7% during the ve-year period. Growth in this age demographic will boost revenue in particular, as more individuals advance into the 18 to 34 and 35 to 54 market segments, which account for 35.0% and 33.0% of revenue, respectively. During the five years to 2013, revenue is anticipated to grow at an annualized rate of 1.4% to $25.9 billion, bill ion, and will w ill be b e supporte sup ported d by the trend of more baby boomers and
youth purch purchasing asing healt health h memberships. In 2013 alone, revenue is anticipated to grow 2.5%, strengthened by an increasingly active aging population, which propels demand for health club memberships. However, profit contracted from about 9.8% of revenue in 2008 to 8.4% in 2013, as operators increasingly offered low-cost gym memberships without contracts, in an attempt to attract budget-cons budge t-cons cious consum ers, cuttin cutting g into industry profitability.
Industry operators experience the greatest growth in health club memberships during the rst three months of the year. New Year’s resolutions incite consumers to implement a healthier lifestyle and correspondingly, about 30.0% of all new members join gym and tness clubs during the rst few months of the year. Although industry operators operators aim to boost the number of memberships during other months by oering discounts and monthly memberships, January still comprises the largest portion of membership sales. Over the past ve years, the number of health club memberships across the
United States expanded rapidly and total memberships rose from 47.7 million in 2008 to an estimated 52.6 million in 2013. While this trend boosted revenue, industry operators still compete on the basis of price. Operators that oered low-cost, contract-free memberships with fewer amenities became more popular, as consumers grappled with low disposable income over the period. The time spent on leisure and sports remained stagnant, further hampering revenue growth, despite 1.4% increase in 2009, as a result of surging unemployment. Although leisure time remained stagnant, more individuals participated in sports. As participation in
Industry revenue 8 6
e g n a h c %
4 2 0 −2 −4
Year
05
07
09
11
13
15
17
19
SOURCE: WWW.IBISWORLD.COM
7
WWW.IBISWORLD.COM
Gym, Health & Fitness Clubs in the US November 2013
Industry Performance
Improving sales continued
sports grew at an annualized rate of about 0.9% during the ve years to 2013, more individuals substituted individual tness activities for team sports. This trend sustained revenue, as many time-strapped individuals found it easier and more time ecient to purchase gym memberships, as compared with participating in team sports. Moreover, demographic trends have helped drive industry growth. For
Fitness trends
Poor economic conditions have caused new trends to emerge within the industry. A growing preference for easily accessible, smaller gyms with fewer amenities has beneted small-franchise gyms that cater to a local market. The market share of smaller-budget gyms is subsequently growing, as consumers substitute gyms with fewer amenities for expensive, all-inclusive clubs (which include related facilities such as tennis centers, racquetball courts, ice rinks and swimming pools). For example, Planet Fitness experienced strong membership growth during the recession, with some clubs signing up more than 1,000 new members each month in 2009, according to the International Health, Racquet and Sportsclub Association
(IHRSA). Planet Fitness oers inexpensivee gym membership fees of inexpensiv $10 to $19 per month depending on the area, and has steadily expanded operations over the past three years. Other growing franchises include Snap and Anytime Fitness, and have demonstrated the popularity of niche gyms that target specic clientele. Moreover, consumers that seek individualized individualize d tness programs, specic tness goals or are uncomfortable exercising in larger gyms particularly favored small-scale gyms.
As operators operators try to attract consum consumers ers with with low-cost, contract-free and low-amenity memberships, some industry players will consolidate or limit establishment expansion to lower operational costs. As a result, during the ve years to 2013, the number of companies is anticipated to decline at an annualized rate of 0.5% to 29,501. To address consumers’ preference for local gyms and tness centers that cater to a specic geographical niche, operators are increasingly substituting
smaller facilities for national chains. For example, from 2007 to 2010, Curves International Inc. closed 2,500 locations, as the franchise was unable to compete with local, local, low-cos low-costt gyms with longer longer operating hours. Regardless of the broader trend of consolidation, the number of employees in the industry is expected to grow at an annualized rate of 0.8% to 573,328 workers, as demand for tness instructors increases in line with the growth in health club membership.
Enterprises and employment
example, the aging of the baby-boomer generation and the maturation of their ospring, the “echo boomers,” have broadened the market for gyms and health and tness clubs. Governmentsponsored programs, such as Michelle Obama’s “Let’s Move!” initiative, which ghts childhood obesity, have increased awareness of the benets of physical exercise for consumers of all ages, especially families.
Consumer preference has shifted towards smaller gyms with fewer amenities
8
WWW.IBISWORLD.COM
Gym, Health & Fitness Clubs in the US November 2013
Industry Performance
Industry Outlook
The Gym, Health and Fitness Clubs Furthermore, as the number of adults industry will experience growth in the aged 20 to 64 is expected to increase at an next ve years, largely due to an annualized rate of 0.4% to 192.0 million, during the ve years to 2018, revenue will increase in per capita disposable income. As per capita disposable also grow given that this age demographic income is anticipated to grow at an comprises the largest market segment for annualized rate of 2.5% during the ve the industry. However, industry operators years to 2018, 201 8, consumers cons umers will w ill will contend contend with time-strapped time-strapped increasingly substitute memberships consumers, as leisure time is expected to that oer more services, with low-cost decline at an annualized rate of 0.2% gym memberships with fewer amenities. during the ve-year period. While timeMoreover, health club memberships are strapped consumers will have diculty anticipated to grow at an annualized incorporating tness into their daily rate of 2.0% during the ve-year period. routine, more consumers will purchase As health heal th club member memberships ships grow at a t the high-cost gym sessions to achieve tness same rate compared with the previous goals in a shorter period of time, such as ve years, individuals with higher personal trainers or tness classes. As a discretionary income will purchase result of consumers buying a greater more expensive industry services, such number of high-cost industry services, as personal trainers. The number of revenue is forecast to grow at an individuals participating in sports will annualized rate of 2.9% to $29.9 billion grow at an annualized rate of about during the ve years to 2018. 0.5% during the period, which will Additionally, prot is an anticipated ticipated to to grow further boost revenue as consumers from about 8.4% of revenue in 2013 to continue to substitute tness 9.0% in 2018, as operators oer more memberships with team sports. high-margin services.
New demographics
During the next ve years, population growth and demographic changes will increasingly drive revenue growth. For example, an aging baby boomer population will maintain a more active lifestyle and purchase gym memberships. Additional Addit ionally, ly, as as healthc healthcare are costs costs cont continue inue to escalate, insurance providers may implement incentives to promote preventive health practices, such as the use of tness centers, to lower the risk of type 2 diabetes, heart disease, dementia, cancer, high blood pressure and other health ailments. Many employers are increasingly viewing tness as a vital component of employee health, especially because becau se studies studies are showin showing g how tne tness ss can boost worker productivity, a trend that will posit positively ively aect indus industry try revenue revenue..
Population growth and demographic changes will increas i ncreasingly ingly drive revenue growth Furthermore, as many families becomee health becom hea lth and a nd fitness f itness consc conscious, ious, more consumers aged 17 and younger will purch purchase ase gym membe m embership rships. s. Less Les s physical education in schools, coupled with concer concerns ns regard re garding ing childh c hildhood ood obesity, will prompt membership sales for this age demographic. As consumers become increasingly time strapped, many will purchase either individual or group trainers and fitness
9
WWW.IBISWORLD.COM
Gym, Health & Fitness Clubs in the US November 2013
Industry Performance
New demographics continued
classes to obtain fitness goals more efficiently. In the next five years, group classes are expected to increase in
Establishments and employees
While large-scale lar ge-scale gyms gym s will continue conti nue to increase as operators oer a diverse portfolio of services, small operators will persist in attracting a market niche of local customers. In particular, small operators will attempt to entice local customer bases that are time strapped by oering conveniently located l ocated establishments. establishmen ts. Large industry operators will compete for consumers on the basis of convenience. However, large industry operators can somewhat mitigate this trend by attracting consumers via technology, such as phone applications that allow users to access previous tness statistics. During the five years to 2018, the number of companies is anticipated to
Future opportunities
popularity, especially fusion classes that combine yoga, pilates, ballet, dance and surfing.
Small operators will attract consumers by oering convenient establishments slightly grow at an annualized rate of 0.7% to 30,604, as the trend of health consciousness continues to boost demand for industry services. Additional Addit ionally, ly, the t he number nu mber of employees is anticipated to grow at an annualized rate of 1.6% to 619,989 workers, worke rs, as industr in dustry y operato op erators rs implement a larger workforce to provide additional services, like fitness classes and spa services, to build and maint maintain ain clientel cl ientele. e.
The number of individuals in the US system will be unable to cope with the that are obese is increasing dramatically. growing number of cases of heart According to the th e US Center for Disease Disea se disease, diabetes and other illnesses Control and Prevention, obesity has caused by obesity. As a result, increased signicantly among adults. identifying solutions to the obesity Surveys show that among adults aged 20 epidemic has become a political issue to 74 years old, the prevalence of obesity because it directly d irectly contributes contr ibutes to increased from 15.0% (in the 1976 to increased healthcare costs. As a result, 1980 survey) to 32.9% (in the 2003 to initiatives initiativ es calling for increased exercise 2004 survey), with obesity anticipated are expected to continue through the to become more prevalent in the coming next ve years, which will positively years. Subsequently, S ubsequently, the healthcare health care aect the industry.
10
