Fitness Clubs
Market characteristics of Fitness Clubs
Fitness clubs can be divided into a number of principal types:
1. Prestigious fitness clubs at high-class hotels or in large city centres. Subscriptions for six months or one year can be purchased at these clubs, and the target audience is men and women.
2. Fitness clubs on the outskirts of large cities or in other city centres. At this type of club subscriptions for three months, six months or one year can be purchased.
3. Fitness clubs on the outskirts of cities and in residential neighbourhoods – the subscription period is one month, three months or six months.
4. Fitness clubs in residential neighbourhoods – the subscription period is one month or three months.
Customers
Twenty one percent of the adult population works out at a fitness club at least once a week. The subscription rate increases with income, from 3% of subscribers among those with a lower than average income to 28% among those with a higher than average income. Young people aged 18 – 24 make up a large portion of subscribers. Registration at fitness clubs drops with age.
One of the salient characteristics in the sector is the high percentage of subscribers who drop out (55% - 60% a year). Fifteen to twenty percent of all subscribers do not utilise their subscriptions throughout the year. Sixty percent come two to three times a week and 20% - 25% come between four times a week to daily. For this reason most clubs require registration for one year in advance and do not refund subscription fees for those who leave. The percentage of those who leave constitutes a pivotal parameter in determining the number of subscriptions that the club can sell, with the goal of maximising profits without causing overcrowding and crowdedness that will cause subscribers to leave.
Factors affecting success
Location (studies that examined the subject reveal that most people attend a fitness club near their place of employment or home), equipment, space and aesthetics, skilled and professional staff, price, activities offered at the club.
Entry barriers in the sector
A high initial investment – opening a fitness club involves a major investment – the price of the equipment alone ranges from NIS 450,000 – NIS 2,025,000.
Subscriber recruitment
High wages – a teacher at a studio earns NIS 100 – NIS 120 per hour, a personal trainer costs NIS 120 – NIS 180 per hour.
Turnover
The turnover is determined by two components:
1. Turnover from stations (machines) – most of the club’s income stems from the sales of periodic subscriptions. Subscription periods range from one month to one year. Purchasing a subscription grants the subscriber the right to use all the club’s equipment without limitation, apart from services provided for a special fee, such as: classes, cafeteria etc. The range of services at the fitness club constitutes around 10% of the overall turnover for small clubs and around 20% - 30% for large clubs.
2. The principal additional services provided at fitness clubs:
Classes – the instructor’s fee is generally based on the number of participants in the class and constitutes around 30% - 50% of the turnover stemming from the class.
Auxiliary para-medical services – primarily massages or auxiliary medical treatments. The therapist receives between 30% and 50% of the fee paid by the customer.
Cafeteria
Sales of auxiliary equipment
Future courses of development
Auxiliary services for fitness clubs – most clubs offer a range of classes in addition to the activity of the gym, from popular classes such as yoga, spinning and aerobics to unique classes such as Thai boxing, salsa and belly dancing.
Improving aesthetics at fitness clubs – in recent years aesthetics has become a significant factor in selecting a fitness club. The placement of TVs at the clubs has also become significant. The effect of the entry of the Holmes Place chain on the fitness club sector – the success of its penetration in Israel has raised the bar in the entire sector, as well as the investment required for setting up an operating fitness club.
Licenses and regulations for opening fitness clubs
A licence to run a fitness club, under the Business Licensing Law, will be granted after the following conditions have been fulfilled:
1. The location has been found suitable for opening a fitness club. The licence stipulates terms obligating the fitness club to operate in accordance with the provisions of the Sports Law.
2. The licence stipulates terms obligating the fitness club to uphold the provisions of the Fitness Clubs (Licensing and Supervision) Law, 5754 – 1994.
3. The presence of an instructor – at all times when the club is operating an instructor will be present for teaching the operation and use of the machines.
4. Medical fitness – a fitness club will engage a permanent instructor only after the latter has presented a medical certificate confirming his medical fitness for working out in a gym.
Insurance
Employer’s liability insurance, third party insurance, professional liability insurance for the instructors, indoor insurance – for the equipment and machines against theft and fire.
In addition to the aforesaid, consulting with an insurance agent regarding required insurance is advisable.
| Fitness Clubs
Fitness clubs can be divided into a number of principal types:
1. Prestigious fitness clubs at high-class hotels or in large city centres. Subscriptions for six months or one year can be purchased at these clubs, and the target audience is men and women.
2. Fitness clubs on the outskirts of large cities or in other city centres. At this type of club subscriptions for three months, six months or one year can be purchased.
3. Fitness clubs on the outskirts of cities and in residential neighbourhoods – the subscription period is one month, three months or six months.
4. Fitness clubs in residential neighbourhoods – the subscription period is one month or three months.
Customers
Twenty one percent of the adult population works out at a fitness club at least once a week. The subscription rate increases with income, from 3% of subscribers among those with a lower than average income to 28% among those with a higher than average income. Young people aged 18 – 24 make up a large portion of subscribers. Registration at fitness clubs drops with age.
One of the salient characteristics in the sector is the high percentage of subscribers who drop out (55% - 60% a year). Fifteen to twenty percent of all subscribers do not utilise their subscriptions throughout the year. Sixty percent come two to three times a week and 20% - 25% come between four times a week to daily. For this reason most clubs require registration for one year in advance and do not refund subscription fees for those who leave. The percentage of those who leave constitutes a pivotal parameter in determining the number of subscriptions that the club can sell, with the goal of maximising profits without causing overcrowding and crowdedness that will cause subscribers to leave.
Factors affecting success
Location (studies that examined the subject reveal that most people attend a fitness club near their place of employment or home), equipment, space and aesthetics, skilled and professional staff, price, activities offered at the club.
Entry barriers in the sector
A high initial investment – opening a fitness club involves a major investment – the price of the equipment alone ranges from NIS 450,000 – NIS 2,025,000.
Subscriber recruitment
High wages – a teacher at a studio earns NIS 100 – NIS 120 per hour, a personal trainer costs NIS 120 – NIS 180 per hour.
Turnover
The turnover is determined by two components:
1. Turnover from stations (machines) – most of the club’s income stems from the sales of periodic subscriptions. Subscription periods range from one month to one year. Purchasing a subscription grants the subscriber the right to use all the club’s equipment without limitation, apart from services provided for a special fee, such as: classes, cafeteria etc. The range of services at the fitness club constitutes around 10% of the overall turnover for small clubs and around 20% - 30% for large clubs.
2. The principal additional services provided at fitness clubs:
Classes – the instructor’s fee is generally based on the number of participants in the class and constitutes around 30% - 50% of the turnover stemming from the class.
Auxiliary para-medical services – primarily massages or auxiliary medical treatments. The therapist receives between 30% and 50% of the fee paid by the customer.
Cafeteria
Sales of auxiliary equipment
Future courses of development
Auxiliary services for fitness clubs – most clubs offer a range of classes in addition to the activity of the gym, from popular classes such as yoga, spinning and aerobics to unique classes such as Thai boxing, salsa and belly dancing.
Improving aesthetics at fitness clubs – in recent years aesthetics has become a significant factor in selecting a fitness club. The placement of TVs at the clubs has also become significant. The effect of the entry of the Holmes Place chain on the fitness club sector – the success of its penetration in Israel has raised the bar in the entire sector, as well as the investment required for setting up an operating fitness club.
Licenses and regulations for opening fitness clubs
A licence to run a fitness club, under the Business Licensing Law, will be granted after the following conditions have been fulfilled:
1. The location has been found suitable for opening a fitness club. The licence stipulates terms obligating the fitness club to operate in accordance with the provisions of the Sports Law.
2. The licence stipulates terms obligating the fitness club to uphold the provisions of the Fitness Clubs (Licensing and Supervision) Law, 5754 – 1994.
3. The presence of an instructor – at all times when the club is operating an instructor will be present for teaching the operation and use of the machines.
4. Medical fitness – a fitness club will engage a permanent instructor only after the latter has presented a medical certificate confirming his medical fitness for working out in a gym.
Insurance
Employer’s liability insurance, third party insurance, professional liability insurance for the instructors, indoor insurance – for the equipment and machines against theft and fire.
In addition to the aforesaid, consulting with an insurance agent regarding required insurance is advisable.
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