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Gym, Health & Fitness Clubs in the USNovember 2013 1
Working out: 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
2 About this Industry
2 2 2 3 Industry Denition Main Activities Similar Industries Additional Resources 17 International Trade 18 Business Locations
Sarah Turk
32 Key Statistics
32 Industry Data 32 Annual Change 32 Key Ratios
20 Competitive Landscape
20 Market Share Concentration 20 Key Success Factors
33 Jargon & Glossary
4 Industry at a Glance 5 Industry Performance

5 5 7 9 Executive Summary Key External Drivers Current Performance Industry Outlook
20 Cost Structure Benchmarks 22 Basis of Competition 23 Barriers to Entry 24 Industry Globalization
25 Major Companies 28 Operating Conditions

28 Capital Intensity 29 Technology & Systems 29 Revenue Volatility 30 Regulation & Policy 31 Industry Assistance
11 Industry Life Cycle
13 Products & Markets

13 Supply Chain 13 Products & Services 15 Demand Determinants 15 Major Markets
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About this Industry

Industry Denition
This industry operates fitness and recreational sports facilities that feature exercise and other active physical fitness conditioning or recreational sports activities, such as swimming, skating or racquet sports. Companies are also involved in facilities management and fitness instruction.
Main Activities
The primary activities of this industry are Operating aerobic dance and exercise centers Operating athletic club facilities for physical tness Operating body building studios for physical tness Operating tness 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 tness 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 accommodations. 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 articial tanning services
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About this Industry
Additional Resources
For additional information on this industry www.ballytness.com Bally Total Fitness www.ihrsa.org International Health, Racquet and Sportsclub Association www.sa.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 towww.ibisworld.com
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Gym, Health & Fitness Clubs in the US November 2013
Industry at a Glance
Gym, Health & Fitness Clubs in 2013 Key Statistics Snapshot
Revenue
$25.9bn 1.4%
Prot
Annual Growth 08-13
Annual Growth 13-18
$2.2bn
Market Share
Revenue vs. employment growth
8 6
Wages
$8.0bn
4 2
2.9% 29,501
Businesses
Per capita disposable income
There are no Major Players in this industry

% change
% change
4 2 0 2
0 2 4
Year 05 Revenue
p. 25
07
09
11
13
15
17
19
Year
06
08
10
12
14
16
18
Employment
SOURCE: WWW.IBISWORLD.COM
Products and services segmentation (2013)
Key External Drivers

Participation in sports Per capita disposable income Time spent on leisure and sports Number of adults aged 20 to 64
Ice and roller rinks Swimming pools
6%
Tennis centers
5%
7%
Dance centers
7%
Gyms and tness centers
65%
10%
Other
p. 5
SOURCE: WWW.IBISWORLD.COM SOURCE: WWW.IBISWORLD.COM
Industry Structure
Life Cycle Stage Revenue Volatility Capital Intensity Industry Assistance Concentration Level
Growth Low Medium Low Low
Regulation Level Technology Change Barriers to Entry Industry Globalization Competition Level
Light Medium Low Low High
FOR ADDITIONAL STATISTICS AND TIME SERIES SEE THE APPENDIX ON PAGE 32
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Industry Performance
Executive Summary
The Gym, Health and Fitness Clubs industry has slightly benefited from the recent onslaught of marketing campaigns and consumer trends that fight 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 five years to 2013. While health 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
Executive Summary | Key External Drivers | Current Performance Industry Outlook | Life Cycle Stage
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 five-year period, which will benefit revenue due to increased participation. Revenue is anticipated to grow at an annualized rate of 1.4% to $25.9 billion during the five 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 offered membership on a monthly basis. Therefore, profitability is expected to slightly contract from 9.8% of revenue in 2008 to 8.4% in 2013. During the five years to 2018, the industry will benefit from an increase in per capita disposable income and growth in the number of baby boomers signing up for health memberships. An increase in discretionary spending, coupled with continued consumer awareness about the health benefits of exercise, will drive revenue growth. Consequently, revenue is anticipated to grow at annualized rate of 2.9% to $29.9 billion during the five-year period. Moreover, consumers will begin to substitute larger, all-inclusive clubs for low-cost memberships, which is anticipated to bolster revenue for the industry.
The
industry will benefit from an increase in per capita disposable income

five-year period, consumers became more budget conscious, which stimulated demand for low-cost gym memberships with few amenities. Consequently, during the recession, small-budget gyms with fewer amenities gained popularity compared with expensive, all-inclusive health clubs. During the period, consumers were also more likely to participate in sports, which benefitted the industry, and subsequently caused the sports participation rate to grow at an annualized rate of 0.9% during the five years to 2013. This trend slightly boosted
Key External Drivers
Participation in sports When an increased number of people become aware of the importance 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
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
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Key External Drivers continued
health and fitness 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
Per capita disposable income
4.0 2.0
sports is expected to decrease slowly during 2014, posing a potential threat to the industry. Number of adults aged 20 to 64 Gyms, health and fitness 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
5.4 5.3
% change
0.0 2.0 4.0
Units
06 08 10 12 14 16 18
5.2 5.1 5.0
Year
Year 04
06
08
10
12
14
16
18
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Current Performance
The Gym, Health and Fitness Clubs industry experienced slight growth during the past five years, bolstered by public health initiatives that shed light on the importance of fitness to fight 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 five years to 2013. Nevertheless, health club memberships are anticipated to grow at an annualized rate of 2.0% during the five-year period, as a result of the increased value consumers will place on fitness. The number of individuals aged 20 to 64 is also expected to grow at an annualized rate of 0.7% during the five-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, and will be supported by the trend of more baby boomers and
Industry revenue
8 6
% change
4 2 0 2
Year 05
07
09
11
13
15
17
19
youth purchasing health 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-conscious consumers, cutting into industry profitability.
Improving sales
Industry operators experience the greatest growth in health club memberships during the first three months of the year. New Years resolutions incite consumers to implement a healthier lifestyle and correspondingly, about 30.0% of all new members join gym and fitness clubs during the first few months of the year. Although industry operators aim to boost the number of memberships during other months by offering discounts and monthly memberships, January still comprises the largest portion of membership sales. Over the past five 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 offered 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
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Improving sales continued
sports grew at an annualized rate of about 0.9% during the five years to 2013, more individuals substituted individual fitness activities for team sports. This trend sustained revenue, as many time-strapped individuals found it easier and more time efficient to purchase gym memberships, as compared with participating in team sports. Moreover, demographic trends have helped drive industry growth. For
example, the aging of the baby-boomer generation and the maturation of their offspring, the echo boomers, have broadened the market for gyms and health and fitness clubs. Governmentsponsored programs, such as Michelle Obamas Lets Move! initiative, which fights childhood obesity, have increased awareness of the benefits of physical exercise for consumers of all ages, especially families.
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 benefited 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
Consumer
preference has shifted towards smaller gyms with fewer amenities

(IHRSA). Planet Fitness offers inexpensive gym membership fees of $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 specific clientele. Moreover, consumers that seek individualized fitness programs, specific fitness goals or are uncomfortable exercising in larger gyms particularly favored small-scale gyms.
Enterprises and employment
As operators try to attract consumers 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 five 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 fitness centers that cater to a specific 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, low-cost gyms with 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 fitness instructors increases in line with the growth in health club membership.
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Industry Outlook
The Gym, Health and Fitness Clubs industry will experience growth in the next five years, largely due to an increase in per capita disposable income. As per capita disposable income is anticipated to grow at an annualized rate of 2.5% during the five years to 2018, consumers will increasingly substitute memberships that offer more services, with low-cost gym memberships with fewer amenities. Moreover, health club memberships are anticipated to grow at an annualized rate of 2.0% during the five-year period. As health club memberships grow at the same rate compared with the previous five years, individuals with higher discretionary income will purchase more expensive industry services, such as personal trainers. The number of individuals participating in sports will grow at an annualized rate of about 0.5% during the period, which will further boost revenue as consumers continue to substitute fitness memberships with team sports.
Furthermore, as the number of adults aged 20 to 64 is expected to increase at an annualized rate of 0.4% to 192.0 million, during the five years to 2018, revenue will also grow given that this age demographic comprises the largest market segment for the industry. However, industry operators will contend with time-strapped consumers, as leisure time is expected to decline at an annualized rate of 0.2% during the five-year period. While timestrapped consumers will have difficulty incorporating fitness into their daily routine, more consumers will purchase high-cost gym sessions to achieve fitness goals in a shorter period of time, such as personal trainers or fitness classes. As a result of consumers buying a greater number of high-cost industry services, revenue is forecast to grow at an annualized rate of 2.9% to $29.9 billion during the five years to 2018. Additionally, profit is anticipated to grow from about 8.4% of revenue in 2013 to 9.0% in 2018, as operators offer more high-margin services.
New demographics
During the next five 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. Additionally, as healthcare costs continue to escalate, insurance providers may implement incentives to promote preventive health practices, such as the use of fitness 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 fitness as a vital component of employee health, especially because studies are showing how fitness can boost worker productivity, a trend that will positively affect industry revenue.
Population
growth and demographic changes will increasingly drive revenue growth

Furthermore, as many families become health and fitness conscious, more consumers aged 17 and younger will purchase gym memberships. Less physical education in schools, coupled with concerns regarding childhood 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
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New demographics continued
classes to obtain fitness goals more efficiently. In the next five years, group classes are expected to increase in
popularity, especially fusion classes that combine yoga, pilates, ballet, dance and surfing.
Establishments and employees
While large-scale gyms will continue to increase as operators offer 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 offering conveniently located establishments. 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 fitness statistics. During the five years to 2018, the number of companies is anticipated to
Small
operators will attract consumers by offering 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. Additionally, the number of employees is anticipated to grow at an annualized rate of 1.6% to 619,989 workers, as industry operators implement a larger workforce to provide additional services, like fitness classes and spa services, to build and maintain clientele.
Future opportunities
The number of individuals in the US that are obese is increasing dramatically. According to the US Center for Disease Control and Prevention, obesity has increased significantly among adults. Surveys show that among adults aged 20 to 74 years old, the prevalence of obesity increased from 15.0% (in the 1976 to 1980 survey) to 32.9% (in the 2003 to 2004 survey), with obesity anticipated to become more prevalent in the coming years. Subsequently, the healthcare
system will be unable to cope with the growing number of cases of heart disease, diabetes and other illnesses caused by obesity. As a result, identifying solutions to the obesity epidemic has become a political issue because it directly contributes to increased healthcare costs. As a result, initiatives calling for increased exercise are expected to continue through the next five years, which will positively affect the industry.
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Life Cycle Stage
Increased awareness and interest in fitness and health has bolstered industry performance Although industry value added is growing at a slower rate compared with the overall economy, this can be attributed to the recession General population growth leads to increased demand for facilities
% Growth in share of economy
20
Company consolidation; level of economic importance stable 15
Maturity
Quality Growth
High growth in economic importance; weaker companies close down; developed technology and markets
Key Features of a Growth Industry Revenue grows faster than the economy Many new companies enter the market Rapid technology & process change Growing customer acceptance of product Rapid introduction of products & brands
10
Quantity Growth
5
Many new companies; minor growth in economic importance; substantial technology change
Heating & Air Conditioning Steam & AirConditioning Supply Hotels & Motels
Golf Driving Ranges & Family Fun Centers Weight Loss Services
Gym, Health & Fitness Clubs
-5
Decline
Shrinking economic importance
-10 -10
-5
10
15
20
% Growth in number of establishments

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Industry Life Cycle This industry is G rowing
The Gym, Health and Fitness Clubs is in the growth life cycle stage, because consumers continue to be interested in exercise to boost fitness and health. During the 10 years to 2018, industry value added (IVA), a measure of an industrys contribution to the overall economy, is expected to grow at an annualized rate of 1.9%. Comparatively, GDP is anticipated to grow at an annualized rate of 2.1% during the ten-year period. While the industry is growing at a slower pace than the economy, this trend can be attributed to the recession. As per capita income declined, more consumers purchased low-cost gym memberships with fewer amenities, which hampered industry profitability. However, this trend will be mitigated in future years as growing per capita disposable income, coupled with less leisure time, will incite time-strapped consumers to purchase personal trainers to accomplish fitness goals.
As public health campaigns spread awareness about the health benefits of fitness, consumers will increasingly perceive gym and fitness club membership as a vital expense. For example, as government programs and businesses support participation in fitness programs, consumers will recognize the benefits of exercise for productivity and health reasons. As gym memberships become more entrenched in the average Americans life, revenue growth will slow to match population growth, bringing the industry from growth to maturity. Future growth areas will likely be in participative sports for women and the older sections of the community; and in individual sports rather than team sports. These factors will support continued growth for gyms and health clubs over the coming five years.
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Products & Markets

Supply Chain
KEY BUYING INDUSTRIES
99
Supply Chain | Products & Services | Demand Determinants Major Markets | International Trade | Business Locations
Consumers in the US Consumers drive the demand for gyms, health and tness clubs.
KEY SELLING INDUSTRIES

22133 23822a 23822b 33992a 33992b Steam & Air-Conditioning Supply in the US This industry supplies air conditioning for facilities. Heating & Air Conditioning in the US This industry supplies heating and air conditioning for gyms and tness centers. Plumbing in the US This industry supplies plumbing services for changing rooms. Athletic & Sporting Goods Manufacturing in the US This industry supplies sporting equipment to operators. Gym & Exercise Equipment Manufacturing in the US This industry supplies sporting equipment to operators.
Products & Services
Products and services segmentation (2013)

Tennis centers Ice and roller rinks
6%
5%
Swimming pools Dance centers
7%
7%
10%
Other
Gyms and tness centers
65%
Total $25.9bn
The Gym, Health and Fitness Clubs industry offers a wide array of services across a variety of facility types, including gyms, tennis centers, ice-skating rinks and swimming pools. The industry is generally divided into groups based on these types of facilities, but it can also be separated by function or payment. Industry operators generate income from membership dues, admissions or use of facilities, tuition services, rental hire, food and beverage sales, retail sales and other services. Health and fitness clubs
typically derive a large portion of revenue from membership fees, followed by admissions to facilities like pools, courts, rinks and classes. However, the breakdown will vary considerably between different types of clubs, depending on their operations and services offered. Gyms and fitness centers The largest product segment is gyms and fitness centers, which make up about 65.0% of revenue in 2013. This segment
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Products & Markets
Products & Services continued
dominates the industry due to a high participation rate; 40.0% of people aged seven and older worked out at a club at least once in 2010, according to the latest data available from the National Sporting Goods Association (NSGA). The activity is also nonseasonal because many health and fitness centers offer membership packages on a contractual basis. Members generally join gyms by signing one-year contracts. Clubs offer a range of activities and continue to offer new classes and recreation options to their members (e.g. yoga, Pilates and spa services). This segment has especially grown in the past five years, as gyms are considered more fitness activities than leisure, appealing directly to the health-conscious population. There are various kinds of health and fitness clubs that cater to different markets; examples include female-only gyms (such as Curves International), premium full-service health clubs, 24-hour gyms and bodybuilding gyms. Swimming pools Swimming pools are the second-largest industry segment, which comprises about 7.0% of revenue in 2013. Outdoor pools are more popular in the warmer southern states, but indoor heated pools are common in colder states. Swimming is a popular activity, though outdoor pools tend to be seasonal. According to the latest available data, about 63.5% of the US population went swimming at least once in 2010 (latest data available). Dance centers Dance centers and studios are a growing segment of the industry, generating about 7.0% of industry revenue in 2013. These centers are largely available to the general public for all ages and ability levels. A wide variety of dance classes (e.g. salsa and hip hop) are made available in most
areas, appealing to both beginners and professionals. Ice rinks and in-line skating rinks Ice rinks and in-line skating rinks are another popular industry activity, accounting for about 6.0% of revenue in 2013. Skating rinks are popular, as participants can skate both for leisure and to participate in hockey and figure skating. The NSGA reports that about 10.0% of the population participated in either ice or in-line skating during 2010 (latest available data), and 2.0% participated in ice hockey. IBISWorld estimates that there are about 1,800 ice rinks across the United States. Tennis centers Tennis centers are expected to account for about 5.0% of revenue in 2013. As the popularity of other competing sports has increased in recent years, demand for tennis courts has wavered. In 2010, 12.6% of the population played tennis at least once, up 2.9% from 2007, according to the NSGA. The most popular tennisplaying surfaces are clay and hard courts. Recently, there have been significant technological advances in tennis racquets. These advances have come in areas such as grip shapes, shaft flexibility, string patterns, head size and string gauges. Tennis court surfaces are also changing for both indoor and outdoor tennis courts, with synthetic and artificial surfaces providing a more even and predictable bounce than grass or clay surfaces. Each of these factors will lead to more participants and increased frequency of tennis center attendance in the coming years. Other centers Other fitness and recreational services include a variety of racket sports, such as handball, racquetball, squash, table tennis and badminton and account for about 10.0% of industry revenue.
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Products & Markets
Demand Determinants
Across the United States, increasing awareness of the need for exercise, weight control, good nutrition and a healthy lifestyle among adults and children is having a positive effect on fitness and recreational sports centers. The demand for services provided by the Gym, Health and Fitness Clubs industry is determined by a number of factors, including household disposable income, consumer confidence, leisure time availability, participation in recreation and sports, seasonal conditions, attitudes towards health and fitness and the cost of services relative to other recreation options. Household disposable income is particularly relevant to industry demand, as the level of disposable income within a household will determine the amount spent at fitness and recreational sports centers. As discretionary spending rises, demand for gyms and fitness clubs also tends to increase. Similarly, industry growth is impacted by consumer confidence, as an increase leads to higher demand and willingness to spend on the industrys services. Overall, demand is also sensitive to seasonal and weather conditions; for example, cold weather can reduce the
level of swimming pool attendance (particularly if the pools are outdoor), while increase attendance at ice-skating rinks. Additionally, the beginning of the calendar year marks the busiest season for new sales. A large portion of new gym members sign on in January or February, often because of New Years resolutions. Leisure time availability also influences demand, with time-poor consumers generally finding it difficult to use the facilities at centers. As work hours decline, people find more ways to attend gyms and use facilities. The link between leisure time and demand relates to health and fitness awareness, as people see fitness as a valuable way to use their spare time. While health crazes generally have a positive effect on the industry, certain fitness trends can have varied effects on the industry. For example, the increase in popularity of yoga, and especially in its muscle toning qualities, reduces demand for weight training among females in particular. Finally, the lower cost of industry services compared with other sport and recreation activities can stimulate demand as well. Conversely, when industry costs are relatively higher than other recreational activities, demand can suffer.
Major Markets
Over the past decade, the industry has experienced substantial growth in demand, and as a result, the breakdown of the industrys markets has also changed. The aging population has encouraged health and fitness clubs to widen their target demographic beyond the traditional market of 18- to 35-yearolds. Industry operators are increasingly expanding their target market to include 35- to 54-year-olds and those aged under 18. The majority of gym and health club members are female, which account for about 57.0% of all membership sales within the health club sector and have
increased in recent years. The growth of female participation is likely a result of the rising number of female-only health club facilities. Consumers aged 35 and older The central characteristic of the Gym, Health and Fitness Clubs industry has been the growth in the population of older members who are joining health clubs. By the end of 2013, IBISWorld estimates that there will be about 52.6 million health club members across the United States. About 20.0% of these members will be older than 55, which
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Products & Markets
Major Markets continued
Major market segmentation (2013)
Consumers aged Consumers aged 6 to 11 12 to 17
8%
4%
Consumers aged 55 and up
20%
Consumers aged 18 to 34
35%
Total $25.9bn
Consumers aged 35 to 54
33%
totals a 320.0% increase since the early 1990s. The industry has also growth significantly within the 35-to-54 age group, with an estimated 13.4 million members of health clubs (33.0% of the market). This figure has increased by 130.0% from an estimated 6.3 million in 1990. The two segments identified can be generally grouped within baby boomers and generation X profiles. There are about 120 million people within these age categories, accounting for more than 35.0% of the total US population. These segments continue to drive growth in membership numbers and participation in sport and fitness activities. Participation by these age groups is not limited to health clubs, as it extends to home fitness and active recreational and outdoors sports. Consumers aged 18 to 34 This age category is the largest market segment for the Gym, Health and Fitness Clubs industry, accounting for about 35.0% of the total market. Despite its size, this segment has shown little growth over the past decade compared with the other age categories.
In the 1990s, consumers aged 18 to 24 years had about 10.5 million members, which rose to about 14.2 million members in 2010, representing a 35.0% increase, the slowest of any age demographic. However, this segment consistently demonstrates strong demand for fitness options. Consumers aged 17 and younger The 6-to-11 age category accounts for only 4.0% of the market, while the 12-to-17 age category accounts for 8.0%. Growth within these areas (particularly the latter) has been strong over the past decade, as the echo boom generation (children of baby boomers) increased in size. Additionally, many parents have been spending large amounts on health club memberships for their children in order to tackle obesity. Youth memberships have become one of the fastest growth areas for the fitness club industry, and many clubs have are shifting their focus to this area. Moreover, the nations schools have cut back on physical education classes, causing parents and their children to seek alternatives.
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Products & Markets
International Trade
International trade does not generally apply to the US Gyms, Health and Fitness Clubs industry, as it is a serviceoriented sector with no measurable imports or exports. International trading of fitness and exercise
equipment is recorded at the manufacturing level for fitness or sporting goods (IBISWorld report 33992). For more information on global operations, please refer to the Industry Globalization section.
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Products & Markets

Business Locations 2013
West
AK
0.3
New England Great Lakes MidAtlantic

MI
3.0
ME
0.5
WA
2.6
OR
1.5
Rocky Mountains ID
0.4 0.5
MT
ND
0.3
MN
SD
0.3
Plains
IA
1.1
2.0
1 2 3 NY 7.1 5 4 6 7 8
WI
2.2
PA
4.7
WY
0.2
West NV
0.6
NE
0.7
IL
4.2
IN
2.0
OH
3.8
UT
0.7
CO
1.8
KS
0.8
MO
1.9
KY
1.2
WV VA 2.8
0.5
NC
3.4
CA
10.8
OK AZ
1.5 0.9
AR
0.7
Southeast
1.6
TN
SC
1.4
NM
0.5
Southwest
TX
6.0
MS
0.7
AL
1.2
GA
2.6
LA
1.4
FL
5.5
West
HI
0.3
Additional States (as marked on map) 1 VT

0.3 1.6
Establishments (%) Less than 3% 3% to less than 10% 10% to less than 20% 20% or more
2 NH
0.6
3 MA
3.5
4 RI
0.5
5 CT
6 NJ
4.2
7 DE
0.4
8 MD
2.2
9 DC
0.2
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Products & Markets
Business Locations
The four regions that encompass the greatest percentages of gyms and health and fitness clubs include the Southeast (22.9% of establishments), the MidAtlantic (18.9%), the West (16.0%), and the Great Lakes (15.2%) regions of the United States. Together these four regions account for 73.0% of total industry establishments. Establishments are particularly concentrated in the following states: with 10.8% of establishments in California, New York (7.1%), Texas (6.0%), Florida (5.5%) and Pennsylvania (4.7%). Typically, highly populated regions have a higher portion of industry establishments. This trend can be attributed to consumers lack of willingness to travel excessive distances to perform exercise or become a member of a fitness or recreational sports center. However, geographical locations can also determine the popularity of a fitness activity as many areas have climates that are not conducive to particular sports. For example, the population of Maine is twice as likely to participate in ice-skating as the national average. Similarly, the population of Arizona is almost twice as likely to participate in swimming at a pool as the national average. As such, areas across the United States will have a greater amount of establishments dedicated to a particular activity depending on climate and other related factors.
Distribution of establishments vs. population

30
20
%
10 0 Great Lakes Mid-Atlantic New England Rocky Mountains Southwest West Southeast Plains
Establishments Population
Changes in geographic distribution over the past five years have been minimal, with no region increasing or declining in share by more than one percentage point. The West and Southwest regions have experienced slight growth in the past five years, whereas the Rocky Mountains, New England, and Great Lakes observed small declines. These changes can be attributed to shifting demographics and varying demand levels.
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Competitive Landscape
Market Share Concentration
Level Concentration This industry has a low level of market share concentration, with the top four firms in this industry accounting for about 12.7% of total revenue in 2013. The industrys low level of concentration can be attributed to many industry operators in the Gym, Health and Fitness Clubs industry developing a local customer base. Additionally, a large number of fitness and gym centers only employ one person or are nonemploying establishments. In 2013, about 36.0% of all establishments were nonemploying, and these establishments are expected to generate only 11.9% of industry revenue. The percentage of nonemployers is substantial because the industrys low
Market Share Concentration | Key Success Factors | Cost Structure Benchmarks Basis of Competition | Barriers to Entry | Industry Globalization
barriers to entry, making it an attractive industry to enter. The larger players in this industry have numerous locations throughout the United States, while small players are generally independently owned and operate in one or two states. The industry is highly fragmented, with the majority of employing establishments employing fewer than 20 people. However, over the past five years, the proportion of businesses that employs 20 people or more has increased, indicating that concentration is rising. Increasing concentration is a result of larger firms continuing to consolidate operations to improve economies of scale and enter new markets by acquiring smaller firms.
in this industry is L ow
Key Success Factors IBISWorld identies 250 Key Success Factors for a business. The most important for this industry are:
Easy access for clients A high profile location offering easy access and parking can provide a competitive advantage for firms in this industry. Effective product promotion Being able to promote a business effectively increases awareness and attracts greater membership and local patronage. Economies of scale Fitness firms that have a large number of establishments and provide a wide range of services are able to attract and retain new and existing members, as well as reduce costs per member.
Provision of appropriate facilities Providing appropriate equipment and maintaining it regularly is essential to attracting and retaining customers. Having a good technical knowledge of the product Skilled employees that can demonstrate the use of various types of equipment and assist participants are important to attract repeat customers. Business expertise of operators The long-term success of a firm in this industry depends on the skill of the operator in running a business profitably over time.
Cost Structure Benchmarks
Prot Member retention is a key component in fitness centers profitability, as these centers have fixed overhead costs to cover. Studies have found that the average attrition rate for gyms in the United States is 37.0%, meaning that
37 out of 100 people will cancel their memberships each year. Furthermore, the cost of recruiting a new member is more than twice the cost of retaining an existing member. Clubs will continue to direct funds toward retaining existing members in 2013 by
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Cost Structure Benchmarks continued
prioritizing excellent customer service and adding amenities. IBISWorld estimates that industry profit will comprise 8.4% of revenue in 2013. Following a weak year in 2009, profit has steadily grown due to heightened demand and a wider array of services (such as massages, spas, classes and lessons). While membership declined in 2009, operating costs remained virtually the same, which lowered the industrys profit margin. Prior to 2009, high competition in the industry kept margins under 10.0% of revenue, although prices were still high relative to the discounts after the recession. Wages Wages are the largest cost to this industry, accounting for about 30.7% of revenue in 2013. To minimize this cost, most centers employ part-time employees who are paid on an hourly basis. Companies also hire salaried staff, Sector vs. Industry Costs
Average Costs of all Industries in sector (2013) 100
including back-office support, personal trainers and other professionals, but the majority of these staff members generate additional revenue streams for fitness and health clubs. These staff members also help attract new clientele, as fitness classes and training programs are important drivers of new business. The average wage varies between employing and nonemploying establishments, as large businesses require a range of employees to run their operations, including accountants, financial analysts and other back-office support staff. During the next five years, IBISWorld expects the average size of an establishment to increase, thus forcing clubs to hire more full-time staff, which will increase the average wage. Purchases Purchases represent the second-highest cost to this industry, comprising about
Industry Costs (2013)
13.3 27.0
8.4 30.7
80
Percentage of revenue
60
Prot Wages Purchases Depreciation Marketing Rent & Utilities Other
26.6
40
20.0 7.5 10.0 15.5 7.9

20
6.1 4.3 6.3 16.4
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Cost Structure Benchmarks continued
20.0% of revenue in 2013. Purchases largely include smaller types of equipment, office requirements, retail products and other miscellaneous items. Purchases can also include food and beverages that are sometimes sold within the fitness and recreational sports centers. Some of the larger centers have negotiated national buying agreements with suppliers to secure low prices, such as fitness equipment. Rent and utilities Rent makes up about 12.0% of industry revenue in 2013. Many businesses in this industry do not own their fitness facilities, and as a result they must rent their buildings. Additionally, some equipment used in recreational and fitness centers are not purchased entirely, but on a rental basis, thus adding to the cost in this segment. Industry operators incur utility costs that make up 3.5% of revenue, because the industry requires electricity for lighting, treadmills, cross-trainers, steppers and other electronic equipment. To lower utility costs, some centers have implemented energy-efficient lighting fixtures and automatic switches and timers. Advertising The industry is expected to spend about 10.0% of its revenue on advertising in 2013, as strong marketing support is
essential for attracting new clientele in such a highly competitive market. Firms advertise via TV, direct mail, newspapers, telephone directories, radio, billboards, internet websites, and other promotional activities. Advertisements aim to differentiate firms from competitors by focusing on amenities, prices, services and promotional offers. Operators also try to appeal to the publics desire to lose weight, look better and improve health. Depreciation and other costs Depreciation of buildings and equipment represents another significant expense item for the industry, accounting for about 7.5% of revenue in 2013. Expenditure on capital includes purchasing new and replacing old equipment, such as treadmills and weight machines. To operate both efficiently and profitably, firms must continually acquire up-todate fitness technology to maintain and attract their customer base, which adds to depreciation costs. Other costs include general administration, IT expenses and insurance costs. This category accounts for 7.9% of revenue. Many businesses have had to insure their products against damage, which increases insurance costs as more consumers use fitness equipment frequently.
Basis of Competition
Level & Trend ompetition C
in this industry is Highand the trend is I ncreasing
During the past five years, the Gym, Health and Fitness Clubs industry has become increasingly competitive. Wellfinanced competitors have entered the industry, and existing regional and national operators have expanded their operations. Gym and fitness clubs typically compete for high consumer retention rates on the basis of price, customer service, brand recognition and types of services offered. For example, industry operators may offer additional
services, including nutritional programs, meal planning and facial services. While facials and nutritional programs are not included in industry revenue, operators that offer additional services may increase their consumer retention rates, which boosts industry revenue. Internal competition Industry operators compete for brand recognition and members word of mouth to generate revenue. Many
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Basis of Competition continued
operators rely on retaining and developing large membership rates to cover operational costs. Operators also compete on the basis of price. For example, gym and health clubs that offer low initiation fees and monthly membership will attract first-time gym members in particular. Additionally, low-cost membership on a month by month basis appeals to both budget-conscious consumers and individuals that do not want to lock in a year contract. Also, industry operators may compete for customer service. In particular, strong customer service boosts both member attrition rates but also develops a strong customer base of individuals that may be new to gym memberships. Firms in this industry also compete with other commercial fitness center and recreational facilities that are established and operated by local governments. Nonprofit and government organizations
have an edge on commercial gyms and fitness clubs because they can obtain land and build centers at lower costs. Additional services offered by hospitals, businesses and salons are another source of competition, adding to the highly competitive environment. These firms typically compete based on location, which is the greatest convenience factor for the consumer. External competition Firms also experience external competition from entertainment and retail businesses for the discretionary income of the specific target markets in this industry. Industry operators compete with amenity and condominium clubs, exercise studios, country clubs, weight-loss centers and home fitness equipment businesses. Many other leisure industries, such as bowling alleys and marinas, also compete with this industry for leisure time, albeit without the fitness aspect.
Barriers to Entry
Level & Trend arriers to Entry B
in this industry are Lowand S teady
Overall, barriers to entry are relatively low. Prior to the recession, operators successfully obtained financing from a range of sources, including financial institutions, landlords, equipment manufacturers, private equity sources and the public capital markets. However, in late 2008 the credit markets tightened, which will continue to limit further expansion by many operators over the short term. Leasing operations provide a relatively lower cost basis for entry. Additionally, average wages in the industry tend to be low, as the staff is typically unskilled. Equipment costs are relatively low as well, and have long life spans. Many start-up gyms use second-hand exercise equipment to cut down on costs. Barriers to entry in urban markets include restrictive zoning laws, lengthy permit processes and a shortage of
Barriers to Entry checklist

Competition Concentration Life Cycle Stage Capital Intensity Technology Change Regulation & Policy Industry Assistance
Level High Low Growth Medium Medium Light Low

appropriate real estate. New entrants may also incur heavy costs when acquiring or leasing the required equipment for members and participants to use. Access to capital to fund these startup costs are therefore essential. In addition, tight credit markets have made it difficult for small businesses to enter the industry since 2009. Lending practices are expected to loosen in the
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Barriers to Entry continued
next five years, however, making it easier for new entrants to enter the market. The high cost and lengthy time it takes to build brand reputation is a potential barrier to entry. Existing players have
already established trade names, and new entrants will have to invest money and time to persuade consumers to shift away from established, brand-name gym and fitness centers.
Industry Globalization
Level & Trend lobalization G
in this industry is Lowand the trend is I ncreasing
The Gym, Health and Fitness Clubs industry has a low level of globalization; the majority of firms are small local operators, employing between one and 19 people or are nonemployers, which account for about 85.0% of the industrys total firms. While the industry is not typified by a high level of globalization, some of the industrys larger players are increasingly becoming globalized. For
example, Golds Gym International Inc. and Curves International Inc. have subsidiaries that operate in global markets. Golds Gym International operates in over 25 countries, while 24 Hour Fitness also enjoys a global presence with locations throughout Asia. Globalization is increasing as national and regional competitors expand the scope of their operations, but at this stage, it is relatively low.
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Major Companies
Other Companies
There are no Major Players in this industry | Other Companies
Due to the fragmented nature of this industry, no players hold a market share greater than 5.0%. Moreover, there is limited financial information available for players in this industry because many are private organizations with franchised operations, and as such, annual revenue figures are unavailable.
24 Hour Fitness Worldwide Inc.
provided fitness ambassadors to NBC staff, including the broadcast teams, production crews, on-air talent and other personnel. Since 24 Hour Fitness is a private company, limited financial information is available, however, IBISWorld estimates that the company will generate revenue of about $1.3 billion for 2013.
Estimated market share: 4.9% 24 Hour Fitness Worldwide Inc. is a large, privately owned and operated fitness center chain. Established in 1983, the companys first club location opened in California. With more than 400 clubs across the United States, 24 Hour serves nearly four million members. The company also offers a plethora of gym services, including personal training services, group exercise classes and a variety of strength, cardio and functional training equipment. Furthermore, the company is one of the largest supporters of amateur athletics in the US, serving as the Official Fitness Center Sponsor of the US Olympic and Paralympic Teams. 24 Hour also uses celebrities and professional athletes to advertise its brand, and is partners with the reality TV show The Biggest Loser. As a result, these marketing strategies help differentiate 24 Hour Fitness from its competitors, which allows the company to strengthen its market share. In 2005, 24 Hour Fitness entered a partnership with New York-based private equity firm Forstmann Little & Co. Financier Theodore J. Forstmann acquired the company for $1.6 billion, and has continued to promote 24 Hour Fitness as a leader within the fitness industry, with the aim of continual expansion. The company has also sponsored the US Olympic team, and was the official fitness center for the team through the 2008 Olympic Games in Beijing. At the 2010 Winter Olympic Games in Vancouver, 24 Hour Fitness
Life Time Fitness
Estimated market share: 4.1% Life Time Fitness Inc., under the Life Time Fitness and Life Time Athletic brands, operates 102 centers, including sports and athletics, professional fitness, family recreation and resorts and spas. The company offers a range of services such as group fitness, yoga, swimming, running, racquetball, squash, tennis, pilates, kid activities and camps, rockclimbing, among other services. The company designs and develops its own centers, with a focus on providing members with products and services in the areas of exercise, education and nutrition. The company currently operates in 21 states, primarily in suburban locations. Life Time Fitness business model includes attracting a larger customer base within the first three years after a center opens, as well as retaining members and controlling expenses. In 2013, IBISWorld estimates that company will generate $1.1 billion in revenue.
Bally Total Fitness Holding Corporation
Estimated market share: 3.2% Bally Total Fitness Holding Corporation was incorporated in Delaware in 1983 and is a commercial operator of fitness centers in North America. Bally operates about 60 locations in 18 states and serves one million active members nationwide. In March 2010, Bally launched a new campaign that uses music downloads from partner
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Major Companies
Other Companies continued
Universal Music Group to motivate its members. In 2013, IBISWorld estimates that Bally fitness clubs will generate $829.0 million in revenue. Most of the companys locations operate under the flagship Bally Total Fitness brand. Ballys members have access to pools, aerobic programs, running tracks and racquet courts, as well as personal trainers and sports medicine services. Bally also markets private-label nutritional products and sells health-related products in most of its clubs and about 7,000 retail outlets. Bally has followed a strategy of selling high-margin, multi-club memberships and consolidating its brand. In addition to the private-label nutritional products and in-club retail stores, the company has diversified its revenue stream through branded apparel. The move into the high-end marketplace has caused their customer base to shift toward a more senior demographic in the past five years. However, the company has also experienced financial difficulty. For example, in 2008, the company owed about $478.0 million in debt to US Bancorp and HSBC Holdings. In July 2009, the company reached an agreement with its lenders to exit bankruptcy and, under the deal, the lenders (including JPMorgan Chase) took a 94.0% share of company equity and reduced Ballys debt by $660 million.
160 health and fitness facilities and boasts half a million members. The companys business strategy involves serving densely populated metropolitan regions and developing locations near TSIs targeted customer base. Town Sports notes that they target the upper value market segment, comprising individuals in the 21 to 50 years old age group, with income levels between $50,000 and $150,000 per year. In 2013, IBISWorld estimates Town Sports Internationals revenue to be about $484.0 million.
Curves International Inc.
Town Sports International Holdings Inc.
Estimated market share: 1.9% Town Sports International Holdings Inc. (TSI) is the largest owner and operator of fitness clubs in the Northeast and MidAtlantic regions of the United States. TSI owns and operates under a number of brands: New York Sports Clubs, Boston Sports Clubs, Washington Sports Clubs and Philadelphia Sports Clubs. Founded in 1974, the company now operates over
Estimated market share: 1.8% Founded in 1992, Curves International Inc. developed a market niche in fitness and weight-loss facilities, which targeted women. The company developed a customer base of four million members in 90 countries with over 10,000 Curves for Women fitness centers. Curves is the largest fitness franchise in the world, and the company offers 30 minute health and weight-loss sessions for women in Australia, Canada, the Caribbean, Europe, Mexico, New Zealand, South America and the US. In 2008 the company opened franchises in the Ukraine, Slovakia, Botswana, Bahrain, Qatar and Saudi Arabia. It also added franchise establishments in Belgium, Finland, Jordan, Malta, and Senegal. Moreover, in 2009 Curves opened centers in China, India and the Philippines. IBISWorld estimates that US segment revenue will reach $466.0 million in 2013.
Golds Gym International Inc.
Estimated market share: 1.5% Established in 1965, Golds Gym International serves more than three million members in 38 US states and 28 countries. The company offers gym services that include cardio and strength training, zumba, yoga, group cycling,
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Major Companies
Other Companies continued
mixed martial arts, muscle endurance training and pilates. In addition to opening franchises, the company buys smaller regional health clubs and converts them into Golds Gyms. The company also licenses the Golds Gym name for products, such as fitness equipment and accessories, luggage, T-shirts and mens and womens sportswear. In 2004, TRT Holdings acquired Golds Gym for about
$158.0 million. The newly form entity aims to develop a budget-conscious consumer base by developing Golds Gym Express, which includes low-cost gym facilities. Golds Gym also continues to maintain its core weightlifting tradition, which generated its early success with the companys initial Venice beach location. In 2013, IBISWorld estimates that the company will generate $389.0 million in revenue.
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Operating Conditions
Capital Intensity
Level The level Wage costs account for about 30.7% of revenue in 2013, and capital costs, represented by the depreciation expense, account for 7.5% of revenue. Capital costs are moderate for the industry and includes the cost of fitness equipment, buildings, vehicles, furniture and computers. Nevertheless, labor costs remain high because of administration, training, supervision and maintenance requirements. Gyms and fitness centers seek to minimize their labor costs by employing a parttime labor force and employing instructors and personal trainers on an as-needed basis. The industry has moderate capital intensity despite the low barriers to entry; the total startup
Capital Intensity | Technology & Systems | Revenue Volatility Regulation & Policy | Industry Assistance
Capital units per labor unit 0.5 0.4 0.3 0.2 0.1 0.0 Economy Arts, Entertain- Gym, Health & ment and Fitness Clubs Recreation
Capital intensity
of capital intensity is M edium
Dotted line shows a high level of capital intensity
costs are low but are split relatively evenly between capital and labor.
Tools of the Trade: Growth Strategies for Success

New Age Economy Recreation, Personal Services, Health and Education. Firms benet from personal wealth so stable macroeconomic conditions are imperative. Brand awareness and niche labor skills are key to product differentiation. Investment Economy Information, Communications, Mining, Finance and Real Estate. To increase revenue rms need superior debt management, a stable macroeconomic environment and a sound investment plan.
Capital Intensive
Labor Intensive
Heating & Air Conditioning Weight Loss Services Golf Driving Ranges & Family Traditional Service Economy Fun Centers
Wholesale and Retail. Reliant on labor rather than capital to sell goods. Functions cannot be outsourced therefore rms must use new technology or improve staff training to increase revenue growth.
Hotels & Motels
Gym, Health & Conditioning Supply Fitness Clubs
Steam & Air-
Old Economy Agriculture and Manufacturing. Traded goods can be produced using cheap labor abroad. To expand rms must merge or acquire others to exploit economies of scale, or specialize in niche, high-value products.
Change in Share of the Economy
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Technology & Systems

Level The level
of Technology Change is M edium
Fitness centers offer electronic payment options to members. In selecting this option, on about the same date each month, a fixed payment is either automatically transferred via debit from members bank accounts or charged to members designated credit card. Most fitness centers compete to be the establishment with the most state-ofthe-art equipment. This equipment includes the latest cardiovascular and weight-training machines. Entertainment units are also becoming increasingly common in centers. The units are mounted to cardiovascular equipment and are equipped with a color screen for television viewing, links
to MP3 players, hearing aids for television equipment, and other devices that keep customers entertained during fitness activities. Centers use computers to manage operations and to keep a database of members. Many of the larger firms strive to offer customers state-of-the-art training equipment to aid customer retention. Patrons are looking for added extras to improve their fitness regimens, and so it is important for centers to offer various equipment options that incorporate the latest technology. This has encouraged firms to continually update their equipment. For example, treadmills can become out of date within two years.
Revenue Volatility
Level The level
of Volatility is L ow
The Gym, Health and Fitness Clubs industry has a low level of revenue volatility. While there are varying degrees of membership rates across centers, which increases revenue volatility, the industrys diverse array of services and fragmented nature minimizes volatility. Furthermore, general stability in household disposable income over the past five years, despite a sizable decline during the recession, has translated to constant demand for the industrys
A higher level of revenue volatility implies greater industry risk. Volatility can negatively affect long-term strategic decisions, such as the time frame for capital investment. When a rm makes poor investment decisions it may face underutilized capacity if demand suddenly falls, or capacity constraints if it rises quickly.
products and services. Steady promotion of the health benefits of exercise by the medical profession has supported a constant rate of growth and minimized volatility. Media attention to fitness and diet considerations has kept levels steady in the industry. While technically a discretionary service, health and fitness clubs are increasingly viewed by consumers as a vital health expense. Furthermore, the structure of memberships mitigates
Volatility vs Growth
1000
Hazardous
Rollercoaster
Revenue volatility* (%)
100 10 1 0.1
Gym, Health & Fitness Clubs

Stagnant
30 10 10 30 50
Blue Chip
70
Five year annualized revenue growth (%)

* Axis is in logarithmic scale
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Revenue Volatility continued
revenue volatility. Gyms and fitness centers have traditionally sought to sign up members for 12 to 24 month periods and typically apply cancelation fees to contracts. These fees often deter customers from cancelling their memberships so that they can avoid
financial penalty. As competition has increased, gyms have begun to offer more flexible membership options, such as shorter contract periods and rolling contracts. These competitive measures will likely lead to increased revenue volatility in future years.
Regulation & Policy

Level & Trend he level of T
Regulation is Lightand the trend is S teady
The general rules and regulations of the Federal Trade Commission and of other federal, state, provincial and local consumer protection agencies apply to franchising, advertising, sales and other trade practices. State and provincial statutes and regulations relevant fitness industry have been enacted or proposed in all of the states and provinces across the United States. Typically, these statutes and regulations prescribe certain forms and regulate the terms and provisions of membership contracts, including: giving members the right to cancel the contract, in most cases, within three business days after signing; requiring an escrow for funds received from preopening sales or the posting of a bond or proof of financial responsibility; and in some cases, establishing maximum prices and terms for membership contracts and limitations on the financing term of contracts. Firms are subject to numerous other types of federal, state and provincial regulations governing the sale, financing and collection of memberships, including the Truth-in-Lending Act and Regulation Z, as well as state and provincial laws governing the collection of debts. These laws and regulations are subject to
varying interpretations by a large number of state, provincial and federal enforcement agencies. Under the cooling-off statutes employed in most states and provinces, new members of fitness centers have the right to cancel their memberships for a period of three to fifteen days after the date the contract was entered and are entitled to refunds of any payment made. The amount of time new members have to cancel their membership contract depends on the applicable state or provincial law. Advertising of nutritional products is subject to regulation by one or more federal agencies, including the Food and Drug Administration (FDA) and the Federal Trade Commission (FTC). For example, the FDA regulates the formulation, manufacture and labeling of vitamins and other nutritional supplements, while the FTC principally regulates marketing and advertising claims. Industry firms are also subject to several state and federal labor laws governing the relationship with employees, such as minimum wage requirements, overtime and working conditions and citizenship requirements.
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Industry Assistance
Level & Trend he level of Industry T
Assistance is L ow and the trend is I ncreasing
The level of industry assistance is low, but it is increasing as more institutions promote the benefits of assistance. Such assistance is a significant benefit for the industry, as it reduces expenses and creates demand. The industry received indirect assistance from the federal government in 2009 under the $787.0 billion stimulus package, or the American Reinvestment and Recovery Act of 2009. The Department of Health and Human Services has been allocated $1.0 billion for a Prevention and Wellness Fund. The National Association for Health and Fitness (NAHF) is a nonprofit organization that promotes physical fitness and sports and supports Governor and State Councils that promote such activities. The association produces newsletters on strategies and successful approaches to increasing physical activity and improving health. The International Health, Racquet & Sportsclub Association also supports the industry and is a nonprofit trade association representing more than 9,100 health, racquet and
sports clubs worldwide. This association provides media articles and press releases that promote the benefits of keeping fit and active. Therefore, this association helps drive industry demand. The Fifty-Plus Fitness Association (FPFA) is another nonprofit organization, which was established 20 years ago. This associations mission is to promote an active lifestyle for the older population. The organization started at Stanford University as an outgrowth of some medical research on the value of exercise for older persons. The FPFA currently has about 1,000 members across the United States. The association also publishes a newsletter and distributes books and videos. In the past, it has offered a six-week Fifty-Plus Fitness Challenge Camp on the Stanford University Campus that involved the participants in a variety of physical activities. Some facilities are initially established with the assistance of government grants.
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Key Statistics
Industry Data
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Sector Rank Economy Rank Revenue ($m) 21,309.4 22,080.6 22,783.4 24,136.1 24,145.4 23,707.9 24,227.5 24,781.4 25,269.1 25,904.3 26,522.4 27,339.2 28,225.2 29,014.0 29,913.4 4/33 338/1312 Industry Value Added ($m) 10,170.0 10,532.6 10,765.3 11,080.3 11,579.7 11,023.3 10,540.4 11,314.8 11,557.3 12,081.5 12,552.8 13,069.5 13,378.5 13,635.7 13,915.9 5/33 221/1312 Establishments 30,624 31,988 32,432 33,269 33,451 32,864 32,820 33,068 33,385 33,527 34,023 34,331 34,540 35,112 35,498 5/33 197/1311 Employment Enterprises (People) 27,593 479,202 28,779 488,795 29,000 507,921 30,154 541,562 30,269 550,634 29,031 536,231 28,912 527,086 29,136 548,375 29,365 561,536 29,501 573,328 29,894 583,075 30,031 594,153 30,199 603,660 30,331 610,225 30,604 619,989 5/33 3/33 186/1311 70/1312 Exports ---------------N/A N/A Imports ---------------N/A N/A Wages ($m) 6,760.5 6,867.2 7,028.8 7,484.0 7,499.1 7,158.9 7,100.1 7,325.0 7,564.8 7,962.7 8,309.2 8,613.2 8,800.4 8,906.4 9,040.0 5/33 201/1312 Domestic Demand N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A Health Club Memberships (Mils) 47.2 48.7 50.3 48.9 47.7 47.5 48.3 50.5 51.4 52.6 54.1 54.8 56.0 56.9 58.2 N/A N/A
Annual Change
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Sector Rank Economy Rank Revenue (%) 3.6 3.2 5.9 0.0 -1.8 2.2 2.3 2.0 2.5 2.4 3.1 3.2 2.8 3.1 9/33 702/1312
Industry Value Added (%) 3.6 2.2 2.9 4.5 -4.8 -4.4 7.3 2.1 4.5 3.9 4.1 2.4 1.9 2.1 6/33 417/1312
Establishments (%) 4.5 1.4 2.6 0.5 -1.8 -0.1 0.8 1.0 0.4 1.5 0.9 0.6 1.7 1.1 28/33 812/1311
Enterprises Employment (%) (%) 4.3 2.0 0.8 3.9 4.0 6.6 0.4 1.7 -4.1 -2.6 -0.4 -1.7 0.8 4.0 0.8 2.4 0.5 2.1 1.3 1.7 0.5 1.9 0.6 1.6 0.4 1.1 0.9 1.6 26/33 10/33 726/1311 516/1312
Exports (%) N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
Imports (%) N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
Wages (%) 1.6 2.4 6.5 0.2 -4.5 -0.8 3.2 3.3 5.3 4.4 3.7 2.2 1.2 1.5 3/33 211/1312
Domestic Demand (%) N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
Health Club Memberships (%) 3.2 3.3 -2.8 -2.5 -0.4 1.7 4.6 1.8 2.3 2.9 1.3 2.2 1.6 2.3 N/A N/A
Key Ratios
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Sector Rank Economy Rank IVA/Revenue (%) 47.73 47.70 47.25 45.91 47.96 46.50 43.51 45.66 45.74 46.64 47.33 47.80 47.40 47.00 46.52 10/33 323/1312
Imports/ Demand (%) N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
Exports/ Revenue (%) N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
Revenue per Employee ($000) 44.47 45.17 44.86 44.57 43.85 44.21 45.96 45.19 45.00 45.18 45.49 46.01 46.76 47.55 48.25 26/33 1253/1312
Wages/Revenue (%) 31.73 31.10 30.85 31.01 31.06 30.20 29.31 29.56 29.94 30.74 31.33 31.50 31.18 30.70 30.22 11/33 309/1312
Employees per Est. 15.65 15.28 15.66 16.28 16.46 16.32 16.06 16.58 16.82 17.10 17.14 17.31 17.48 17.38 17.47 13/33 582/1311
Average Wage ($) 14,107.83 14,049.24 13,838.37 13,819.29 13,619.03 13,350.40 13,470.48 13,357.65 13,471.62 13,888.56 14,250.65 14,496.60 14,578.41 14,595.27 14,580.90 27/33 1252/1312
Share of the Economy (%) 0.08 0.08 0.08 0.08 0.09 0.09 0.08 0.09 0.09 0.09 0.09 0.09 0.09 0.09 0.09 5/33 221/1312
Figures are ination-adjusted 2013 dollars. Rank refers to 2013 data.
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Jargon & Glossary
Industry Jargon
BABY BOOMERA person born between 1946 and 1964 accounting for a major proportion of the population. CARDIOVASCULAR EQUIPMENTEquipment used for aerobic exercise, meant to be used at light to medium intensity for a long period of time, e.g. treadmills, elliptical trainers and stationary bikes.
PILATESA physical tness system developed in the early 20th century by Joseph Pilates with a focus on the strength and endurance on core muscle groups. RETENTION RATEA rate comparing the number of new gym memberships to canceled gym memberships.
IBISWorld Glossary
BARRIERS TO ENTRYHigh barriers to entry mean that new companies struggle to enter an industry, while low barriers mean it is easy for new companies to enter an industry. CAPITAL INTENSITYCompares the amount of money spent on capital (plant, machinery and equipment) with that spent on labor. IBISWorld uses the ratio of depreciation to wages as a proxy for capital intensity. High capital intensity is more than $0.333 of capital to $1 of labor; medium is $0.125 to $0.333 of capital to $1 of labor; low is less than $0.125 of capital for every $1 of labor. CONSTANT PRICESThe dollar gures in the Key Statistics table, including forecasts, are adjusted for ination using the current year (i.e. year published) as the base year. This removes the impact of changes in the purchasing power of the dollar, leaving only the real growth or decline in industry metrics. The ination adjustments in IBISWorlds reports are made using the US Bureau of Economic Analysis implicit GDP price deator. DOMESTIC DEMANDSpending on industry goods and services within the United States, regardless of their country of origin. It is derived by adding imports to industry revenue, and then subtracting exports. EMPLOYMENTThe number of permanent, part-time, temporary and seasonal employees, working proprietors, partners, managers and executives within the industry. ENTERPRISEA division that is separately managed and keeps management accounts. Each enterprise consists of one or more establishments that are under common ownership or control. ESTABLISHMENTThe smallest type of accounting unit within an enterprise, an establishment is a single physical location where business is conducted or where services or industrial operations are performed. Multiple establishments under common control make up an enterprise. EXPORTSTotal value of industry goods and services sold by US companies to customers abroad. IMPORTSTotal value of industry goods and services brought in from foreign countries to be sold in the United States.
INDUSTRY CONCENTRATIONAn indicator of the dominance of the top four players in an industry. Concentration is considered high if the top players account for more than 70% of industry revenue. Medium is 40% to 70% of industry revenue. Low is less than 40%. INDUSTRY REVENUEThe total sales of industry goods and services (exclusive of excise and sales tax); subsidies on production; all other operating income from outside the rm (such as commission income, repair and service income, and rent, leasing and hiring income); and capital work done by rental or lease. Receipts from interest royalties, dividends and the sale of xed tangible assets are excluded. INDUSTRY VALUE ADDED (IVA)The market value of goods and services produced by the industry minus the cost of goods and services used in production. IVA is also described as the industrys contribution to GDP, or prot plus wages and depreciation. INTERNATIONAL TRADEThe level of international trade is determined by ratios of exports to revenue and imports to domestic demand. For exports/revenue: low is less than 5%, medium is 5% to 20%, and high is more than 20%. Imports/domestic demand: low is less than 5%, medium is 5% to 35%, and high is more than 35%. LIFE CYCLEAll industries go through periods of growth, maturity and decline. IBISWorld determines an industrys life cycle by considering its growth rate (measured by IVA) compared with GDP; the growth rate of the number of establishments; the amount of change the industrys products are undergoing; the rate of technological change; and the level of customer acceptance of industry products and services. NONEMPLOYING ESTABLISHMENTBusinesses with no paid employment or payroll, also known as nonemployers. These are mostly set up by self-employed individuals. PROFITIBISWorld uses earnings before interest and tax (EBIT) as an indicator of a companys protability. It is calculated as revenue minus expenses, excluding interest and tax. VOLATILITYThe level of volatility is determined by averaging the absolute change in revenue in each of the past ve years. Volatility levels: very high is more than 20%; high volatility is 10% to 20%; moderate volatility is 3% to 10%; and low volatility is less than 3%. WAGESThe gross total wages and salaries of all employees in the industry. The cost of benets is also included in this gure.
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Gym, Health & Fitness Clubs in the USNovember 2013 1

IBISWorld Industry Report 71394

Gym, Health & Fitness Clubs in the US

33 Jargon & Glossary

4 Industry at a Glance 5 Industry Performance

20 Cost Structure Benchmarks 22 Basis of Competition 23 Barriers to Entry 24 Industry Globalization

25 Major Companies 28 Operating Conditions

11 Industry Life Cycle

13 Products & Markets

www.ibisworld.com | 1-800-330-3772 | info @ibisworld.com

Gym, Health & Fitness Clubs in the USNovember 2013 2

About this Industry

Gym, Health & Fitness Clubs in the USNovember 2013 3

About this Industry

Gym, Health & Fitness Clubs in the US November 2013

Annual Growth 08-13

Annual Growth 13-18

Per capita disposable income

There are no Major Players in this industry

Products and services segmentation (2013)

Key External Drivers

Ice and roller rinks Swimming pools

Gyms and tness centers

Growth Low Medium Low Low

Light Medium Low Low High

Gym, Health & Fitness Clubs in the USNovember 2013 5

industry will benefit from an increase in per capita disposable income

Key External Drivers

Gym, Health & Fitness Clubs in the USNovember 2013 6

Key External Drivers continued

0.0 2.0 4.0

5.2 5.1 5.0

Gym, Health & Fitness Clubs in the USNovember 2013 7

Gym, Health & Fitness Clubs in the USNovember 2013 8

Improving sales continued

preference has shifted towards smaller gyms with fewer amenities

Enterprises and employment

Gym, Health & Fitness Clubs in the USNovember 2013 9

growth and demographic changes will increasingly drive revenue growth

Gym, Health & Fitness Clubs in the USNovember 2013 10

New demographics continued

Establishments and employees

operators will attract consumers by offering convenient establishments

Gym, Health & Fitness Clubs in the USNovember 2013 11

% Growth in share of economy

Company consolidation; level of economic importance stable 15

Gym, Health & Fitness Clubs

Shrinking economic importance

% Growth in number of establishments

Gym, Health & Fitness Clubs in the USNovember 2013 12

Industry Life Cycle This industry is G rowing

Gym, Health & Fitness Clubs in the USNovember 2013 13

Products & Markets

KEY SELLING INDUSTRIES

Products & Services

Products and services segmentation (2013)

Swimming pools Dance centers

Gyms and tness centers

Gym, Health & Fitness Clubs in the USNovember 2013 14

Products & Markets

Products & Services continued

Gym, Health & Fitness Clubs in the USNovember 2013 15

Products & Markets