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Health Club Management

Health Club Management

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Gym Group reports fastest growth in budget sector

We’ve significantly increased our market share in the low-cost sector, and we’ll continue to use our covenant strength to grow the business. We plan to open 15 to 20 more gyms this year.
– John Treharne, CEO, The Gym Group

The Gym Group has increased its share of the budget gym sector by opening two-thirds of the UK’s new clubs built since March 2017.

In a trading update released today (16 January), the business reported an increase in market share – measured by number of sites – to 22.4 per cent in December 2017 from 17.7 per cent in March 2017.

The company had a strong year growing its new-build portfolio, opening 21 new properties at a cost of £1.35m each.

It also completed the acquisition of 18 Lifestyle Fitness clubs in September and a site from Rush Fitness in December, bringing its total number of gyms to 129 – and pushing its debt to £37.5m, in line with expectations.

John Treharne, CEO of The Gym Group, told Health Club Management: “We’ve significantly increased our market share in the low-cost sector.

“We’ll continue to use our covenant strength to grow the business and we plan to open 15 to 20 more gyms this year.”

Gym Group revenue grew by 24.3 per cent compared with 2016, driven by an increase in membership of 35.5 per cent – results which are in line with City expectations.

Membership grew to 607,000 by December 2017, against 448,000 in 2016. Some of this increase can be attributed to the Lifestyle portfolio, which had around 60,000 members.

The company reported an average membership for the year of 528,000 against 428,000 in 2016.

Treharne said a complaint last year by MP Frank Field about its personal trainer employment contracts – which the company believes is unfounded – has not affected results and it would continue with longstanding plans to test a number of employment models for personal trainers – including full-time and self-employed – to further improve customer service.

Six Lifestyle clubs* have been rebranded so far at a cost of around £450,000, with four to follow by April, and each is expected to grow membership numbers to meet the level of existing Gym Group clubs.

“As we convert these clubs, they’re being changed to the way we operate, so members will start to benefit from 24/7 operation, which appeals to a wider cross-section of people,” said Treharne.

“We’ve also removed the contract environment and brought the pricing in line with ours – we’re working to create a very positive environment by applying our operational model.”

The Gym Group also announced it will roll-out its new 'Live It' premium service, which offers three add-ons to basic membership: the ability to use more than one gym, a bring a friend programme, and use of FitQuest fitness and body composition analysers.

The Live It membership is £19.98 against £14.99 for a basic membership.

Following a trial launched in November, Live It will be rolled out to the rest of the Gym Group’s clubs by May.

Treharne said the Live It programme will expand to offer other services, with additional options being made available in the future: “We’re looking at how we can add other things to the Live It programme once we've tested it nationally,” he said.

* The six Lifestyle clubs converted so far are: Birmingham Hagley Road, Birmingham Trident, Handforth, Hartlepool, Wembley and Tamworth.

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The Gym Group has increased its share of the budget gym sector by opening two-thirds of the UK’s new clubs built since March 2017.
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