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Health Club Management

Health Club Management

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Bannatyne Group targeting European expansion after record turnover

A focus on ‘affordable luxury’ has seen health club operator The Bannatyne Group achieve its highest ever turnover – resulting in the group setting its sights on an expansion into Europe.

“We recognise it’s getting harder to find properties in the UK and within five years, I’d like to think we’ll be entering Europe," said Bannatyne CEO Justin Musgrove in an interview with Health Club Management.

"I believe our ‘affordable luxury’ proposition would translate very well into markets like Germany, Holland and Belgium, which are focused on low-cost and value."

The European plans come on the back of impressive financial results for the group.

Earlier this year, the group posted profits of £14.3m for the year up to 31 December 2017 – an increase of 57 per cent in the year before – thanks to a record turnover of £117.6m.

Musgrove credits the results on the group's decision to focus on "affordable luxury" at a time when budget fitness operators began putting pressure on mid-market operators.

“Over recent years, we’ve all seen the market polarise," Musgrove said.

"Our business faced the same question at the end of 2014: do we go up or down? For me there was only one answer: we had to go upmarket.

"But – and this is what makes our approach different – we did so at mid-market prices, charging on average £45 a month for membership. This is ultimately the secret of our success over the last few years.”

Musgrove adds that one of the successes of the shift upmarket has been the group's growing emphasis on spa.

“Our spas are now a £20m business and growing rapidly," he said.

“Since 2007, we’ve grown our number of spas from 24 to 46 – we have them in two-thirds of our clubs – and it’s a great USP.

"One factor driving that has been our online booking system. More than 80 per cent of transactions are now done online, with total spa bookings up by around 25 per cent year-on-year.”

Currently, 92 per cent of Bannatyne’s spa business comes from non-members visiting on day spa packages.

Of these, around 70 per cent book direct, with the rest coming through third-party and gift card resellers such as Red Letter Days.Non-members pay from £79 for a spa day for two people. For that, they can do a workout, try a pilates or yoga class, have a swim, then come in and have a Elemis spa treatment followed by some downtime in a relaxation room.

“Some guests comment that they had a spa day, but it was in a health club environment," Musgrove said. "But that’s OK, because that’s exactly what we aim to do. We’re a health club and this is our USP."

As well as a focus on spa, the move upmarket has been driven by a £27m investment in improving and updating the portfolio of clubs – and investment is set to continue.

"Where previously we went 15 years between refurbs, by which time things looked dated, we’ll now looking to do a major gym floor refit every seven years," Musgrove revealed, adding that the group is now ideally placed to carve out a market for itself on mainland Europe.

“Ours is a unique proposition," he said. "We’ve created our own space in the UK market. I believe we can do the same in Europe.”

To read the full interview with Justin Musgrove, click here for Health Club Management Issue 6, 2018.

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