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UNITING THE WORLD OF FITNESS
Health Club Management

Health Club Management

features

Everyone’s talking about...: Expanding overseas

As the economy improves, will health and fitness operators start to eye new markets, bringing about the next wave of international expansion, or will they build on their current bases?

Published in Health Club Management 2014 issue 10

One year ago in this panel feature, we looked at how health and fitness brands could go global. At that point, however, the situation was not overly positive: Fitness First was the biggest global player but had sold off clubs in Benelux, France, Spain and Italy, as well as the UK. Few companies seemed to have ambitions to become big global players.

A year on, things have changed. The UK economy is growing again, house prices and consumer confidence are on the up and the health club industry appears to have toughed out the recession.

There’s certainly a buzz about, but will this translate into the next wave of international expansion for operators?

A number of chains have announced they are looking at opportunities overseas. After some tough times, Fitness First is growing again, especially in Asia. Virgin Active is also expanding across borders, and Holmes Place has announced it’s stepping up expansion in central Europe and the Iberian Peninsula; with 31 per cent of its membership now in continental Europe, the chain has designs on being the leading premium health club in the region.

Meanwhile, in the budget sector, easyGym says it’s setting its sights on countries where easyJet has a strong presence, leveraging brand recognition. It expects to have 200 gyms, and one million members, in multiple countries within the next six to seven years. And The Gym Group has also recently announced plans to expand into “Europe and beyond”, kicking off in 2015.

Is this a trend more operators will follow? Will more budget chains look for new markets for their concepts as the competition gets tougher in mature markets? Or will barriers such as local market knowledge and capital costs make players more conservative?

Where are the main areas of opportunity, and will all the operators be fighting over the same territories? How risky is an overseas development strategy, and what part might technology play in international expansion? We ask our panel of experts for their thoughts.

Are you looking to extend your operation overseas? Email us: [email protected]

Mark Hutcheon,

Director of communications,

Fitness First

Mark Hutcheon
Mark Hutcheon

“Many operators are already expanding overseas: if you have a solid base in one territory, it makes it easier to go into markets with parallels.

At the moment, a lot of places are ripe for expansion. Fitness First looks for sites with rising populations and rising incomes – because of this, we think there will be a wave of expansion on a city by city basis, rather than country by country. Delhi, Istanbul and Rio are currently looking like they can be future hotspots. If you get in early with a flexible model and competitive proposition, when the penetration rate is still only about 5 per cent, there are good opportunities for expansion.

However, the risks are high. Overseas expansion is not a quick buck: it’s a long-term proposition so plenty of capital, patience and above all integrity is essential to long-term success. Companies have to invest in service and standards – they can’t cut corners and must continually differentiate to meet consumer demand.

Going forward, Fitness First’s international expansion will be more about digital products and services, with differently priced online memberships that take our expertise beyond the gym to a potentially larger audience.”

John Kersh,

International Development,

Anytime Fitness

John Kersh
John Kersh

“I’m not sure we’re set for a rash of overseas development. Expansion across borders requires an immense amount of capital and the risk of failure is high. It’s difficult enough for fitness operators to stay relevant and successful within their own borders, much less when spread thin across multiple countries.

A major challenge when expanding is to not divert attention from domestic business, while also devoting adequate attention to localising the brand in new markets. Local competitors know the market much better than a foreign operator and can more easily exploit local opportunities. A foreign operator can run into unfortunate challenges by misreading the market or making mistakes with legal or financial assumptions.

Although we’re seeing lots of interest from the Middle East and Asia, the challenge in both regions is the very low awareness of the benefits of exercise and joining a health club.

I view these markets as a very long-term growth opportunity.

At least one Australian company is expanding into Europe now, and several Asian and Latin American companies are crossing borders within their own continents. A handful of American and British companies are dabbling with foreign expansion, although very few are making great strides.”

Paul Lorimer-Wing,

CEO,

easyGym

Paul Lorimer-Wing
Paul Lorimer-Wing

“Ithink we’re ready for the next wave of international expansion, especially in the low-cost sector. As the world gets wealthier, the spending power of the middle class gets stronger; and as the world gets less healthy, the awareness of good health grows. All this will fuel the appetite for health clubs.

I think there are strong opportunities all over the world, especially in emerging markets. Even though the US is the market leader, I still see many opportunities for growth there, as well as across Europe, in parts of Asia, Brazil and Mexico. South Africa has opportunities and Nigeria has a large economy. The Middle East is also a strong contender.

The strongest, most capital-rich companies will go out and exploit these opportunities. If you don’t have the capital capacity or the appetite for risk, you won’t stand a chance – all these opportunities come with risk.

The main threats are not understanding the market and not having a local partner. A copy and paste approach is not the path to success: adaptation is necessary.

Neither is it a ‘get rich quick’ situation – it will require significant commitment and dedication, and finding the right properties at the right price will be crucial.”

James Balfour,

CEO,

1Rebel

James Balfour
James Balfour

“For companies that have an appetite for risk, the emerging markets can offer a huge amount of growth going forward. Meanwhile, both at home and in mature markets, there’s the opportunity for a shake-up. However, I don’t think the industry is set for the next wave of international expansion, as a lot of the major operators are laden with debt and acting cautiously.

One of the risks of expansion overseas is that operators take their eye off their core assets at home, neglecting their ageing estates and failing to attract new members. It’s important for businesses to stay ahead of the game in all their businesses while they are pushing ahead with international expansion.

Various franchise operators are seeing continued overseas growth, as franchising offers speed to markets, and this is 1Rebel’s preferred route for overseas expansion. We will be launching an international franchise department to take advantage of growing demand from key international cities, but we’re still taking a conservative approach. We think 20 clubs over five years is appropriate. Our brand works best in transient markets where the population changes, so we will be looking at locations such as Hong Kong and Singapore.”

Sign up here to get HCM's weekly ezine and every issue of HCM magazine free on digital.
https://www.leisureopportunities.co.uk/images/HCM2014_10talk.jpg
As the economy improves, will fitness operators eye new markets or consolidate their existing bases?
Mark Hutches, Director of communications, Fitness First John Kersh, International development, Anytime Fitness PAUL LORIMER-WING, CEO, easyGym James Balfour, CEO, 1Rebel,International expansion, overseas expansion
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In April, Deloitte and Europe Active published the ninth edition of their yearly European Health and Fitness Market Report, as Karsten Hollasch explains
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Bryce Hastings, head of research at Les Mills, explains the latest research into exercise motivation, giving tips on how to engage hard-to-reach members
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HCM People

Louis Rennocks

Co-founder, Grndhouse
We want Grndhouse to be everywhere: in gyms, hotels, on holidays, at home – it’s boutique fitness in your hand
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Postbag
As HCM passed its 300th edition milestone, readers shared their thoughts and feelings on HCM’s contribution to the industry in a very special postbag
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Choose consistent over perfect. That’s the long game. It’s never too late to pivot to that mindset
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We’ve set ourselves the initial goal of developing 100 Feel Electric sites, using a cluster model
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Supplier showcase
Pulse Fitness and Bolsover District Council have been collaborating for many years to deliver dedicated community activity spaces
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Insight
The Global Wellness Summit brought together public health and wellness experts in Boston recently. Jane Kitchen was there for HCM to see first-hand what this ‘New new era in health and wellness’ will look like for the sector
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Editor's letter
Having a portfolio of more than 1,000 health club locations is the aim of ambitious operators, with this elite category growing fast, creating new dynamics in the market
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Featured operator news: Everyone Active to launch new exercise classes to reduce gender gap
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Catalogue Gallery
Click on a catalogue to view it online
Directory
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trade associations
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Flooring
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Property & Tenders
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Diary dates
15-16 Jun 2022
ExCeL London, London, United Kingdom
Diary dates
30-30 Jun 2022
The ICC, Birmingham, Birmingham , United Kingdom
Diary dates
12-13 Sep 2022
Wyndham Lake Buena Vista Disney Springs® Resort, Lake Buena Vista, United States
Diary dates
25-28 Oct 2022
Messe Stuttgart, Germany
Diary dates
25-28 Oct 2022
Ibiza, Ibiza, Spain
Diary dates
01-07 Dec 2022
tbc, Dunedin, New Zealand
Diary dates
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Diary dates

features

Everyone’s talking about...: Expanding overseas

As the economy improves, will health and fitness operators start to eye new markets, bringing about the next wave of international expansion, or will they build on their current bases?

Published in Health Club Management 2014 issue 10

One year ago in this panel feature, we looked at how health and fitness brands could go global. At that point, however, the situation was not overly positive: Fitness First was the biggest global player but had sold off clubs in Benelux, France, Spain and Italy, as well as the UK. Few companies seemed to have ambitions to become big global players.

A year on, things have changed. The UK economy is growing again, house prices and consumer confidence are on the up and the health club industry appears to have toughed out the recession.

There’s certainly a buzz about, but will this translate into the next wave of international expansion for operators?

A number of chains have announced they are looking at opportunities overseas. After some tough times, Fitness First is growing again, especially in Asia. Virgin Active is also expanding across borders, and Holmes Place has announced it’s stepping up expansion in central Europe and the Iberian Peninsula; with 31 per cent of its membership now in continental Europe, the chain has designs on being the leading premium health club in the region.

Meanwhile, in the budget sector, easyGym says it’s setting its sights on countries where easyJet has a strong presence, leveraging brand recognition. It expects to have 200 gyms, and one million members, in multiple countries within the next six to seven years. And The Gym Group has also recently announced plans to expand into “Europe and beyond”, kicking off in 2015.

Is this a trend more operators will follow? Will more budget chains look for new markets for their concepts as the competition gets tougher in mature markets? Or will barriers such as local market knowledge and capital costs make players more conservative?

Where are the main areas of opportunity, and will all the operators be fighting over the same territories? How risky is an overseas development strategy, and what part might technology play in international expansion? We ask our panel of experts for their thoughts.

Are you looking to extend your operation overseas? Email us: [email protected]

Mark Hutcheon,

Director of communications,

Fitness First

Mark Hutcheon
Mark Hutcheon

“Many operators are already expanding overseas: if you have a solid base in one territory, it makes it easier to go into markets with parallels.

At the moment, a lot of places are ripe for expansion. Fitness First looks for sites with rising populations and rising incomes – because of this, we think there will be a wave of expansion on a city by city basis, rather than country by country. Delhi, Istanbul and Rio are currently looking like they can be future hotspots. If you get in early with a flexible model and competitive proposition, when the penetration rate is still only about 5 per cent, there are good opportunities for expansion.

However, the risks are high. Overseas expansion is not a quick buck: it’s a long-term proposition so plenty of capital, patience and above all integrity is essential to long-term success. Companies have to invest in service and standards – they can’t cut corners and must continually differentiate to meet consumer demand.

Going forward, Fitness First’s international expansion will be more about digital products and services, with differently priced online memberships that take our expertise beyond the gym to a potentially larger audience.”

John Kersh,

International Development,

Anytime Fitness

John Kersh
John Kersh

“I’m not sure we’re set for a rash of overseas development. Expansion across borders requires an immense amount of capital and the risk of failure is high. It’s difficult enough for fitness operators to stay relevant and successful within their own borders, much less when spread thin across multiple countries.

A major challenge when expanding is to not divert attention from domestic business, while also devoting adequate attention to localising the brand in new markets. Local competitors know the market much better than a foreign operator and can more easily exploit local opportunities. A foreign operator can run into unfortunate challenges by misreading the market or making mistakes with legal or financial assumptions.

Although we’re seeing lots of interest from the Middle East and Asia, the challenge in both regions is the very low awareness of the benefits of exercise and joining a health club.

I view these markets as a very long-term growth opportunity.

At least one Australian company is expanding into Europe now, and several Asian and Latin American companies are crossing borders within their own continents. A handful of American and British companies are dabbling with foreign expansion, although very few are making great strides.”

Paul Lorimer-Wing,

CEO,

easyGym

Paul Lorimer-Wing
Paul Lorimer-Wing

“Ithink we’re ready for the next wave of international expansion, especially in the low-cost sector. As the world gets wealthier, the spending power of the middle class gets stronger; and as the world gets less healthy, the awareness of good health grows. All this will fuel the appetite for health clubs.

I think there are strong opportunities all over the world, especially in emerging markets. Even though the US is the market leader, I still see many opportunities for growth there, as well as across Europe, in parts of Asia, Brazil and Mexico. South Africa has opportunities and Nigeria has a large economy. The Middle East is also a strong contender.

The strongest, most capital-rich companies will go out and exploit these opportunities. If you don’t have the capital capacity or the appetite for risk, you won’t stand a chance – all these opportunities come with risk.

The main threats are not understanding the market and not having a local partner. A copy and paste approach is not the path to success: adaptation is necessary.

Neither is it a ‘get rich quick’ situation – it will require significant commitment and dedication, and finding the right properties at the right price will be crucial.”

James Balfour,

CEO,

1Rebel

James Balfour
James Balfour

“For companies that have an appetite for risk, the emerging markets can offer a huge amount of growth going forward. Meanwhile, both at home and in mature markets, there’s the opportunity for a shake-up. However, I don’t think the industry is set for the next wave of international expansion, as a lot of the major operators are laden with debt and acting cautiously.

One of the risks of expansion overseas is that operators take their eye off their core assets at home, neglecting their ageing estates and failing to attract new members. It’s important for businesses to stay ahead of the game in all their businesses while they are pushing ahead with international expansion.

Various franchise operators are seeing continued overseas growth, as franchising offers speed to markets, and this is 1Rebel’s preferred route for overseas expansion. We will be launching an international franchise department to take advantage of growing demand from key international cities, but we’re still taking a conservative approach. We think 20 clubs over five years is appropriate. Our brand works best in transient markets where the population changes, so we will be looking at locations such as Hong Kong and Singapore.”

Sign up here to get HCM's weekly ezine and every issue of HCM magazine free on digital.
https://www.leisureopportunities.co.uk/images/HCM2014_10talk.jpg
As the economy improves, will fitness operators eye new markets or consolidate their existing bases?
Mark Hutches, Director of communications, Fitness First John Kersh, International development, Anytime Fitness PAUL LORIMER-WING, CEO, easyGym James Balfour, CEO, 1Rebel,International expansion, overseas expansion
Latest News
A young girl has died following an incident at the David Lloyd gym at Capability ...
Latest News
New fitness franchise, Circuit Society, has signed its first London location in Bayswater. The 3,000sq ...
Latest News
Active Nottingham, part of Nottingham City Council, has released a children’s book called Can We ...
Latest News
The new £42m Moorways Sports Village will open its doors to the public on Saturday ...
Latest News
Fitness industry veteran Harm Tegelaars has returned to the fitness industry by joining the board ...
Latest News
Planet Fitness saw its Q1 2022 revenue increase by 66.9 per cent (to US$186.7m) on ...
Latest News
Sport England and UK Active have signed a five-year partnership agreement which will see the ...
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Featured supplier news
Featured supplier news: UK health clubs hit by rising cost of energy
Health clubs across the UK are facing huge rises in business energy bills which are forcing difficult decisions.
Featured supplier news
Featured supplier news: Virtuagym raises €3m investment to fuel innovation in health and fitness technology
Global fitness technology provider Virtuagym has raised a new €3m investment from Icecat, an Amsterdam-based technology company which invests in innovative technology organisations.
Featured operator news
Featured operator news: Everyone Active to launch new exercise classes to reduce gender gap
As part of their work to break down the barriers that deter women and girls from participating in sport and physical activity, Everyone Active has teamed up with EMD UK to launch new exercise classes linked to the This Girl Can campaign.
Featured operator news
Featured operator news: Serco Leisure wins 10-year Mansfield contract
Following a competitive tendering process, Serco Leisure and its partner More Leisure Community Trust Limited (MLCT) have been awarded a 10-year contract by Mansfield District Council to operate three centres in the town, starting 1 May 2022.
Company profiles
Company profile: Indigofitness Ltd
We Create Training Spaces! We've been designing and delivering high quality training spaces for almost ...
Company profiles
Company profile: Power Plate
Power Plate’s whole body and targeted vibration training and therapy helps users feel better by ...
Catalogue Gallery
Click on a catalogue to view it online
Directory
Skincare
Comfort Zone - Davines S.p.A: Skincare
Whole body cryotherapy
Art of Cryo: Whole body cryotherapy
trade associations
International SPA Association - iSPA: trade associations
Salt therapy products
Saltability: Salt therapy products
Management software
Premier Software Solutions: Management software
Flooring
Total Vibration Solutions / TVS Sports Surfaces: Flooring
Lockers/interior design
Crown Sports Lockers: Lockers/interior design
Spa software
SpaBooker: Spa software
Fitness equipment
A Panatta Sport Srl: Fitness equipment
On demand
Fitness On Demand: On demand
Property & Tenders
Pendine Sands, Carmarthenshire
Carmarthenshire County Council
Property & Tenders
Runcorn
Halton Borough Council
Property & Tenders
Diary dates
15-16 Jun 2022
ExCeL London, London, United Kingdom
Diary dates
30-30 Jun 2022
The ICC, Birmingham, Birmingham , United Kingdom
Diary dates
12-13 Sep 2022
Wyndham Lake Buena Vista Disney Springs® Resort, Lake Buena Vista, United States
Diary dates
25-28 Oct 2022
Messe Stuttgart, Germany
Diary dates
25-28 Oct 2022
Ibiza, Ibiza, Spain
Diary dates
01-07 Dec 2022
tbc, Dunedin, New Zealand
Diary dates
17-18 Mar 2023
Tobacco Dock, London, United Kingdom
Diary dates
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