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Health Club Management

Health Club Management

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UNITING THE WORLD OF FITNESS
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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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FREE WEBINAR
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This free webinar on 26 January will see our panellists reflect on the changes to work in 2020, and their priorities for 2021.
Opinion: 2021 is the year to prioritise global culture
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Featured supplier: Funxtion collaborates with global experts on white paper exploring digital in the future of fitness
In collaboration with ukactive, FunXtion has driven a global discussion with some of the world’s leading fitness operators and influencers, exploring how digitalisation will influence the delivery of fitness services and products moving forwards.
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Click on a catalogue to view it online
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Property & Tenders
11 - 25 Union St, London SE1 1SD
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Waltham Abbey, Essex
Lee Valley Regional Park Authority
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Diary dates
02-04 Feb 2021
Ericsson Exhibition Hall, Ricoh Arena, Coventry, United Kingdom
Diary dates
23-26 Feb 2021
IFEMA, Madrid, Spain
Diary dates
03-04 Mar 2021
NEC, Birmingham, United Kingdom
Diary dates
03-06 Jun 2021
Expo Centre & Riviera di Rimini, Italy
Diary dates
16-17 Jun 2021
ExCeL London, London, United Kingdom
Diary dates
21-24 Sep 2021
Messe Stuttgart, Germany
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tbc, Dunedin, New Zealand
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
HCM editor, Liz Terry, has launched a Parliamentary Petition calling for gyms to be in ...
Latest News
The failure to tackle the UK's obesity crisis is down to successive governments being guilty ...
Latest News
Les Mills has launched a new digital content solution to support health and fitness operators ...
Latest News
Gymbox has entered the hospitality space with the signing of a deal to deliver in-room ...
Latest News
Nuffield Health has launched a series of free, online classes focused on emotional wellbeing. The ...
Latest News
Resistance training is just as beneficial for men and women over the age of 50, ...
Latest News
Fitness, sport and leisure sector professionals who have continued to deliver services to their communities ...
Latest News
A national survey has launched to chart the mental health of the fitness and physical ...
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One of England's highest ranking police officers has called on government ministers to clearly define ...
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Virtuagym, a leading provider of fitness technology for gyms and trainers, has announced the launch ...
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Fitness First has launched a new free digital fitness hub, offering users a wide range ...
FREE WEBINAR
promotion
This free webinar on 26 January will see our panellists reflect on the changes to work in 2020, and their priorities for 2021.
Opinion: 2021 is the year to prioritise global culture
Featured supplier news
Featured supplier: Funxtion collaborates with global experts on white paper exploring digital in the future of fitness
In collaboration with ukactive, FunXtion has driven a global discussion with some of the world’s leading fitness operators and influencers, exploring how digitalisation will influence the delivery of fitness services and products moving forwards.
Featured supplier news
Featured supplier: Cryotherapy specialists, L&R Kältetechnik, launch new artofcryo.com division
L&R Kältetechnik has launched a new division, named artofcryo.com, after 30 years’ experience with -110 °C electrical solutions.
Company profiles
Company profile: FunXtion International BV
Unlock your club’s digital potential with the FunXtion Platform. Deliver engaging and immersive digital fitness ...
Company profiles
Company profile: TRIB3 International Ltd
First established in Sheffield in January 2016 TRIB3 is a bootcamp boutique studio designed to ...
Supplier Showcases
Supplier showcase - Egym: Game changer
Catalogue Gallery
Click on a catalogue to view it online
Directory
Lockers/interior design
Crown Sports Lockers: Lockers/interior design
Wearable technology solutions
MyZone: Wearable technology solutions
Fitness equipment
Precor: Fitness equipment
Software
Volution.fit: Software
Exercise equipment
EXF Fitness Equipment: Exercise equipment
Hydrotherapy / spa fragrances
Kemitron GmbH: Hydrotherapy / spa fragrances
Whole body cryotherapy
Art of Cryo: Whole body cryotherapy
Management software
Premier Software Solutions: Management software
Independent service & maintenance
Servicesport UK Limited: Independent service & maintenance
Fitness Software
FunXtion International BV: Fitness Software
Property & Tenders
11 - 25 Union St, London SE1 1SD
Bankside Open Spaces Trust
Property & Tenders
Waltham Abbey, Essex
Lee Valley Regional Park Authority
Property & Tenders
Diary dates
02-04 Feb 2021
Ericsson Exhibition Hall, Ricoh Arena, Coventry, United Kingdom
Diary dates
23-26 Feb 2021
IFEMA, Madrid, Spain
Diary dates
03-04 Mar 2021
NEC, Birmingham, United Kingdom
Diary dates
03-06 Jun 2021
Expo Centre & Riviera di Rimini, Italy
Diary dates
16-17 Jun 2021
ExCeL London, London, United Kingdom
Diary dates
21-24 Sep 2021
Messe Stuttgart, Germany
Diary dates
01-07 Dec 2022
tbc, Dunedin, New Zealand
Diary dates
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