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UNITING THE WORLD OF FITNESS
Health Club Management

Health Club Management

features

HCM People: Colin WaggettCEO, Third Space

We first started talking to KSL over two years ago, so this was not a rushed partnership

Published in Health Club Management 2021 issue 8
Now’s the time to capitalise on the availability of new sites, says Waggett / photo: Third Space
Now’s the time to capitalise on the availability of new sites, says Waggett / photo: Third Space
The market demand is there and we’re going to meet and grow that demand

How long has it taken you to get the KSL deal over the line and what’s the thinking behind it?
The deal gives us a partner with deep leisure experience – and funding. Taken together this means we can be bold in our strategy and our ambition.

Going into the pandemic we were self-financing our growth and had a very good set of opportunities, however, the pandemic ate up a lot of our cash reserves while the quality and quantity of new site opportunities improved. We want to take advantage of these.

The new opportunities have mainly come from the huge amount of space that’s being repurposed from big box retail, added to the fact that landlords who are undertaking major redevelopment projects recognise that for both residential and office developments, fitness is the new anchor tenant and if it’s a premium development, then Third Space is top of their list.

Now’s the time to capitalise on this opportunity, hence the reason for seeking out additional funding. KSL saw the situation just as we did, hence our ability to get this done now.

Why KSL?
KSL has a vision statement which is “to invest in the unforgettable to create the enduring.” I really like that. They’re a leisure-only investor and work primarily in the luxury segment.

They really understand that customer experience is at the heart of businesses like ours. In short, they have relevant expertise, their values align with ours and they believe in what we’re doing.

We first started talking to them over two years ago, so this was not a rushed partnership. It’s also great that our long-term backer, Encore Capital, has remained invested. This reflects their confidence and belief in what we do.

Will you extend the brand?
As a holistic lifestyle brand with fitness and training at its heart, we also have credentials in food through our successful Natural Fitness Food Brand and our restaurant The Pearson Room. Natural Fitness Food delivery also launched in April this year, allowing consumers to order our food outside the clubs, alongside nutritional support and healthy meal plans.

We also have a sports medical business, a spa business and we launched our retreats business Third Space Escapes prior to the pandemic. Once travel is more stable we see Third Space Escapes re-launching with new locations and for both restorative and adventure-led trips.

Our digital fitness proposition was developed rapidly during the successive lockdowns to support our members’ training at home with PT programmes and a range of our most popular classes, all delivered through our member app. Now it’s used both in and out of the clubs for personalised programmes and for members who are still partly working from home and wish to take a class from our on-demand library.

There’s an opportunity to continue to grow and obsessively innovate in all of these areas of our business to further support and enrich the lives of our members.

We continually re-invest in our clubs, repurposing space as trends and demands evolve. For example, with increased interest in recovery and relaxation, we’re adding cryotherapy and percussive therapy zones to our clubs.

A simple and obvious part of our plan is to add more great sites. We already have a strong presence in central London and our pipeline will take us into some of the more residential neighbourhoods of the city in the next two to three years. This will bring our brand to new people, as well as providing a great network for members to train, both near home and near to work.

In summary, our plan is to get better and better, as we also grow. The market demand is there and we’re going to meet and grow that demand.

How much value has been added to the company in percentage terms since your last funding deal?
Revenues from the Third Space brand increased by six-fold between 2014 and immediately prior to the pandemic.

How has trading been in the UK since the end of lockdowns?
We’ve actually bounced back better than we expected. Even though we’re mainly in central London locations, all our clubs have a significant residential catchment, plus some very dedicated members that would come to the clubs even if they were on fire!

Working from home is obviously a factor in some of our locations – and will be for some time no doubt. I fully expect it to be a year or so before anyone can say what the new normal really is.

Has Little Space been a success and if so, will you be rolling out more?
The Little Space kids concept has been incredibly well received by our Islington (London) members with children. Our fully-booked swimming programme has been particularly successful and parents are keen to get their kids back to activities again.

If the demographics and space supported it, we would definitely consider building more Little Space sites.

Has your demographic changed since the start of the pandemic?
Not particularly.

What actions did you take that made the most difference when it came to getting through the lockdowns?
The most important thing was good communication. That applies to members and the team. With members, we immediately put them on free freeze and kept our brilliant membership team working full-time to deal with any and all queries that members had.

By being decisive, fair, transparent and contactable I think we protected our brand and even built further loyalty as we navigated the lockdowns.

The same principles applied to the team. Even when we didn’t know what was coming next we would tell the team that. We tried to keep them as up to speed as possible. Sometimes just saying there is no news is in itself reassuring. We also ran a whole load of training and development, as well as social clubs, book clubs, cocktail events or just getting together online for a chat. For some people, lockdown was incredibly hard, so we tried to be helpful and supportive.

As mentioned, we also moved heaven and earth to give members digital options to train with their favourite instructors. Looking back, the progress we made in that time was amazing – it’s incredible what can be done with total focus and a burning need.

Do you have global ambitions for the Third Space brand?
Yes at some point... I can’t say where or when yet...

What does this deal say about the state of the wider industry?
It shows how resilient it is. The last 18 months have been very hard for everyone in the industry, but the big tailwinds we had before are still there and with the right proposition there are plenty of opportunities still. Sophisticated investors like KSL can clearly see that, so this deal is great validation for our business.

Background briefing
London 6 August 2021

KSL Capital Partners acquired a majority interest in Third Space from Encore Capital, who originally invested in the company in 2010.Encore will remain an investor in Third Space.

Launched in 2001, Third Space operates a portfolio of six clubs in the UK, with a seventh site set to open in late 2021 at Number One Curzon Street, Mayfair, London.

In addition to adding new clubs, the company plans to continue to develop its brand outside the traditional club environment, both digitally and “in new settings”.

Martin Edsinger, principal at KSL, said: “Third Space’s mission and growth plan align with KSL’s history of investing in differentiated, experiential hospitality and wellness brands that are committed to people and community impact.

More: www.HCMmag.com/KSL

Fitness is the new anchor tenant, with property developers seeking alliances with premium brands / photo: Third Space
Fitness is the new anchor tenant, with property developers seeking alliances with premium brands / photo: Third Space
Third Space Escapes will relaunch as soon as travel is more stable / photo: Third Space
Third Space Escapes will relaunch as soon as travel is more stable / photo: Third Space
Revenues at Third Space increased six-fold between 2014 and the start of the pandemic / photo: Third Space
Revenues at Third Space increased six-fold between 2014 and the start of the pandemic / photo: Third Space
https://www.leisureopportunities.co.uk/images/2021/47957_129986.jpg
The CEO of Third Space, Colin Waggett, talks about the company’s recent deal with KSL and plans for growth
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01-07 Dec 2022
tbc, Dunedin, New Zealand
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features

HCM People: Colin WaggettCEO, Third Space

We first started talking to KSL over two years ago, so this was not a rushed partnership

Published in Health Club Management 2021 issue 8
Now’s the time to capitalise on the availability of new sites, says Waggett / photo: Third Space
Now’s the time to capitalise on the availability of new sites, says Waggett / photo: Third Space
The market demand is there and we’re going to meet and grow that demand

How long has it taken you to get the KSL deal over the line and what’s the thinking behind it?
The deal gives us a partner with deep leisure experience – and funding. Taken together this means we can be bold in our strategy and our ambition.

Going into the pandemic we were self-financing our growth and had a very good set of opportunities, however, the pandemic ate up a lot of our cash reserves while the quality and quantity of new site opportunities improved. We want to take advantage of these.

The new opportunities have mainly come from the huge amount of space that’s being repurposed from big box retail, added to the fact that landlords who are undertaking major redevelopment projects recognise that for both residential and office developments, fitness is the new anchor tenant and if it’s a premium development, then Third Space is top of their list.

Now’s the time to capitalise on this opportunity, hence the reason for seeking out additional funding. KSL saw the situation just as we did, hence our ability to get this done now.

Why KSL?
KSL has a vision statement which is “to invest in the unforgettable to create the enduring.” I really like that. They’re a leisure-only investor and work primarily in the luxury segment.

They really understand that customer experience is at the heart of businesses like ours. In short, they have relevant expertise, their values align with ours and they believe in what we’re doing.

We first started talking to them over two years ago, so this was not a rushed partnership. It’s also great that our long-term backer, Encore Capital, has remained invested. This reflects their confidence and belief in what we do.

Will you extend the brand?
As a holistic lifestyle brand with fitness and training at its heart, we also have credentials in food through our successful Natural Fitness Food Brand and our restaurant The Pearson Room. Natural Fitness Food delivery also launched in April this year, allowing consumers to order our food outside the clubs, alongside nutritional support and healthy meal plans.

We also have a sports medical business, a spa business and we launched our retreats business Third Space Escapes prior to the pandemic. Once travel is more stable we see Third Space Escapes re-launching with new locations and for both restorative and adventure-led trips.

Our digital fitness proposition was developed rapidly during the successive lockdowns to support our members’ training at home with PT programmes and a range of our most popular classes, all delivered through our member app. Now it’s used both in and out of the clubs for personalised programmes and for members who are still partly working from home and wish to take a class from our on-demand library.

There’s an opportunity to continue to grow and obsessively innovate in all of these areas of our business to further support and enrich the lives of our members.

We continually re-invest in our clubs, repurposing space as trends and demands evolve. For example, with increased interest in recovery and relaxation, we’re adding cryotherapy and percussive therapy zones to our clubs.

A simple and obvious part of our plan is to add more great sites. We already have a strong presence in central London and our pipeline will take us into some of the more residential neighbourhoods of the city in the next two to three years. This will bring our brand to new people, as well as providing a great network for members to train, both near home and near to work.

In summary, our plan is to get better and better, as we also grow. The market demand is there and we’re going to meet and grow that demand.

How much value has been added to the company in percentage terms since your last funding deal?
Revenues from the Third Space brand increased by six-fold between 2014 and immediately prior to the pandemic.

How has trading been in the UK since the end of lockdowns?
We’ve actually bounced back better than we expected. Even though we’re mainly in central London locations, all our clubs have a significant residential catchment, plus some very dedicated members that would come to the clubs even if they were on fire!

Working from home is obviously a factor in some of our locations – and will be for some time no doubt. I fully expect it to be a year or so before anyone can say what the new normal really is.

Has Little Space been a success and if so, will you be rolling out more?
The Little Space kids concept has been incredibly well received by our Islington (London) members with children. Our fully-booked swimming programme has been particularly successful and parents are keen to get their kids back to activities again.

If the demographics and space supported it, we would definitely consider building more Little Space sites.

Has your demographic changed since the start of the pandemic?
Not particularly.

What actions did you take that made the most difference when it came to getting through the lockdowns?
The most important thing was good communication. That applies to members and the team. With members, we immediately put them on free freeze and kept our brilliant membership team working full-time to deal with any and all queries that members had.

By being decisive, fair, transparent and contactable I think we protected our brand and even built further loyalty as we navigated the lockdowns.

The same principles applied to the team. Even when we didn’t know what was coming next we would tell the team that. We tried to keep them as up to speed as possible. Sometimes just saying there is no news is in itself reassuring. We also ran a whole load of training and development, as well as social clubs, book clubs, cocktail events or just getting together online for a chat. For some people, lockdown was incredibly hard, so we tried to be helpful and supportive.

As mentioned, we also moved heaven and earth to give members digital options to train with their favourite instructors. Looking back, the progress we made in that time was amazing – it’s incredible what can be done with total focus and a burning need.

Do you have global ambitions for the Third Space brand?
Yes at some point... I can’t say where or when yet...

What does this deal say about the state of the wider industry?
It shows how resilient it is. The last 18 months have been very hard for everyone in the industry, but the big tailwinds we had before are still there and with the right proposition there are plenty of opportunities still. Sophisticated investors like KSL can clearly see that, so this deal is great validation for our business.

Background briefing
London 6 August 2021

KSL Capital Partners acquired a majority interest in Third Space from Encore Capital, who originally invested in the company in 2010.Encore will remain an investor in Third Space.

Launched in 2001, Third Space operates a portfolio of six clubs in the UK, with a seventh site set to open in late 2021 at Number One Curzon Street, Mayfair, London.

In addition to adding new clubs, the company plans to continue to develop its brand outside the traditional club environment, both digitally and “in new settings”.

Martin Edsinger, principal at KSL, said: “Third Space’s mission and growth plan align with KSL’s history of investing in differentiated, experiential hospitality and wellness brands that are committed to people and community impact.

More: www.HCMmag.com/KSL

Fitness is the new anchor tenant, with property developers seeking alliances with premium brands / photo: Third Space
Fitness is the new anchor tenant, with property developers seeking alliances with premium brands / photo: Third Space
Third Space Escapes will relaunch as soon as travel is more stable / photo: Third Space
Third Space Escapes will relaunch as soon as travel is more stable / photo: Third Space
Revenues at Third Space increased six-fold between 2014 and the start of the pandemic / photo: Third Space
Revenues at Third Space increased six-fold between 2014 and the start of the pandemic / photo: Third Space
https://www.leisureopportunities.co.uk/images/2021/47957_129986.jpg
The CEO of Third Space, Colin Waggett, talks about the company’s recent deal with KSL and plans for growth
Latest News
Boxx has launched a new generation punch bag and smart punch trackers that work with ...
Latest News
Inclusive Fitness Boston, a health club created specifically for those with disabilities and their families, ...
Latest News
The Women in Fitness Association (WIFA), is partnering with Sport Alliance to undertake a survey ...
Latest News
Location and cost are the top considerations for consumers when it comes to choosing a ...
Latest News
Increases in COVID-19 cases across Europe are forcing governments to introduce restrictions, which is having ...
Latest News
Exercise has been found to increase levels of endocannabinoids – cannabis-like substances produced by the ...
Latest News
People suffering from mild depression should be offered exercise, mindfulness, therapy or meditation before medication, ...
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Total Fitness plans to launch a new-style health club model, with plans already in the ...
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Opinion
promotion
FitnessOnDemand’s divisional vice president Uday Anumalachetty discusses what live fitness really means for clubs and their members today
Opinion: Why we need to reimagine what live fitness really means
Featured supplier news
Featured supplier news: Revamped Fitline Maassluis health club equipped by Core Health & Fitness
An iconic Dutch fitness centre that first opened 32 years ago has received an extensive overhaul following a vicious fire.
Featured supplier news
Featured supplier news: INTEGRATE INNOVATE INVIGORATE with Power Plate
Moving into a new era of health and wellness, Power Plate has extended their popular Black edition range to enable health clubs and fitness studios to integrate vibration training seamlessly into their facilities.
Featured operator news
Featured operator news: Everyone Active successfully reopens exercise referral scheme thanks to EXi partnership
Local authority leisure provider Everyone Active has reopened its essential exercise referral scheme, by joining forces with EXi, the NHS-approved exercise prescription app and data portal.
Featured operator news
Featured operator news: Sporting heroes to officially open £22 million redevelopment at Everyone Active centre
A £22 million redevelopment project will be unveiled at Grange Paddocks Leisure Centre, as part of the official launch of the state-of-the-art centre.
Video Gallery
Total Vibration Solutions / Floors 4 Gyms / TVS Sports Surfaces
Physical Company Ltd
Les Mills
Company profiles
Company profile: Perfect Gym Solutions S.A.
Perfect Gym currently provides fitness software solutions to customers in 55+ countries, servicing more than ...
Company profiles
Company profile: Hutchison Technologies Ltd.
Hutchison Technologies helps the UK’s leading gyms, health clubs and leisure trusts create memorable experiences ...
Catalogue Gallery
Click on a catalogue to view it online
Directory
Whole body cryotherapy
Zimmer MedizinSysteme GmbH / icelab: Whole body cryotherapy
Exercise equipment
Power Plate: Exercise equipment
Fitness equipment
Octane Fitness: Fitness equipment
Spa software
SpaBooker: Spa software
trade associations
International SPA Association - iSPA: trade associations
Architects/designers
Zynk Design Consultants: Architects/designers
Flooring
Total Vibration Solutions / TVS Sports Surfaces: Flooring
Skincare
Sothys: Skincare
Salt therapy products
Himalayan Source: Salt therapy products
Lockers/interior design
Safe Space Lockers Ltd: Lockers/interior design
Property & Tenders
Welwyn Garden City
Welwyn Hatfield Borough Council
Property & Tenders
Newport, Shropshire
Lilleshall Sports Academy
Property & Tenders
Diary dates
01-03 Feb 2022
Coventry Building Society Arena, Coventry, United Kingdom
Diary dates
07-10 Apr 2022
Exhibition Centre , Cologne, Germany
Diary dates
15-16 Jun 2022
ExCeL London, London, United Kingdom
Diary dates
01-07 Dec 2022
tbc, Dunedin, New Zealand
Diary dates
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