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UNITING THE WORLD OF FITNESS
Health Club Management

Health Club Management

features

Promotional Feature: Viability assessment & full feasibility

How do you assess whether your desired leisure scheme is viable, and where do you go from there? Alliance Leisure’s Sarah Watts explains why this early part of the process is key to future success.

Published in Health Club Management 2013 issue 11

How do you begin to assess the viability of a leisure scheme?
We meet the client at the stage they’re at – some may have started to develop a plan and want to know if their scheme could be viable, while others are starting with an under-used space – often something like a number of ageing sports courts – and want to explore potential opportunities to increase revenue.

What is the approach used by Alliance Leisure?
In these times of reduced subsidy, it’s really all about the money and the space. How much additional revenue can be generated from the square footage that needs to be transformed?

For example, in one scheme we completed there was great controversy among the local senior population, because the council wanted to do away with the indoor bowls rinks (used mostly for just five months of the year) and create a 10-pin bowling facility.

Obviously you do have to think what else you can provide for the older age group, but the reality was that the same amount of space went from generating £38k a year to £300k a year.

That large boost in revenue may in turn allow a leisure site to broaden its social offering to different groups, making it more inclusive – ultimately protecting the service.

What are the most ‘viable’ leisure options these days?
That’s not something you can really state or quantify – it depends on the individual site, and local demand and needs. A 10-pin bowling facility may be a huge success for one leisure site but not for another. That’s where thorough viability and feasibility studies will pay dividends.

For example, we’re currently talking to a client who wants to put a 50m pool in a new mixed leisure development. But all our research shows that an aquatics leisure pool would be by far the better choice to satisfy demand and give the best return on investment.

What are the key steps in the feasibility process?
To begin with, it’s very important to use an independent party. We commission this process out to leading leisure consultants such as FMG, Max Associates, Robin Thompson, and the Sports and Leisure Group. It’s important that the feasibility is totally impartial in order that all decision makers, as well as Alliance’s funders, can be confident in its robustness.

It’s a complex analysis made up of different parts. It starts with going to the site and physically looking at the local area. If you’re planning to build a play centre, it’s no good just looking on paper, seeing there’s a big play centre just down the road and deciding there’s too much competition. That existing play centre may be scruffy, overpriced and not really serving its customers.

That’s why it’s so important to pay a mystery shopper visit. We believe, where there’s competition, there can often be opportunity.

How long does feasibility take and what are the challenges?
An average feasibility report takes around five weeks. On the cost savings side, some benefits are easy to show because we can relate back to existing data – so for example, the savings to be made in the areas of utilities, staff, cleaning services, etc – as these are evidence-based.

The future potential benefits are harder to quantify because there are so many variables, and it will depend on how that facility is run in future. We can’t predict, for example, if a budget gym might open down the road from a newly developed fitness facility. That’s why we generally develop a range of new complementary facilities which protect our clients, so they become less dependent on any one revenue stream.

However, as Alliance Leisure has now completed over 100 projects, we have the experience of many successful models to draw upon, providing a type of evidence base that may be referred to for future projects.

What else does Alliance offer at the viability/feasibility stage?
As well as commissioning external reports, such as latent demand reports, we also proactively commission independent market reports so we can better advise our clients at this stage.

For example, while the market for local authority spas is growing rapidly, there is very little data available on these developments. So we’ve just commissioned our own report from Leisure-net Solutions to look at the public sector spa market. This data will prove invaluable for our clients considering this type of development.

Do clients need to pay out a lot of money at this stage?
No, not really. The process can be funded by either party or a shared process – sometimes it’s shared 50:50, depending on the scheme and situation. The initial headline figures are provided by Alliance for free, which help shape the early thoughts and inform the decision to proceed to full feasibility.

It’s important to note that this is the stage where the financial success of a new facility or an add-on facility is really secured. It could save clients a huge amount in the long term.

For example, do you keep a squash court that generates £8–12k a year, or do you turn the space into a toning table facility? Toning tables may be for a niche, older market, but they’re relatively cheap to install, and even with a small membership of 250 people paying £25–£30 a month, that same space could potentially generate £70–80k a year.

As we said before, it’s all about the money for the space, and being realistic about revenues. We’d never lead a client to believe they could make £1m when we know quite clearly from the feasibility that it will be closer to £300k.

CASE STUDY – Feasibility at Ruthin Leisure Centre

After a £1.4m revamp managed by Alliance Leisure, Ruthin Leisure Centre in Denbighshire opened its new facilities in September 2013. Additions to the centre, which is attached to a local school, include a new all-weather pitch, and an extension with a new reception area, changing rooms and gym.

The feasibility report indicated a latent demand of 675 new users. After affordability was assessed, the decision was made to work to a business plan of 475 members. Julia Goddard, business development manager for Alliance Leisure, says: “There was a target of 350 new members prior to opening, and our team actually sold 400. One month later the centre is about to reach 500 members.

“This puts a really good revenue stream in place right from the outset, plus our schemes almost always exceed the latent demand predictions within six to nine months.”

Ruthin Leisure Centre: Exceeding targets
Ruthin Leisure Centre: Exceeding targets
Sign up here to get HCM's weekly ezine and every issue of HCM magazine free on digital.
Ruthin Centre: About to reach 500 members
Ruthin Centre: About to reach 500 members
It’s hard to predict future competition, so Alliance develops complementary facilities to avoid reliance on one revenue stream
It’s hard to predict future competition, so Alliance develops complementary facilities to avoid reliance on one revenue stream
https://www.leisureopportunities.co.uk/images/HCM2013_11alliance.gif
Part three of a nine-part series detailing Alliance Leisure's process for creating successful public leisure facilities - How do you assess whether your desired leisure scheme is viable, and where do you go from there?
Alliance leisure,leisure scheme, alliance leisure
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Fuel the debate about issues and opportunities across the industry. We’d love to hear from you – [email protected]
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features

Promotional Feature: Viability assessment & full feasibility

How do you assess whether your desired leisure scheme is viable, and where do you go from there? Alliance Leisure’s Sarah Watts explains why this early part of the process is key to future success.

Published in Health Club Management 2013 issue 11

How do you begin to assess the viability of a leisure scheme?
We meet the client at the stage they’re at – some may have started to develop a plan and want to know if their scheme could be viable, while others are starting with an under-used space – often something like a number of ageing sports courts – and want to explore potential opportunities to increase revenue.

What is the approach used by Alliance Leisure?
In these times of reduced subsidy, it’s really all about the money and the space. How much additional revenue can be generated from the square footage that needs to be transformed?

For example, in one scheme we completed there was great controversy among the local senior population, because the council wanted to do away with the indoor bowls rinks (used mostly for just five months of the year) and create a 10-pin bowling facility.

Obviously you do have to think what else you can provide for the older age group, but the reality was that the same amount of space went from generating £38k a year to £300k a year.

That large boost in revenue may in turn allow a leisure site to broaden its social offering to different groups, making it more inclusive – ultimately protecting the service.

What are the most ‘viable’ leisure options these days?
That’s not something you can really state or quantify – it depends on the individual site, and local demand and needs. A 10-pin bowling facility may be a huge success for one leisure site but not for another. That’s where thorough viability and feasibility studies will pay dividends.

For example, we’re currently talking to a client who wants to put a 50m pool in a new mixed leisure development. But all our research shows that an aquatics leisure pool would be by far the better choice to satisfy demand and give the best return on investment.

What are the key steps in the feasibility process?
To begin with, it’s very important to use an independent party. We commission this process out to leading leisure consultants such as FMG, Max Associates, Robin Thompson, and the Sports and Leisure Group. It’s important that the feasibility is totally impartial in order that all decision makers, as well as Alliance’s funders, can be confident in its robustness.

It’s a complex analysis made up of different parts. It starts with going to the site and physically looking at the local area. If you’re planning to build a play centre, it’s no good just looking on paper, seeing there’s a big play centre just down the road and deciding there’s too much competition. That existing play centre may be scruffy, overpriced and not really serving its customers.

That’s why it’s so important to pay a mystery shopper visit. We believe, where there’s competition, there can often be opportunity.

How long does feasibility take and what are the challenges?
An average feasibility report takes around five weeks. On the cost savings side, some benefits are easy to show because we can relate back to existing data – so for example, the savings to be made in the areas of utilities, staff, cleaning services, etc – as these are evidence-based.

The future potential benefits are harder to quantify because there are so many variables, and it will depend on how that facility is run in future. We can’t predict, for example, if a budget gym might open down the road from a newly developed fitness facility. That’s why we generally develop a range of new complementary facilities which protect our clients, so they become less dependent on any one revenue stream.

However, as Alliance Leisure has now completed over 100 projects, we have the experience of many successful models to draw upon, providing a type of evidence base that may be referred to for future projects.

What else does Alliance offer at the viability/feasibility stage?
As well as commissioning external reports, such as latent demand reports, we also proactively commission independent market reports so we can better advise our clients at this stage.

For example, while the market for local authority spas is growing rapidly, there is very little data available on these developments. So we’ve just commissioned our own report from Leisure-net Solutions to look at the public sector spa market. This data will prove invaluable for our clients considering this type of development.

Do clients need to pay out a lot of money at this stage?
No, not really. The process can be funded by either party or a shared process – sometimes it’s shared 50:50, depending on the scheme and situation. The initial headline figures are provided by Alliance for free, which help shape the early thoughts and inform the decision to proceed to full feasibility.

It’s important to note that this is the stage where the financial success of a new facility or an add-on facility is really secured. It could save clients a huge amount in the long term.

For example, do you keep a squash court that generates £8–12k a year, or do you turn the space into a toning table facility? Toning tables may be for a niche, older market, but they’re relatively cheap to install, and even with a small membership of 250 people paying £25–£30 a month, that same space could potentially generate £70–80k a year.

As we said before, it’s all about the money for the space, and being realistic about revenues. We’d never lead a client to believe they could make £1m when we know quite clearly from the feasibility that it will be closer to £300k.

CASE STUDY – Feasibility at Ruthin Leisure Centre

After a £1.4m revamp managed by Alliance Leisure, Ruthin Leisure Centre in Denbighshire opened its new facilities in September 2013. Additions to the centre, which is attached to a local school, include a new all-weather pitch, and an extension with a new reception area, changing rooms and gym.

The feasibility report indicated a latent demand of 675 new users. After affordability was assessed, the decision was made to work to a business plan of 475 members. Julia Goddard, business development manager for Alliance Leisure, says: “There was a target of 350 new members prior to opening, and our team actually sold 400. One month later the centre is about to reach 500 members.

“This puts a really good revenue stream in place right from the outset, plus our schemes almost always exceed the latent demand predictions within six to nine months.”

Ruthin Leisure Centre: Exceeding targets
Ruthin Leisure Centre: Exceeding targets
Sign up here to get HCM's weekly ezine and every issue of HCM magazine free on digital.
Ruthin Centre: About to reach 500 members
Ruthin Centre: About to reach 500 members
It’s hard to predict future competition, so Alliance develops complementary facilities to avoid reliance on one revenue stream
It’s hard to predict future competition, so Alliance develops complementary facilities to avoid reliance on one revenue stream
https://www.leisureopportunities.co.uk/images/HCM2013_11alliance.gif
Part three of a nine-part series detailing Alliance Leisure's process for creating successful public leisure facilities - How do you assess whether your desired leisure scheme is viable, and where do you go from there?
Alliance leisure,leisure scheme, alliance leisure
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Music service provider Rehegoo (pronounced Reh-air-go) has launched a streaming service for health clubs, gyms, ...
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It’s now just days to go until your leading trade show for the fitness, physical activity and sports therapy industry kicks off in London!
Featured supplier news
Featured supplier news: Parkwood Leisure celebrates milestone of teaching 100,000 children to swim
Parkwood Leisure, one of the UK’s leading leisure operators, has reached the milestone of teaching 100,000 children to swim through its Learn To Swim Programme.
Featured operator news
Featured operator news: New £42m Moorways Sports Village to open on 21 May
Everyone Active will open Moorways Sports Village to the public on Saturday 21 May with a grand opening weekend – in time for the half term holidays.
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.
Company profiles
Company profile: Myzone
It’s time to give more people more ways to move. Myzone is an innovative heart ...
Company profiles
Company profile: REGUPOL BSW GmbH
REGUPOL is one of the leading suppliers of sports and safety flooring, anti-slip mats for ...
Catalogue Gallery
Click on a catalogue to view it online
Directory
Wearable technology solutions
MyZone: Wearable technology solutions
Skincare
Comfort Zone - Davines S.p.A: Skincare
Lockers/interior design
Crown Sports Lockers: Lockers/interior design
Flooring
Total Vibration Solutions / TVS Sports Surfaces: Flooring
On demand
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Architects/designers
Zynk Design Consultants: Architects/designers
Spa software
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Property & Tenders
Pendine Sands, Carmarthenshire
Carmarthenshire County Council
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Runcorn
Halton Borough Council
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Diary dates
12-13 Sep 2022
Wyndham Lake Buena Vista Disney Springs® Resort, Lake Buena Vista, United States
Diary dates
21-21 Sep 2022
Various, London, United Kingdom
Diary dates
25-28 Oct 2022
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Diary dates
25-28 Oct 2022
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Diary dates
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Diary dates
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