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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

Show me the money

Gyms and health clubs rise or fall on the strength of their financial control and keeping the confidence of stakeholders and shareholders. Katherine Selby asks two industry experts for their advice

By Katherine Selby | Published in Health Club Management 2014 issue 11
When SLM wins a new contract, Jefford starts with a three-year budget, giving the facility time to mature / all photos: www.shutterstock.com
When SLM wins a new contract, Jefford starts with a three-year budget, giving the facility time to mature/ all photos: www.shutterstock.com
The problem is people see budgets as a paper exercise to put in the drawer and not look at again. Our managers check their budget weekly and analyse performance daily

The iconic scene in Jerry Maguire where Tom Cruise’s sports agent character is forced to yell “show me the money” to keep his demanding athletic client happy is perhaps extreme – one hopes finance directors of health clubs and leisure centres don’t have to be quite so loud or humbled to keep stakeholders, shareholders and members on board. But they are nevertheless accountable to clear a profit and invest wisely.

Here, two leading operators speak frankly about financial control and share key insights. Duncan Jefford, south-east regional director of public sector operator SLM, trading as Everyone Active, has spent all his working life immersed in the health and fitness business. He started out as a PT and worked his way up through the ranks, supplementing this hands-on knowledge by completing various financial courses with the Institute of Directors to ensure SLM’s continued success.

Nick Harding, group finance director for énergie, has a Plc background and has worked in the fitness and leisure industry with énergie for just over three years. His accountant’s perspective and experience outside the health and fitness market allow him to bring a highly professional approach to énergie and a fresh perspective to its business.

Setting the budget
Budgeting is the backbone of financial control: if you get that right, all other aspects of the financial jigsaw can fit together. Budgets are drawn up in different ways for different facilities.
Jefford favours using historical financial data as a platform on which to plan and build the next year: although zero-based budgets – which start with a blank sheet for the coming year – can give you a sense of a clean sweep and new broom, the reality is whatever has happened in the previous year will follow you into the next year.

But when it comes to the clean sheet that comes with building a brand new facility or winning a new contract, Jefford always starts with a three-year budget, recognising that it takes this length of time for a new facility to mature and go into profit.

He explains: “We have to take a longer-term view than many private sector operators, as a typical new contract will be managed over a 10- to 25-year term. However, in reality as the facility beds in and the membership matures, things are often very different from what you initially imagined, so we keep checking the budget remains suitable and alter it if necessary.”

Harding agrees that budgets must be flexible year to year, but likes to invest the time in setting a realistic annual budget that’s both stretching and achievable. “My finance team spends up to three months in advance of the budget year working with the operations team and franchisees. That means they’re fully involved and take responsibility for the budget,” he explains. “That three-month period can be quite intense as we go back and forth on what we think is realistic and achievable, but once the budget is agreed, the year ahead is then very clear, with specific KPIs in place to monitor performance against that budget.

“The biggest problem with budgets is that people see them as a paper exercise to put in the drawer and not look at again. Our managers and franchisees are all required to check their budget weekly and analyse performance daily.”

From the ground up
To enable the network to manage their budgets, Harding runs interactive training days specific to the health and fitness industry to ensure they understand the financial aspects. “Making accountancy understandable to your workforce is of huge importance, and helps control the finances from the ground up,” he explains.

While he believes every leisure facility or group should have a commercially-focused finance director to drive through the analysis and maintain an overview across the chain or group, he’s clear that ‘top-down’ budgets agreed at board level and handed down to local managers who have had no say in the matter rarely work: “Put simply, this practice doesn’t make people accountable. Anyone operating like this should take a step back, regroup and consider how they can turn this system on its head. It takes a little getting used to, but it really works.”

Jefford also requires his centre managers to take control of their budgets, and believes they pay more attention to finances as a result. “Each site has specific requirements and considerations, so a ‘one size fits all’ budget handed down from the management team will not be helpful,” he says. “Every centre manager must put in for what he or she thinks is needed. Once it’s agreed, they head up the implementation and I offer guidance where necessary.”

Profit & loss
Income streams differ between private and public facilities, with the latter generally having more emphasis on casual exercise lines. However, managing membership income and payroll are the key to a successful business across the board, says Jefford. Both sectors are also equally accountable to their stakeholders and members and both need to be profitable, including ‘not for profit’ clubs which are obliged to invest their profit into improving their business.

As with budgeting, Jefford hands his centre managers the responsibility for their profit and loss accounts. “Many businesses run scared of giving such responsibility to their centre managers, but my view is if you can’t trust them on this, you don’t have the right person in the job,” explains Jefford. “That doesn’t mean all our centre managers have accountancy skills. Instead we have bespoke software, so all they need to do is input sales and purchases accurately as they happen. The software will do the rest. Very quickly, a good centre manager will learn how to interpret the outcomes clearly and look to address any losses that are showing. Any problems, come to me and I’ll help, but they save a lot of my time by keeping an eye on the day-to-day income and expenditure of their centre.”

Real-time tracking
Gone are the days where month-end could bring unpleasant surprises, as there’s now plenty of software available to track income versus expenditure in real time.

Jefford requires a daily income check to ensure any discrepancies or negative trends are identified and acted on early. “As with any issues, the sooner you get to them, the easier they are to solve,” he explains.

To ensure smooth running of all énergie clubs, Harding is able to access what he calls ‘fingertip information’ minute-by-minute. “énergie has built a bespoke piece of software called ORA, which tracks membership sales across the network,” says Harding. “At any given time, I can check ORA and see how the clubs are performing against their sales targets, which are obviously linked back into the budgets.”

With controlling costs just as important as selling memberships – and harder to track, as there are so many different variants – Harding also invested in software to manage the purchase order system and keep a tight rein on expenditure.

Automated systems have certainly transformed the way profit and loss are managed, but as the familiar saying goes: ‘To err is human, but to really foul things up you need a computer.’ Health and fitness clubs therefore still need a finance director in place, supported by a commercially-focused finance team analysing and assessing progress – and staying alert to any oddities created by computer (or user) error.

Forecasting
Forecasting is incredibly important to ensure the long- and short-term viability of any business. This is never more so than in the fitness sector, with its cyclical income of membership subs coming in just once a month.

“People assume forecasting is long-term crystal ball-gazing, when in fact I think it should be seen as an extension of your daily and weekly checks,” says Jefford. “Forecasting should be flexible and allow for changes that happen during the forecast period.”

“Forecasting is essential to keep our shareholders and stakeholders up to speed with our future development plans,” adds Harding. “With our future growth funded through reinvestment of our profits, forecasting is key to giving stakeholders ongoing comfort in the business.”

Collaborative approach
With the right tools, well-trained staff and strong leadership from the finance director, clubs have more scope to track and control their finances than ever before. However, training people properly and maintaining a flexible, open door policy between the finance department and the rest of the business are key to success and security.

The days of the company accountant being shut away and unreachable are numbered, with financial control not just about the figures. It’s about the people behind the figures, with social interaction and communication across the whole business key to bringing financial transparency and control.

MEET OUR EXPERTS

Duncan Jefford
Duncan Jefford
Duncan Jefford,

South-East Regional Director,

Everyone Active


Duncan Jefford, south-east regional director at Everyone Active, has 15 years’ experience in the leisure industry and has worked as a fitness trainer, group development manager and area manager. He currently looks after 41 sites within the south-east region and has accountability for over £50m.

Email: [email protected]

Web: www.everyoneactive.com

MEET OUR EXPERTS

Nick Harding
Nick Harding
Nick Harding,

Group Finance Director,

énergie


Nick Harding, group finance director at énergie, has over 12 years’ accountancy and finance experience. Over the last three years at énergie, he has provided a valuable contribution to redesigning the company strategy into what it is today. The énergie network now consists of 79 clubs with nearly 100,000 members.

Email: [email protected]

Web: www.energiefranchise.com

In a nutshell

- Budgets: Budgets are the backbone to financial stability. A balance must be struck between setting ambitious but achievable budgets, and at the same time allowing for flexibility. Crucially, budgets must be checked regularly to ensure you’re on track.

- Accountability: A finance director can maintain an overview, but every centre/gym manager must be involved in setting the targets and must be accountable for their own budgets and P&L.

- Software: A wide range of software is now available to assist staff in the financial aspects of running a club, but a commercially-focused financial team is crucial to identify human / PC-generated glitches in data.

- Forecasting: This isn’t about long-term crystal ball-gazing, but a flexible “extension of your daily and weekly checks”, with a view to keeping all stakeholders comfortable with the business.

- Collaboration: Financial control isn’t just about the figures – it’s about the people, with communication across the whole business key to success.

If you would like to get each issue of HCM magazine sent direct to you for FREE, plus the weekly HCM ezine, sign up now!
Social interaction and communication across the business are key to financial transparency and control / all photos: www.shutterstock.com
Social interaction and communication across the business are key to financial transparency and control / all photos: www.shutterstock.com
Managing membership income and payroll are key to the success of any business, whether private or public sector / photo: www.shutterstock.com/ Andrey_Popov
Managing membership income and payroll are key to the success of any business, whether private or public sector / photo: www.shutterstock.com/ Andrey_Popov
A strong balance sheet isn’t just about selling memberships, but about controlling costs / photo: www.shutterstock.com
A strong balance sheet isn’t just about selling memberships, but about controlling costs / photo: www.shutterstock.com
http://www.leisureopportunities.com/images/140318_493958.jpg
Health clubs rise and fall on the strength of their financial control and keeping the confidence of stakeholders, says Katherine Selby
People
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general manager, Oldham Leisure Centre
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Exercising increases levels of a protein hormone secreted by the bones which has a powerful ...
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As countries around the world gear up to relax their lockdown rules, there remains a question mark over gyms and studios, which in many markets will be one of the last sectors to be given the green light.
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Finally, the time has come: fitness and health facilities around the globe are gradually resuming operations.
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Temple Gym - Nautilus Equipment Read more
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Matrix strives to offer equipment that will captivate your members, is easy to maintain, and ...
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Company profile: EXF Fitness
EXF offer so much more than modular systems and pick and mix installations, they don’t ...
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Click on a catalogue to view it online
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03-06 Jun 2021
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ExCeL London, London, United Kingdom
Diary dates

features

Show me the money

Gyms and health clubs rise or fall on the strength of their financial control and keeping the confidence of stakeholders and shareholders. Katherine Selby asks two industry experts for their advice

By Katherine Selby | Published in Health Club Management 2014 issue 11
When SLM wins a new contract, Jefford starts with a three-year budget, giving the facility time to mature / all photos: www.shutterstock.com
When SLM wins a new contract, Jefford starts with a three-year budget, giving the facility time to mature/ all photos: www.shutterstock.com
The problem is people see budgets as a paper exercise to put in the drawer and not look at again. Our managers check their budget weekly and analyse performance daily

The iconic scene in Jerry Maguire where Tom Cruise’s sports agent character is forced to yell “show me the money” to keep his demanding athletic client happy is perhaps extreme – one hopes finance directors of health clubs and leisure centres don’t have to be quite so loud or humbled to keep stakeholders, shareholders and members on board. But they are nevertheless accountable to clear a profit and invest wisely.

Here, two leading operators speak frankly about financial control and share key insights. Duncan Jefford, south-east regional director of public sector operator SLM, trading as Everyone Active, has spent all his working life immersed in the health and fitness business. He started out as a PT and worked his way up through the ranks, supplementing this hands-on knowledge by completing various financial courses with the Institute of Directors to ensure SLM’s continued success.

Nick Harding, group finance director for énergie, has a Plc background and has worked in the fitness and leisure industry with énergie for just over three years. His accountant’s perspective and experience outside the health and fitness market allow him to bring a highly professional approach to énergie and a fresh perspective to its business.

Setting the budget
Budgeting is the backbone of financial control: if you get that right, all other aspects of the financial jigsaw can fit together. Budgets are drawn up in different ways for different facilities.
Jefford favours using historical financial data as a platform on which to plan and build the next year: although zero-based budgets – which start with a blank sheet for the coming year – can give you a sense of a clean sweep and new broom, the reality is whatever has happened in the previous year will follow you into the next year.

But when it comes to the clean sheet that comes with building a brand new facility or winning a new contract, Jefford always starts with a three-year budget, recognising that it takes this length of time for a new facility to mature and go into profit.

He explains: “We have to take a longer-term view than many private sector operators, as a typical new contract will be managed over a 10- to 25-year term. However, in reality as the facility beds in and the membership matures, things are often very different from what you initially imagined, so we keep checking the budget remains suitable and alter it if necessary.”

Harding agrees that budgets must be flexible year to year, but likes to invest the time in setting a realistic annual budget that’s both stretching and achievable. “My finance team spends up to three months in advance of the budget year working with the operations team and franchisees. That means they’re fully involved and take responsibility for the budget,” he explains. “That three-month period can be quite intense as we go back and forth on what we think is realistic and achievable, but once the budget is agreed, the year ahead is then very clear, with specific KPIs in place to monitor performance against that budget.

“The biggest problem with budgets is that people see them as a paper exercise to put in the drawer and not look at again. Our managers and franchisees are all required to check their budget weekly and analyse performance daily.”

From the ground up
To enable the network to manage their budgets, Harding runs interactive training days specific to the health and fitness industry to ensure they understand the financial aspects. “Making accountancy understandable to your workforce is of huge importance, and helps control the finances from the ground up,” he explains.

While he believes every leisure facility or group should have a commercially-focused finance director to drive through the analysis and maintain an overview across the chain or group, he’s clear that ‘top-down’ budgets agreed at board level and handed down to local managers who have had no say in the matter rarely work: “Put simply, this practice doesn’t make people accountable. Anyone operating like this should take a step back, regroup and consider how they can turn this system on its head. It takes a little getting used to, but it really works.”

Jefford also requires his centre managers to take control of their budgets, and believes they pay more attention to finances as a result. “Each site has specific requirements and considerations, so a ‘one size fits all’ budget handed down from the management team will not be helpful,” he says. “Every centre manager must put in for what he or she thinks is needed. Once it’s agreed, they head up the implementation and I offer guidance where necessary.”

Profit & loss
Income streams differ between private and public facilities, with the latter generally having more emphasis on casual exercise lines. However, managing membership income and payroll are the key to a successful business across the board, says Jefford. Both sectors are also equally accountable to their stakeholders and members and both need to be profitable, including ‘not for profit’ clubs which are obliged to invest their profit into improving their business.

As with budgeting, Jefford hands his centre managers the responsibility for their profit and loss accounts. “Many businesses run scared of giving such responsibility to their centre managers, but my view is if you can’t trust them on this, you don’t have the right person in the job,” explains Jefford. “That doesn’t mean all our centre managers have accountancy skills. Instead we have bespoke software, so all they need to do is input sales and purchases accurately as they happen. The software will do the rest. Very quickly, a good centre manager will learn how to interpret the outcomes clearly and look to address any losses that are showing. Any problems, come to me and I’ll help, but they save a lot of my time by keeping an eye on the day-to-day income and expenditure of their centre.”

Real-time tracking
Gone are the days where month-end could bring unpleasant surprises, as there’s now plenty of software available to track income versus expenditure in real time.

Jefford requires a daily income check to ensure any discrepancies or negative trends are identified and acted on early. “As with any issues, the sooner you get to them, the easier they are to solve,” he explains.

To ensure smooth running of all énergie clubs, Harding is able to access what he calls ‘fingertip information’ minute-by-minute. “énergie has built a bespoke piece of software called ORA, which tracks membership sales across the network,” says Harding. “At any given time, I can check ORA and see how the clubs are performing against their sales targets, which are obviously linked back into the budgets.”

With controlling costs just as important as selling memberships – and harder to track, as there are so many different variants – Harding also invested in software to manage the purchase order system and keep a tight rein on expenditure.

Automated systems have certainly transformed the way profit and loss are managed, but as the familiar saying goes: ‘To err is human, but to really foul things up you need a computer.’ Health and fitness clubs therefore still need a finance director in place, supported by a commercially-focused finance team analysing and assessing progress – and staying alert to any oddities created by computer (or user) error.

Forecasting
Forecasting is incredibly important to ensure the long- and short-term viability of any business. This is never more so than in the fitness sector, with its cyclical income of membership subs coming in just once a month.

“People assume forecasting is long-term crystal ball-gazing, when in fact I think it should be seen as an extension of your daily and weekly checks,” says Jefford. “Forecasting should be flexible and allow for changes that happen during the forecast period.”

“Forecasting is essential to keep our shareholders and stakeholders up to speed with our future development plans,” adds Harding. “With our future growth funded through reinvestment of our profits, forecasting is key to giving stakeholders ongoing comfort in the business.”

Collaborative approach
With the right tools, well-trained staff and strong leadership from the finance director, clubs have more scope to track and control their finances than ever before. However, training people properly and maintaining a flexible, open door policy between the finance department and the rest of the business are key to success and security.

The days of the company accountant being shut away and unreachable are numbered, with financial control not just about the figures. It’s about the people behind the figures, with social interaction and communication across the whole business key to bringing financial transparency and control.

MEET OUR EXPERTS

Duncan Jefford
Duncan Jefford
Duncan Jefford,

South-East Regional Director,

Everyone Active


Duncan Jefford, south-east regional director at Everyone Active, has 15 years’ experience in the leisure industry and has worked as a fitness trainer, group development manager and area manager. He currently looks after 41 sites within the south-east region and has accountability for over £50m.

Email: [email protected]

Web: www.everyoneactive.com

MEET OUR EXPERTS

Nick Harding
Nick Harding
Nick Harding,

Group Finance Director,

énergie


Nick Harding, group finance director at énergie, has over 12 years’ accountancy and finance experience. Over the last three years at énergie, he has provided a valuable contribution to redesigning the company strategy into what it is today. The énergie network now consists of 79 clubs with nearly 100,000 members.

Email: [email protected]

Web: www.energiefranchise.com

In a nutshell

- Budgets: Budgets are the backbone to financial stability. A balance must be struck between setting ambitious but achievable budgets, and at the same time allowing for flexibility. Crucially, budgets must be checked regularly to ensure you’re on track.

- Accountability: A finance director can maintain an overview, but every centre/gym manager must be involved in setting the targets and must be accountable for their own budgets and P&L.

- Software: A wide range of software is now available to assist staff in the financial aspects of running a club, but a commercially-focused financial team is crucial to identify human / PC-generated glitches in data.

- Forecasting: This isn’t about long-term crystal ball-gazing, but a flexible “extension of your daily and weekly checks”, with a view to keeping all stakeholders comfortable with the business.

- Collaboration: Financial control isn’t just about the figures – it’s about the people, with communication across the whole business key to success.

If you would like to get each issue of HCM magazine sent direct to you for FREE, plus the weekly HCM ezine, sign up now!
Social interaction and communication across the business are key to financial transparency and control / all photos: www.shutterstock.com
Social interaction and communication across the business are key to financial transparency and control / all photos: www.shutterstock.com
Managing membership income and payroll are key to the success of any business, whether private or public sector / photo: www.shutterstock.com/ Andrey_Popov
Managing membership income and payroll are key to the success of any business, whether private or public sector / photo: www.shutterstock.com/ Andrey_Popov
A strong balance sheet isn’t just about selling memberships, but about controlling costs / photo: www.shutterstock.com
A strong balance sheet isn’t just about selling memberships, but about controlling costs / photo: www.shutterstock.com
http://www.leisureopportunities.com/images/140318_493958.jpg
Health clubs rise and fall on the strength of their financial control and keeping the confidence of stakeholders, says Katherine Selby
Latest News
The UK's fitness industry can finally get back to business on Saturday 25 July, following ...
Latest News
HCM understands a decision on reopening dates for gyms and also for spas will be ...
Latest News
Interest in gym reopening in England is reaching fever pitch, with an announcement expected any ...
Latest News
Exercising increases levels of a protein hormone secreted by the bones which has a powerful ...
Latest News
A free-to-access training platform has launched to help the sport and fitness workforce confidently return ...
Latest News
Glasgow Life, which runs leisure and culture facilities on behalf of Glasgow City Council, has ...
Latest News
Fitness equipment firm Nautilus Inc is looking for a buyer for its commercial equipment brand ...
Latest News
Technogym has announced the launch of live streaming and on-demand classes. The new content will ...
Latest News
A number of gym operators are concerned that local lockdowns could come into effect in ...
Latest News
Prime Minister Boris Johnson has announced that gyms may be able to reopen in a ...
Featured supplier news
Featured supplier: Let's get restarted: Physical Company offers advice on keeping gym members safe
As countries around the world gear up to relax their lockdown rules, there remains a question mark over gyms and studios, which in many markets will be one of the last sectors to be given the green light.
Featured supplier news
Featured supplier: EGYM presents Corona Gym Solution, for the successful re-opening of fitness studios
Finally, the time has come: fitness and health facilities around the globe are gradually resuming operations.
Video Gallery
Temple Gym - Nautilus Equipment
Core Health & Fitness
Temple Gym - Nautilus Equipment Read more
More videos:
Company profiles
Company profile: Matrix Fitness
Matrix strives to offer equipment that will captivate your members, is easy to maintain, and ...
Company profiles
Company profile: EXF Fitness
EXF offer so much more than modular systems and pick and mix installations, they don’t ...
Catalogue Gallery
Click on a catalogue to view it online
Directory
Management software
Fisikal: Management software
Locking solutions
Monster Padlocks: Locking solutions
Lockers/interior design
Fitlockers: Lockers/interior design
Exercise equipment
Technogym: Exercise equipment
Trade associations
International SPA Association - iSPA: Trade associations
Whole body cryotherapy
Zimmer MedizinSysteme GmbH / icelab: Whole body cryotherapy
Spa software
SpaBooker: Spa software
Hydrotherapy / spa fragrances
Kemitron GmbH: Hydrotherapy / spa fragrances
Gym flooring
REGUPOL/Berleburger Schaumstoffwerk (BSW): Gym flooring
Flooring
Total Vibration Solutions / TVS Sports Surfaces: Flooring
Property & Tenders
Greywell, Hampshire
Barnsgrove Health and Wellness Club
Property & Tenders
Derby City Council
Property & Tenders
Diary dates
21-24 Sep 2020
Loews Coronado Bay Resort, Coronado, United States
Diary dates
22-23 Sep 2020
Heythrop Park, United Kingdom
Diary dates
17-23 Oct 2020
Pinggu, Beijing, China
Diary dates
27-30 Oct 2020
Messe Stuttgart, Germany
Diary dates
03-06 Nov 2020
Online,
Diary dates
27-28 Nov 2020
Athena, Leicester, 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
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