GET HCM
magazine
Sign up for the FREE digital edition of HCM magazine and also get the HCM ezine and breaking news email alerts.
Not right now, thanksclose this window
Active IQ
Active IQ
Active IQ
Follow Health Club Management on Twitter Like Health Club Management on Facebook Join the discussion with Health Club Management on LinkedIn Follow Health Club Management on Instagram
UNITING THE WORLD OF FITNESS
Health Club Management

Health Club Management

features

Stats: Future gazing

Deloitte has produced a report in partnership with EuropeActive, analysing the impact of COVID-19 on the European health and fitness market, as Karsten Hollasch reports

Published in Health Club Management 2020 issue 9
Operators with rolling one year contracts fared the best / Shutterstock / Jacob Lund
Operators with rolling one year contracts fared the best / Shutterstock / Jacob Lund
Confidence in the future of the fitness market is reflected in the number of M&A and financing activities taking place

When the coronavirus hit the European health and fitness market in March and governments enforced the closure of gyms across Europe, there was no manual on how to handle the situation.

As it turned out, initial club closures lasted anywhere between eight and 18 weeks, depending on how severe the impact of the virus was in the country in question. Some regions suffered a second lockdown and some look likely to experience further disruption.

Although governments were quick to provide financial help, the financial damage for operators and other actors in the fitness industry is still massive. In fact, it’s still unclear how high the losses really are.

For this reason, Deloitte and EuropeActive launched a study to examine the business impact of the crisis on the sector, in both the short- and the longer-term.

The fieldwork took place in August and a total of 17 European key operators were interviewed, covering around 10 per cent of all members in the European health and fitness market.

Key findings
As of 31 March 2020, the surveyed operators experienced an average membership shortfall of around 3.5 per cent compared to their original budgets. By comparison, by 30 June 2020, these shortfalls reached their highest point, at 15.8 per cent, primarily through a combination of membership cancellations and the absence of new membership inflow during closures.

The average shortfalls compared to budget in respect of the number of clubs amounted to 2.5 per cent by 30 June 2020, as clubs reopened across Europe.

In the medium- and long-term, both average membership shortfalls and average club shortfalls are expected to decrease. As of December 2020 and December 2021, European operators said they expect average shortfalls in memberships to be 13.9 per cent and 9.9 per cent respectively. Looking at clubs, the average shortfalls compared to budget are expected to be 1.8 per cent by December 2020 and 0.6 per cent by December 2021.

Overall, the shortfall could be higher in the European fitness market, especially for single club operators, who could face greater financial difficulties than chain operators.

The pandemic-related closures in Q2 also impacted finances, primarily due to the absence of membership fees. European fitness operators experienced an average income shortfall of about 65 per cent compared to budget. Discrepancies in income shortfalls between operators in the study can be explained by different approaches to the handling of membership fees during the period of club closures.

While some operators continued to collect membership fees unless customer objections were received, there were also companies that stopped collecting membership fees altogether.

Operators were able to achieve cost savings of 43 per cent compared to budget in Q2, mainly due to paying less rent and fewer people and other reductions in operating costs.

Additional savings were realised when personnel costs were subsidised by local governments.

Income shortfalls vary considerably between regions. Operators with a UK focus expect the highest financial shortfalls when compared to the initial budget and the income shortfalls of UK-focused operators were especially high in Q2 2020 (-94 per cent).

This is in part attributable to UK operators’ heavy reliance on monthly cancellable contracts, in contrast to Germany and most of the other European markets, which mainly offer longer-term contracts.

Published H1 reports of listed European key operators also show the significant impact of COVID-19 on financial results. Due to an approximately 18-week lockdown in the UK, total revenues of UK operator The Gym Group decreased by around 50 per cent in H1 2020, compared to H1 2019. Similar results have been published by PureGym for its UK business (-49 per cent in H1 2020, compared to H1 2019). In comparison, Dutch operator Basic-Fit, which operates in various European countries, recorded an overall decrease in revenues of 24 per cent compared to H1 2019.

Measures taken
To counter the crisis, operators have undertaken a wide range of monetary and non-monetary measures. Among the monetary measures, short-time work, government grants and loan application were the most popular.

Other popular non-monetary measures introduced by operators include frequent scenario analyses – introduced by all operators surveyed – the creation of emergency plans and the introduction of early warning indicators.

The use of digital fitness offerings increased during the lockdown.

Survey results suggest that consumers’ interest in digital offerings is not a one-off, but rather that COVID-19 is serving as an accelerator for increasing demand for digital sports offerings (apps, videos, etc.).

By providing relevant content through digital channels and engaging with customers via their websites and apps, operators have been able to keep in touch with members during the crisis.

Basic-Fit, for example, actively increased member engagement through its already existing social media channels and mobile app, by offering additional services and contents.

The company-own mobile app was also temporarily made available to the general public.

According to Virtuagym’s COVID-19 impact study, the number of fitness app users more than trebled to reach its first peak in March, when COVID-19 started in Europe. However, the highest peak was reached in July, when clubs started reopening. This indicates that in-person club visits and use of digital offerings can coexist (and accelerate each other) rather than cannibalising each other.

Future outlook
As an overall result, major European club operators consider their existence only partially threatened, assuming no further forced club closures: None of the operators stated that their existence was or will be either severely or highly threatened in the future. However, single club operators, which represent the majority of fitness clubs in the European market, appear to be more threatened in their existence than larger operators, due to limited resources and refinancing possibilities.

The fact that fitness club operators are looking confidently into the future can be proven not only by the lower expected shortfalls, but also by further studies: more than 60 per cent of Spanish operators surveyed in the FNEID/Valgo COVID-19 impact report believe revenues will return to previously expected levels by the third quarter of 2021.

This could be supported by the fact that the behaviour of some consumers in the fitness market has barely changed. Eight-eight per cent of consumers in the ukactive/4Global COVID-19 impact report stated that after the reopening of public sector clubs in the UK they would visit the gym as often or even more often than before the pandemic.

Confidence in the future of the fitness market is reflected in the number of M&A and financing activities that have taken place in the last couple of months. For example, RSG Group expanded its investments by acquiring the US-operator Gold Gym for US$100 million, as well as 35 per cent of the shares of Gym80. Furthermore, other players such as PureGym, BASIC-FIT and The Gym Group were able to raise large sums of capital during this period.

Herman Rutgers, co-editor of the report noted: “It’s not possible at this stage to predict what the full impact of this crisis will ultimately be, due to the increasing number of cases and the uncertain future of policy decisions. However, the study shows the impact on membership and financial losses, and also that – assuming there are no further club closures – the industry can recover quickly and is still confident of achieving the long-term goals of 80 million members by the midpoint of the decade and 100 million by 2030.”

Get the report: www.HCMmag.com/Deloitte

Sign up here to get HCM's weekly ezine and every issue of HCM magazine free on digital.
Data indicates that in-person club visits and use of digital offerings can not only co-exist, but can also accelerate each other / Shutterstock / Jacob Lund
Data indicates that in-person club visits and use of digital offerings can not only co-exist, but can also accelerate each other / Shutterstock / Jacob Lund
https://www.leisureopportunities.co.uk/images/2020/731995_90245.jpg
A report by Deloitte for EuropeActive analyses the impact of COVID-19 on the European health and fitness market
Deloitte, EuropeActive, covid-19, Karsten Hollasch,fitness,europe, fitness industry
HCM magazine
As we adapt to a new way of living, software developers have been supporting the fitness sector with new systems and strategies. We asked operators and developers to share successes
HCM magazine
Lack of exercise is a major cause of death from COVID-19, according to new research, with only advanced age and organ transplant leading to greater risk
HCM magazine
A new report, conducted by Deloitte, analyses the growth of the Chinese fitness industry and the outlook ahead, as Kristen Walsh reports
HCM Magazine
Everyone’s talking about
For years the health and fitness sector has aspired to be taken seriously by the health sector. Is now the time? asks Kath Hudson
HCM Magazine
Wellbeing - the Health Agenda
Prescribe exercise, not painkillers, to chronic pain sufferers, says the UK’s National Institute for Health and Care Excellence, as Tom Walker reports
HCM Magazine
Sponsored
More than 30,000 Hussle users have been turned into direct members in the last 18 months. Find out how Hussle can help your business bounce back
HCM Magazine
Sponsored
Matrix Fitness is launching a new three-tiered cardio range to provide total versatility, explains Matt Pengelly
HCM Magazine
Sponsored
Craig Cocking was appointed Life Fitness UK’s country manager in December, following over 13 years with the business. He reflects on the impact of the past 12 months and shares his views on the future of the industry
HCM Magazine
Editor's letter
Groundbreaking research from around the world is proving the many ways exercise can support health and creating opportunities for the sector to be more valued and useful
HCM Magazine
Hospitality
Fitness, wellness and recovery are driving new investments in the hotel and resorts market, with Kerzner the latest to enter this space, as Megan Whitby reports
HCM Magazine
Latest News
A report commissioned by Parkrun has estimated that allowing mass-participation outdoor events carries an "exceptionally ...
Latest News
Jan Spaticchia, founder and chair of énergie Fitness has died aged 51 following a short ...
Latest News
A new pioneering approach looks to help cancer patients prepare for and respond to treatment ...
Latest News
Peloton is recalling all of its Tread and Tread+ machines in the US, after striking ...
Latest News
Health club operator Bannatyne is repositioning itself as a wellness provider, as it looks to ...
Latest News
Health clubs and leisure centres in Northern Ireland reopened their doors on Friday 30 April, ...
Latest News
It's time to refocus on the changing needs of older adults, according to a new ...
Latest News
In breaking news, HCM understands that David Lloyd Leisure's Glenn Earlam will move from his ...
Opinion
promotion
The UK’s first dedicated leisure development framework has completed its first four-year term with £144m committed investment in public leisure projects.
Opinion: UK’s first leisure framework celebrates £144m investment in public leisure
Featured supplier news
Featured supplier news: Integrated workout solutions will underpin gyms' recovery, says Les Mills’ Martin Franklin
The UK has spent most of the year in lockdown but finally, clubs are beginning to see their fitness communities open back up, with indoor group exercise not far behind.
Featured supplier news
Featured supplier news: iFit: your readymade omnichannel fitness solution
With gyms and leisure centres in England reopened, and the rest of the UK due to shortly follow suit, the time for being theoretical is over.
Company profiles
Company profile: Freemotion Fitness
Freemotion Fitness is the global pioneer in fitness equipment and technology, introducing the world to ...
Company profiles
Company profile: Parkwood Leisure
Parkwood Leisure is a family-owned leisure management company working with local authority partners across England ...
Catalogue Gallery
Click on a catalogue to view it online
Directory
Hydrotherapy / spa fragrances
Kemitron GmbH: Hydrotherapy / spa fragrances
Flooring
Total Vibration Solutions / TVS Sports Surfaces: Flooring
Spa software
SpaBooker: Spa software
Whole body cryotherapy
Art of Cryo: Whole body cryotherapy
Lockers/interior design
Crown Sports Lockers: Lockers/interior design
Management software
Premier Software Solutions: Management software
Uniforms
Service Sport: Uniforms
Fitness equipment
Precor: Fitness equipment
Skincare
Comfort Zone - Davines S.p.A: Skincare
Wearable technology solutions
MyZone: Wearable technology solutions
Property & Tenders
Pendine Sands, Carmarthenshire
Carmarthenshire County Council
Property & Tenders
Diary dates
07-09 Jun 2021
Virtual summit,
Diary dates
12 Jun 2021
Worldwide, Various,
Diary dates
13-14 Jun 2021
Online,
Diary dates
01-04 Jul 2021
Expo Centre & Riviera di Rimini, Italy
Diary dates
18-19 Sep 2021
Locations worldwide,
Diary dates
21-24 Sep 2021
Messe Stuttgart, Germany
Diary dates
28-29 Sep 2021
ExCeL London, London, United Kingdom
Diary dates
04-07 Nov 2021
Exhibition Centre , Cologne, Germany
Diary dates
01-07 Dec 2022
tbc, Dunedin, New Zealand
Diary dates

features

Stats: Future gazing

Deloitte has produced a report in partnership with EuropeActive, analysing the impact of COVID-19 on the European health and fitness market, as Karsten Hollasch reports

Published in Health Club Management 2020 issue 9
Operators with rolling one year contracts fared the best / Shutterstock / Jacob Lund
Operators with rolling one year contracts fared the best / Shutterstock / Jacob Lund
Confidence in the future of the fitness market is reflected in the number of M&A and financing activities taking place

When the coronavirus hit the European health and fitness market in March and governments enforced the closure of gyms across Europe, there was no manual on how to handle the situation.

As it turned out, initial club closures lasted anywhere between eight and 18 weeks, depending on how severe the impact of the virus was in the country in question. Some regions suffered a second lockdown and some look likely to experience further disruption.

Although governments were quick to provide financial help, the financial damage for operators and other actors in the fitness industry is still massive. In fact, it’s still unclear how high the losses really are.

For this reason, Deloitte and EuropeActive launched a study to examine the business impact of the crisis on the sector, in both the short- and the longer-term.

The fieldwork took place in August and a total of 17 European key operators were interviewed, covering around 10 per cent of all members in the European health and fitness market.

Key findings
As of 31 March 2020, the surveyed operators experienced an average membership shortfall of around 3.5 per cent compared to their original budgets. By comparison, by 30 June 2020, these shortfalls reached their highest point, at 15.8 per cent, primarily through a combination of membership cancellations and the absence of new membership inflow during closures.

The average shortfalls compared to budget in respect of the number of clubs amounted to 2.5 per cent by 30 June 2020, as clubs reopened across Europe.

In the medium- and long-term, both average membership shortfalls and average club shortfalls are expected to decrease. As of December 2020 and December 2021, European operators said they expect average shortfalls in memberships to be 13.9 per cent and 9.9 per cent respectively. Looking at clubs, the average shortfalls compared to budget are expected to be 1.8 per cent by December 2020 and 0.6 per cent by December 2021.

Overall, the shortfall could be higher in the European fitness market, especially for single club operators, who could face greater financial difficulties than chain operators.

The pandemic-related closures in Q2 also impacted finances, primarily due to the absence of membership fees. European fitness operators experienced an average income shortfall of about 65 per cent compared to budget. Discrepancies in income shortfalls between operators in the study can be explained by different approaches to the handling of membership fees during the period of club closures.

While some operators continued to collect membership fees unless customer objections were received, there were also companies that stopped collecting membership fees altogether.

Operators were able to achieve cost savings of 43 per cent compared to budget in Q2, mainly due to paying less rent and fewer people and other reductions in operating costs.

Additional savings were realised when personnel costs were subsidised by local governments.

Income shortfalls vary considerably between regions. Operators with a UK focus expect the highest financial shortfalls when compared to the initial budget and the income shortfalls of UK-focused operators were especially high in Q2 2020 (-94 per cent).

This is in part attributable to UK operators’ heavy reliance on monthly cancellable contracts, in contrast to Germany and most of the other European markets, which mainly offer longer-term contracts.

Published H1 reports of listed European key operators also show the significant impact of COVID-19 on financial results. Due to an approximately 18-week lockdown in the UK, total revenues of UK operator The Gym Group decreased by around 50 per cent in H1 2020, compared to H1 2019. Similar results have been published by PureGym for its UK business (-49 per cent in H1 2020, compared to H1 2019). In comparison, Dutch operator Basic-Fit, which operates in various European countries, recorded an overall decrease in revenues of 24 per cent compared to H1 2019.

Measures taken
To counter the crisis, operators have undertaken a wide range of monetary and non-monetary measures. Among the monetary measures, short-time work, government grants and loan application were the most popular.

Other popular non-monetary measures introduced by operators include frequent scenario analyses – introduced by all operators surveyed – the creation of emergency plans and the introduction of early warning indicators.

The use of digital fitness offerings increased during the lockdown.

Survey results suggest that consumers’ interest in digital offerings is not a one-off, but rather that COVID-19 is serving as an accelerator for increasing demand for digital sports offerings (apps, videos, etc.).

By providing relevant content through digital channels and engaging with customers via their websites and apps, operators have been able to keep in touch with members during the crisis.

Basic-Fit, for example, actively increased member engagement through its already existing social media channels and mobile app, by offering additional services and contents.

The company-own mobile app was also temporarily made available to the general public.

According to Virtuagym’s COVID-19 impact study, the number of fitness app users more than trebled to reach its first peak in March, when COVID-19 started in Europe. However, the highest peak was reached in July, when clubs started reopening. This indicates that in-person club visits and use of digital offerings can coexist (and accelerate each other) rather than cannibalising each other.

Future outlook
As an overall result, major European club operators consider their existence only partially threatened, assuming no further forced club closures: None of the operators stated that their existence was or will be either severely or highly threatened in the future. However, single club operators, which represent the majority of fitness clubs in the European market, appear to be more threatened in their existence than larger operators, due to limited resources and refinancing possibilities.

The fact that fitness club operators are looking confidently into the future can be proven not only by the lower expected shortfalls, but also by further studies: more than 60 per cent of Spanish operators surveyed in the FNEID/Valgo COVID-19 impact report believe revenues will return to previously expected levels by the third quarter of 2021.

This could be supported by the fact that the behaviour of some consumers in the fitness market has barely changed. Eight-eight per cent of consumers in the ukactive/4Global COVID-19 impact report stated that after the reopening of public sector clubs in the UK they would visit the gym as often or even more often than before the pandemic.

Confidence in the future of the fitness market is reflected in the number of M&A and financing activities that have taken place in the last couple of months. For example, RSG Group expanded its investments by acquiring the US-operator Gold Gym for US$100 million, as well as 35 per cent of the shares of Gym80. Furthermore, other players such as PureGym, BASIC-FIT and The Gym Group were able to raise large sums of capital during this period.

Herman Rutgers, co-editor of the report noted: “It’s not possible at this stage to predict what the full impact of this crisis will ultimately be, due to the increasing number of cases and the uncertain future of policy decisions. However, the study shows the impact on membership and financial losses, and also that – assuming there are no further club closures – the industry can recover quickly and is still confident of achieving the long-term goals of 80 million members by the midpoint of the decade and 100 million by 2030.”

Get the report: www.HCMmag.com/Deloitte

Sign up here to get HCM's weekly ezine and every issue of HCM magazine free on digital.
Data indicates that in-person club visits and use of digital offerings can not only co-exist, but can also accelerate each other / Shutterstock / Jacob Lund
Data indicates that in-person club visits and use of digital offerings can not only co-exist, but can also accelerate each other / Shutterstock / Jacob Lund
https://www.leisureopportunities.co.uk/images/2020/731995_90245.jpg
A report by Deloitte for EuropeActive analyses the impact of COVID-19 on the European health and fitness market
Deloitte, EuropeActive, covid-19, Karsten Hollasch,fitness,europe, fitness industry
Latest News
A report commissioned by Parkrun has estimated that allowing mass-participation outdoor events carries an "exceptionally ...
Latest News
Jan Spaticchia, founder and chair of énergie Fitness has died aged 51 following a short ...
Latest News
A new pioneering approach looks to help cancer patients prepare for and respond to treatment ...
Latest News
Peloton is recalling all of its Tread and Tread+ machines in the US, after striking ...
Latest News
Health club operator Bannatyne is repositioning itself as a wellness provider, as it looks to ...
Latest News
Health clubs and leisure centres in Northern Ireland reopened their doors on Friday 30 April, ...
Latest News
It's time to refocus on the changing needs of older adults, according to a new ...
Latest News
In breaking news, HCM understands that David Lloyd Leisure's Glenn Earlam will move from his ...
Latest News
Sport England has reported a drop of 710,000 in the number of people classed as ...
Latest News
Independent gyms in the UK have fared better during the pandemic than larger corporate operators ...
Latest News
Actor Mark Wahlberg has officially joined Power Plate as an investor in parent company, Performance ...
Opinion
promotion
The UK’s first dedicated leisure development framework has completed its first four-year term with £144m committed investment in public leisure projects.
Opinion: UK’s first leisure framework celebrates £144m investment in public leisure
Featured supplier news
Featured supplier news: Integrated workout solutions will underpin gyms' recovery, says Les Mills’ Martin Franklin
The UK has spent most of the year in lockdown but finally, clubs are beginning to see their fitness communities open back up, with indoor group exercise not far behind.
Featured supplier news
Featured supplier news: iFit: your readymade omnichannel fitness solution
With gyms and leisure centres in England reopened, and the rest of the UK due to shortly follow suit, the time for being theoretical is over.
Company profiles
Company profile: Freemotion Fitness
Freemotion Fitness is the global pioneer in fitness equipment and technology, introducing the world to ...
Company profiles
Company profile: Parkwood Leisure
Parkwood Leisure is a family-owned leisure management company working with local authority partners across England ...
Catalogue Gallery
Click on a catalogue to view it online
Directory
Hydrotherapy / spa fragrances
Kemitron GmbH: Hydrotherapy / spa fragrances
Flooring
Total Vibration Solutions / TVS Sports Surfaces: Flooring
Spa software
SpaBooker: Spa software
Whole body cryotherapy
Art of Cryo: Whole body cryotherapy
Lockers/interior design
Crown Sports Lockers: Lockers/interior design
Management software
Premier Software Solutions: Management software
Uniforms
Service Sport: Uniforms
Fitness equipment
Precor: Fitness equipment
Skincare
Comfort Zone - Davines S.p.A: Skincare
Wearable technology solutions
MyZone: Wearable technology solutions
Property & Tenders
Pendine Sands, Carmarthenshire
Carmarthenshire County Council
Property & Tenders
Diary dates
07-09 Jun 2021
Virtual summit,
Diary dates
12 Jun 2021
Worldwide, Various,
Diary dates
13-14 Jun 2021
Online,
Diary dates
01-04 Jul 2021
Expo Centre & Riviera di Rimini, Italy
Diary dates
18-19 Sep 2021
Locations worldwide,
Diary dates
21-24 Sep 2021
Messe Stuttgart, Germany
Diary dates
28-29 Sep 2021
ExCeL London, London, United Kingdom
Diary dates
04-07 Nov 2021
Exhibition Centre , Cologne, Germany
Diary dates
01-07 Dec 2022
tbc, Dunedin, New Zealand
Diary dates
Search news, features & products:
Find a supplier:
Active IQ
Active IQ