IHRSA Annual Report Finds Fitness Industry Flexing To Rebound

The International Health, Racquet & Sportsclub Association (IHRSA) estimates that the U.S. fitness industry will lose $ 20.4 trillion in revenue by 2020, a year after the record high of $ 35 trillion, according to the organization’s recently released 2021 IHRSA Global Report. However, the report explained the reasons for being optimistic about the industry’s outlook, as in part health became a higher priority in the pandemic.

“Looking to the future, all indications are that there is a strong return,” wrote Jay Ablond, EVP, global products, IHRSA, and Kristen Walsh, associate editor of IHRSA, in the report’s preface.

On the plus side, the report said the pandemic clubs, gyms and fitness studios had implemented creative solutions to improve safety, air quality and cleanliness. “He was the first in the back, central and continuous. For health club members and staff, cleanliness is safe. And security is king. ‘

Another “silver cover” associated with the pandemic mentioned in the report was the day-to-day development of the fitness industry’s digital offerings, including online streaming content and training programs, to keep clubs in touch with members at different stages of the blockade. “The speed at which digital classes were delivered was amazing, as well as being pretty tidy for hundreds of thousands of members.”

In the end, there was another positive sign mentioned: As part of the hustle and bustle of home workouts marked by Peloton’s popularity, surveys increasingly showed the extent to which physical activity and social interaction in gyms are for its members. Jim Schmaltz, editor-in-chief of Club Business International (CBI), said in the study: “The longer gyms stay closed, the more people realize how many clubs meet the insurmountable need for workouts at home.”

However, the report details the difficulties faced by the industry in closing the clubs to those ordered by the government. The report recounts the impact of the pandemic on the industry, closures and regional reductions, and provides guidance on the recovery and performance of the businesses of physical purchasing companies.

The association said fitness club operators struggled with closures and restrictions in part because incidents of COVID-19 appearances associated with gyms were “very rare” due to the avalanches of negative publicity.

In North America, industry sales fell 58 percent to $ 15 billion after record numbers were released in 2019. In April and May alone, the industry lost $ 5.5 billion in revenue.

U.S. health clubs, gyms and studios were closed for at least a month in 2020. In many states, such as California, Oregon and Washington, the closures lasted for most of 12 months. The restrictions mandated in most states limited operations to a maximum of 50 percent of external or virtual-only services.

With a large business model in fixed costs, the wide closure and consequent reductions were unbearable for many club operators. Data from large payment processing companies in gyms and studios that serve the industry show that 19% of boutique fitness studios were permanently closed on 31 December 2020. Approximately 14% of gyms and regular health clubs dropped out of operations. Overall, 17% of fitness facilities were permanently closed in the US

There have been eight major failures in the U.S. fitness industry
Major companies that introduced Chapter 11 restructuring included Gold’s Gym, 24 Hour Fitness, Town Sports International (TSI), YouFit and In-Shape Health Clubs. Among those clubs, 24 Hour Fitness closed 144 locations, Gold’s Gyms closed 31 and TSI closed more than 100 gates. The fitness studio’s Flywheel, YogaWorks and Cyc Fitness brands failed. Flywheel and YogaWorks closed all 42 and 56 studios, respectively.

According to the study, although restrictions in North America have been released in several regions, capacity limits (during the press period) are maintained in most states and provinces.

Since most of the economic relief packages before the U.S. Congress have helped or not helped the fitness industry, IHRSA is hopeful that the proposed GYMS Act will be passed in February. If approved, it would create a $ 30 billion fund to provide assistance to companies affected by the health and fitness industry. At press time, the GYMS Act has 131 congressional sponsors between the two political parties.

The report noted that in many other areas it has been worse for some countries to permanently close a double or triple rate like the US

In Canada, stops in 2020 led to closures of up to six months in many health clubs. Canadian businesses continued with multi-jurisdictional capacity reductions in the spring of 2021.

The major markets for Latin American fitness clubs had long closures, some until 2021. Clubs in Mexico and Argentina were closed for eight months and fitness centers in Chile were closed in April 2021. Colombian and Peruvian gyms have maximum capacity reductions of 30% and 20%, respectively.

In Europe, several markets closed at least two fitness waves. During the press period, the last closures were closed in Germany, the Netherlands, France, Italy, Denmark and some regions of Spain.

In Asia-Pacific, the closure of fitness clubs changed in 2020. In China, the nationwide shutdown lasted about two months, including China’s New Year, when most businesses close every year. Indian clubs have faced tremendous challenges in national closures, and some regions have been closed for more than seven months.

The theme of this year’s IHRSA industry event, October 13-15 in Dallas, TX, and the 40th anniversary show, was titled “Celebrating the Renaissance of the Industry”.

Elizabeth Clark was recently hired as the next president and CEO of the Association, replacing Brent Dard, who has run the interim organization since last August. Clark, who previously led government relations and defense at the National Confectioners Association (NCA), will lead the next phase of IHRSA’s initiatives aimed at “reopening, rebuilding and re-imagining” the fitness industry.

Seven reasons for optimism
The study cited seven reasons for optimism for the fitness industry to thrive.

  1. Health has become a top priority. Driven by pandemics and persistent public messages about previous or underlying health conditions and immunity, being physically active and living a healthy lifestyle has won our attention.
  2. Pent-up demand. Blackouts, quarantines, working from home, and isolation increased the desire of consumers to return to the gym to work and to the sense of community it offers.
  3. Changes in market dynamics offer opportunities. The permanent closure of 17 percent of U.S. clubs, and 40 percent to 50 percent in some countries, has left a large segment of displaced members looking for alternatives. Many surviving clubs have seen a significant rise in membership, surpassing the previous number of pandemics.
  4. Online and home workouts complement the workout in the gym. Research shows that consumers see virtual classes and a wide range of alternatives to physical exercise at home as an adjunct to being a member of the gym, not replacing personal club workouts.
  5. Most members will return. Since opening, operators in China, Japan, New Zealand and the Basque Country have reported a 95 per cent rise in pre-pandemic care levels. In the US, major clubs in states that have allowed them to be open with reasonable restrictions have reported a 75-80% return of membership in the first months of 2021.
  6. The industry is maturing. The pandemic forced the rationalization of staff and programs, accelerated the adoption of digital offerings, accelerated the redevelopment of spaces, led to external fitness solutions, and enriched efforts to retain members, among other advances.
  7. The economic outlook is favorable. Outside of the industry, investment analysts, private equity groups and market analysts predict a positive future. Within the industry, national and regional operators are already aggressively looking for expansion opportunities.

The full report can be found here.

Photos by YogaWorks, Golds Gym