FITNESS CLUBS STRONGER THAN EVER IN B.C.
But are luxurious perks and high fees a good fit in a fiercely competitive market?
The newest arrival to Vancouver’s fitness industry is big, bold and pretty, and its $170 monthly fees are the most expensive ever seen for a large club in Vancouver.
Can it survive in an increasingly crowded market?
Its competitors are taking notice of Equinox, an exclusive U.S.-based gym that offers chilled eucalyptus-scented towels in its five-star-hotel setting. It signed up an impressive 2,000 members before it opened its doors last month on West Georgia between the financial district and Coal Harbour.
“We’ve been getting a lot of calls on this specific subject, asking if we’re worried,” said Colleen Kirk, spokeswoman for Steve Nash Sports Club chain, which merged with Fitness World in 2009 and is preparing to open its 24th club, making it the biggest chain in Metro Vancouver.
“Everyone says we should be panicked, but actually we’re not,” she said. “The fitness market seems robust and any offer to Canadians to get fit is a good thing. Everyone says, ‘Oh, it’s the new thing, we want to try it.’ We’re very supportive of other chains. Equinox has a great reputation.
“People in L.A. can pay $170 a month, but will Canadians pay that?” she said. “We’re going to take a wait-and-see approach.”
The fitness industry is big in B.C. and growing yearly. In eight years revenues for “fitness and recreational sports centres” in B.C. jumped 160 per cent, to $404 million in 2014, from $250 million a year in 2007, according to Statistics Canada.
The number of clubs in Metro reached 300 this year, with another 19 in Abbotsford and 48 in Victoria, according to StatsCan.
The biggest names are Steve Nash Fitness World, with 23 and another on the way, and Anytime Fitness, Club 16 Trevor Linden, GoodLife, Curves and Orangetheory, with between four and 16 gyms each, and there are 25 city community centres in Vancouver alone that offer gym services. Each of the area’s other municipalities have between five and 10 community centres.
Add to the mix the yoga-only and Pilates studios, as well as cross-fit clubs, spinning studios, boxing and martial-arts and mixed-martial-arts gyms, workplace facilities, condo gyms and several other tennis clubs, golf clubs and schools that also offer gyms and weight rooms, as well as independent personal trainers, and the space gets more crowded than a lunchtime Tabata class.
Fitness is big business that could get bigger. In the U.S., one-in-five Americans belong to a fitness facility.
One in four Canadians belong to fitness clubs
The International Health, Racquet and Sportsclub Association (IHRSA), which represents all-purpose and non-specialty clubs, said it doesn’t track data on B.C., but “the Canadian industry serves about six million members and 6,000 facilities,” according to its latest Canadian Health Club Report from 2013, spokeswoman Shannon Vogler said in an email. That’s only 25 per cent of all Canadians between the ages of 20 and 80. One gym owner estimates 30 per cent of people in the Metro area belong to a fitness club, meaning that 70 per cent don’t.
The industry may like those odds, but more clubs mean more competition and maybe more pressure on member attrition rates. The customer “churn” rate at U.S. clubs in 2013 was 22 per cent, according to the IHRSA, meaning for every new member clubs sign, they lose five.
To compete, some offer more services and programs, others do it on price, with some advertising rates as low as $4 and $5 a week.
Equinox is the first large gym — its two-storey facility takes up 33,000 square feet on West Georgia — that charges substantially more.
It hopes it can draw members with its posh facility and perks such as fridges with chilled towels and complimentary Kiehl’s products in the spa-like locker-rooms. The strategy may be working. Equinox has more than 80 gyms in the U.S. and two in Toronto, along with Vancouver’s.
“We’re very pleased with the way the club has resonated with the city,” said Vancouver’s general manager, Liz Jacobs. “Vancouver likes fitness and Vancouver likes luxury, so there’s no reason that a luxurious fitness club wouldn’t be a success here.”
She said membership rates are $171 a month (an initiation fee of $300 was waived for the first month), setting the club apart from Club 16 Trevor Linden, which offers monthly fees at $4 a week, and from typical fees of between $20 and $60 a month at most chains.
Steve Nash has a couple of premium clubs with base fees as high as $70-$80 a month, said Kirk.
One recent mid-morning less than a month after opening, Equinox was busy as members worked out on weights and in classes, which include spinning, boxing, Pilates, barre, TRX and yoga.
“It’s fantastic, I was one of the first to sign up as soon as I heard they were coming,” said Amanda Cole, an executive assistant, after her workout.
She was paying combined monthly fees of $450 at two different fitness clubs for different specialized training.
She said she can get the same workouts at Equinox for one fee.
“They offer everything in one gym, so I’m actually saving money,” she said.
The fitness industry expects U.S. chains like Equinox to expand in Canada and there is room for different price points, said David Hardy, CEO of the Alberta-based fitness chains WorldHealth and Orangetheory, and president of the Fitness Industry Council of Canada.
“Some people like to shop at Walmart, some like to shop at Sears and others at Holt Renfrew,” he said.
He said $170 isn’t a lot “for a month’s worth of activity” when you can easily drop $200 on a meal for two in one night. “And working out is the new going out,” he said.
The success of a gym is dependent on its proximity to its members because it has to be convenient for a daily routine and most people won’t drive across town to work out, he said.
Equinox strategically locates its clubs near cities’ business districts, as it has in Vancouver. Parking could be an issue, he said, but it can draw on the dense population of downtown, the West End, Coal Harbour and Yaletown for members.
A study last year called Forecasting the Future of the Health Club Industry by IHRSA found that most U.S. fitness-club operators, 73 per cent, expect the health-club market to grow.
An overwhelming majority of owners (more than 75 per cent) predicted that studio/boutique gyms and low-cost gyms will grow.
Almost half of owners saw highend clubs also growing, but few (11 per cent) saw room for expansion in the mid-priced area.
Even though the facilities at Equinox are fancier, that doesn’t mean locals are getting anything new in terms of fitness instruction, said Nathan Mellalieu, owner of Studeo 55, whose website boasts of training visiting Hollywood celebrities in an exclusive club that has 500 members, not thousands like the other large chains do.
Equinox “is taking an existing model and just executing it better by building nicer gyms, better facilities and sometimes providing better staff. But it’s the same cardio equipment and the same programs,” said Mellalieu, who was in Los Angeles last month to open a gym in wellheeled Beverly Hills. “They’re just an evolution of the YMCA. It’s one step up from Fitness World.”
He said Equinox is a “passive model” compared with his club, which offers more personalized service — and charges for it at a rate of “about twice as much (per month as Equinox) on average.”
“I’m not surprised it got to 2,000 members,” he said. “People think going to a club with shinier marble floors will get you in better shape.”
He said there is room for more players in the Vancouver fitness market, considering “70 per cent of people don’t belong to gyms,” but high-end perks with higher fees might not be the answer to expanding the industry.
When the Steve Nash Sports Club opened its first facility in 2007, monthly fees at the $5-million, 38,500-sq.-ft gym on Granville Mall at Dunsmuir ranged from $115 to $135 (with up to $350 for an initiation fee). Today, fees at the chain (which merged with Fitness World in 2009) are about half that.
And YYoga first charged about $150 a month, but has had to scale back fees, said Mellalieu.
Kirk said the prices at Steve Nash Fitness World were dropped because “the whole key is we listen to the customer. You’ve got to give them what they want and you must respond in real time.”
“It’s a tough market (at the high end). Others have tried,” said Mellalieu. “But nobody executes better than Equinox. The design is perfect, the layout is perfect and the music is perfect. They do a good job and we’ve learned a lot from them.”
GoodLife, where fees are about $30 to $60 a month, tried branding some of its clubs as higher-end with premium fees, calling them Platinum clubs, but that was discontinued, according to media reports but denied by the club’s owner.
“We believe in offering the same services to everybody,” said David Patchell-Evans, CEO of the Ontario-based GoodLife chain. He said he’s planning to open two to four more gyms a year in the Vancouver area. “We’re not focused on being a status club. Equinox runs a nice club, but it doesn’t bother me.
“It’s a whole different price point. If you want to supply everyone with eucalyptus towels, that’s going to cost you,” he said. “But they’re pretty smart. Who knows? Maybe they make more money than I do.”
Kalev Jaaguste, owner of Kalev Fitness Solution, an exclusive fitness club with limited membership that charges monthly fees similar to Equinox for gym access, said he sees the appeal of the “big, pretty gym.”
“Equinox is a fancy, shmancy new gym and maybe Vancouver can afford it, maybe it can’t. We have higher mortgages and cost of living here.”
Planet Fitness, a burgeoning $10-a-month chain with 1,000 clubs in the U.S. and two in Toronto, is eyeing a Vancouver expansion, but a spokesman said a date hasn’t been set. And that could have more of an effect on the market than the arrival of Equinox.
Half the club operators in the IHRSA study were concerned that a “low-cost bubble” would burst and negatively affect the industry.
The digital impact on the physical world of fitness is yet to be determined, but two-thirds of the operators in the IHRSA study said they thought mobile apps, wearable devices, virtual classes and online platforms would affect the industry in a positive rather than a negative way.