Thoughts on the Current State of the Industry

By Pete Moore

Thanks for giving me the opportunity to share some thoughts with you.  Clearly, it is an uncertain time in the financial markets as the stock market swings and debt downgrade affect overall consumer sentiment.  I do believe these are concerns but no reason to panic in running your health club operation.  Hold firm on your EFT draft pricing and look at ancillary revenue streams by adding fee-based small group training or GroupX programs – this is a trend that will proliferate.  As the low cost operators have disrupted our pricing model over the past 10 years, those locations are NOT as sustainable as your fitness only or multi-sport locations.  The trend will be to lower membership pricing but entice members with Elite group training classes, personal training, boot camps, etc.  Hop on this trend NOW.

Regarding M&A activity, there continues to be a lot of rumors circulating about potential transactions.  There are a number of large players seeking to take this opportunity to pursue acquisitions more aggressively.  This is primarily due to the cost of opening and ramping new facilities.  In this market environment, a large health club operator HAS a higher probability of getting financing to acquire a cash flow generating health club versus a club chain getting a local bank to lend $3-5 million to build a new location.

Food for thought….enjoy your summer.  

Peter F. Moore
Managing Partner
Integrity Square LLC
www.integritySQ.com
Advising the rapidly-growing active lifestyle, health & wellness sector


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About GGFA

The Gold's Gym Franchisee Association is the independent voice of the Gold's Gym franchisees.
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