Where Do We Go From Here?
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The first U.S. cases of COVID-19 were diagnosed just over a year ago. The anniversary of the devastating lockdown is coming soon. And, yet, reported pandemic statistics are worse than ever. To that end, depending on the State, safety regulations and/or additional lockdowns still exist, further exacerbating what is already a nearly untenable situation. So, that begs the question: Where Do We Go From Here?
At the micro-level, you already know many of the steps you and other facilities across the country took to survive. They have become the new reality as the industry continues to operate in the harshest of conditions. In time, many of these things will actually have a positive effect outside of the pandemic. Some could have a detrimental effect, and those will be a challenge for a future time. But, now, as best you can, many of you are setting yourself up to thrive once the pandemic is declared over, because we all believe there will be pent-up demand like we have never seen before. But, did it really have to be this way?
Zooming out to a wider view, at the macro-level, we failed, plain and simple. Our industry was lumped in with bars/restaurants/other indoor uses and was shut down across the board. After the initial shutdown, as the second wave picked up steam, in strict states, shutdowns loomed again. For some, if they were to shutdown again, they would never re-open, so they defied orders and stayed open, bringing negative press coverage, fines and legal exposure along with it. For those who could sustain a second shutdown, it was back to square one or worse.
In short, much of what this industry has worked to achieve over many years has been lost, and it really will take years to recover. But, here and now, we have a choice. We can rebuild as we were, and again set ourselves up for failure at some point in the future. Or, we can learn from what occurred, most importantly being how the industry was really viewed, and take the steps we must to become "essential," preventing the same failure down the road.
So, why did this happen? Many views exist, but I will provide my own: Oversimplifying a bit, it's an education and public relations issue. The light in which we felt we should be viewed is not the light in which we were viewed. We know the power of our product when yielded properly and effectively. That is our internal perception, our own look in the mirror. Externally, though, we were way off the mark.
The fix for this will not be to yell louder. It will be much more complicated than that and require a unified effort with a new set of standards across the board. At the very least, the industry as a whole must reconstitute itself to become more results driven (for the end user, not the facility). From there, at an industry level, those results must be consistently quantified and verified to prove outcomes. This must include validation from the medical community, as well as validation that our spaces are safe. Only then, through an aggregation of millions of use-cases can we make our own case to Government that we are truly part of the solution and not the problem, thus setting us up to be "essential" in the future.
The idea of being "essential" isn't just to prevent being shutdown during a future pandemic. Many other positive things will come if our industry is seen on the same level as the medical field and respected accordingly. But, as such, it will require a medical level of expertise and support. It is a tall order, but it is not something that should be feared. Instead, it should be embraced because it is how it always should have been. Along the way, we were successful enough to be happy as we were and not care about what we could have been. But, hindsight is 20/20, and it is easy to see that now.
As I said, though, many views exist, and that is the purpose of this article series. Within this first iteration, you will hear from several club operators, as well as several prominent industry consultants who are also Club Insider Contributing Authors. They were asked one simple yet infinitely difficult question, the title of this article series: Where Do We Go From Here? Across both categories of responses, you will be given views from the trenches near your own, so with that, I invite you to read on.
Club Operator Views
Comments From Larry Conner, CPA,
President/GM of Stone Creek Club & Spa
I see our industry as needing to become a bigger part of the overall health story while continuing to improve our focus on the member experience.
During this time, we have learned the hard way that you cannot be represented fairly if no one understands what you do, how you do it or what effect it has on the overall community. We have to prove that we operate according to industry standards that are put in place to protect the consumers while also improving their health and wellness, which is beneficial to everyone, inside and outside of our clubs.
We also have to be recognized as trustworthy 'professionals' in the health and wellness industry and working closer with the medical industry while also being a larger voice in our communities and in governmental decisions. We put ourselves into this predicament by operating silently, and we must now become vocal and stay in the fight past this current situation, not losing interest and/or steam once this subsides.
While doing this, we have to continue to reinvent by reinvesting in our clubs as we go along. I know, right now, we don't have much if anything to reinvest, but as it starts to come back, start to change or freshen it up. If we can learn anything from other industries, it is that you have to deliver the experience people want, not only for that moment in time, but also continuously. That means constant, well-planned changes.
How aggravating is it when you would go to one of the online movie/television providers and they have the same old movies and shows running when you sign in? They learned that, in their industry, not only do they have to offer easy access in and out of their service, but in order to keep you as a subscriber, they have to change it up. New subscribers do not have a problem with the current offerings, but subscribers who have been there for a while get tired of looking at the same old stuff.
It's the same with our clubs; we not only have to change more continuously, but we also have to keep looking from the member side of the transaction to keep our 'services' hassle free. We must not forget how our clubs look to longtime members and employees so that we can continue to excite and motivate them as well as the new members. Otherwise, they will all go somewhere else. We have to focus on an experience that is hard for others to duplicate while also managing all areas of our operations as professionals: following the rules, paying people appropriately and treating everyone with respect. Otherwise, we will continue to be looked at as 'Gym' operators instead of 'Health and Wellness Professionals' who should be 'Essential' to our communities. We are how people perceive us.
Key Statistical Measures
2020 vs. 2019 (in %)
- Total Revenue: -20% (w/o PPP/SBA funds)
- Total Paying Members: -13%
- New Member Sales (#s): -27%
- Member Cancellations (#s): +36%
- Total Check-Ins (#s): -25%
- Total Non-Dues Revenue ($): -20%
- EBITDA ($): Loss for 2020
- Total # On Freeze: +569%
Interim GM of Cincinnati Sports Club
The Cincinnati Sports Club (CSC) has had a pandemic preparedness plan in place since 2005, and the Club began implementing the plan in January - February in 2020, before COVID-19 was declared a pandemic. When a statewide lockdown was declared, and the club was closed in March 2020, our Net Promoter Score went up 50 points, primarily as a result of our early implementation of the plan. There were a number of lessons learned from 2020 that can be used in the future:
1. We've learned that outside is good:
- The CSC has had a year-round Outdoor Fitness Pavilion since 2012, seven outdoor racquet courts and two outdoor pools;
- Expanded the Outdoor Group Exercise offerings to include Spinning and HIIT.
2. We made adjustments to the Master Plan and accelerated the addition of an outdoor 40-yard synthetic turf field.
3. Members liked the use of reservation systems for lap swimming, outdoor pool time and group exercise capacities.
4. We created more contactless transactions for members including:
- Contact free check-in;
- No longer accepting cash.
5. We continue to close the club at 10PM during the week instead of midnight until the pandemic ends or as long as club utilization increases.
The CSC has a longstanding history of being considered a second home to our membership. Now, more than ever, this will be more prominent due to our mature market, proximity to downtown Cincinnati and an anticipated demise of the office market and the rise of working from home. In the first quarter of 2021, we plan to lean heavily on our medical fitness competency, and in the second quarter, transition to our social competency as we believe there will be high pent-up demand for social programs once the virus is under control.
Key Statistical Measures
2020 vs. 2019 (in %)
- Total Revenue: -6%
- Total Paying Members*: -9%
- New Member Sales (#s): -22%
- Member Cancellations (#s): 19%
- Total Check-Ins (#s): -39%
- Total Non-Dues Revenue ($): -12%
- EBITDA ($): -20%
- Total # On Freeze: 22%
*Members on freeze still pay a lower monthly fee.
Note: All financial have been adjusted to not include 2 1/2 months we were forced to close due to Ohio lockdowns.
Anonymous, Multiple Location Club Chain
First, we need to determine what 'rock bottom' is with regards to cancels and the dues line. Members are still cancelling their memberships or going on freeze. Once the dues line stabilizes, we can begin to build it back up by creating 'win back' programs for members who have cancelled or frozen their memberships. This could be a 2- to 3-year process at best. In the meantime, we will take it one day at a time, slowly growing our group exercise class schedule and offering new services and events as our dues line grows. We are investing in online group exercise class streaming and virtual personal training programs as well. We have introduced small social events like wine tastings, cooking classes and hikes to bring back the social element of our clubs. Frequent communication with employees and members has been and will continue to be essential in keeping everyone engaged.
Key Statistical Measures
2020 vs. 2019 (in %)
- Total Revenue: -52%
- Total Paying Members: -41%
- New Member Sales (#s): -38%
- Member Cancellations (#s): +105%
- Total Check-Ins (#s): -59%
- Total Non-Dues Revenue ($): -56%
- EBITDA ($): -105%
- Total # On Freeze: +190%
Comments From Scott Gillespie,
President of Saco Sport & Fitness
Scott and Beth Gillespie
First, I believe we'll need to maintain our current flexibility through most of 2021. There are still many unknowns, and timelines are uncertain. The third quarter seems to be a realistic target for the first senses of new normalcy, and beyond that looks better and better. Looking to a time when we see COVID-19 as behind us, I see the chance to go where many new opportunities exist.
An emerging consumer paradigm seeing 'Health' as 'Wealth' opens up many doors. After getting over the 'Quarantine, Isolation and Sanitation = Health' paradigm, move to the acknowledgement that exercising is a critical component to being healthy and that not all exercisers are meant to be fitness models. The face of fitness can dramatically expand to include many more types of people!
In some ways, we can go back to our roots but with a lot more experience, knowledge and tools. For those who were around when we had to teach every new member how to exercise in a club, remember the look of accomplishment when they 'got it.' I believe as we have served more and more people, and people came in experienced, we started to assume they all were. We've lost some of our obligation to help all those who aren't.Additional thoughts include:
Re or Engaging - Those who can find ways to help people overcome the fear and/or inertia of not exercising for a long time will be the new winners!
Community - With workplaces physically diminishing and a pent-up need for socialization, we can become the second place for community and social interaction.
The Virtual Blend - Using it to complement vs. replace memberships.
- People like the space they've been enjoying.
- Strength Training - Running with the strong trend of higher demand for strength and functional training.
- Outdoor Fitness - 'Mikey likes it.' - Now that our members have experienced the feeling of working out outside, they will want more.
Nutrition - Accelerating results with proper nutrition helps people see the benefits of and stick with exercise.
Young Adult Demand - The first generation to be exercising more than their predecessors, a pandemic trend we can take advantage of.
Filling the Void - There will likely be increased demand due to club closures. Will we meet it with more of the same, or more likely, will new models emerge to challenge the status quo?
Finally, where do we go from here? Hopefully, to the pub after the next in-person convention to have a beer with all my industry friends!
CEO of VASA Fitness
At VASA, we will leverage what we've learned in 2020 to better connect with our employees and members, as we continue to strengthen our fitness community for better physical and mental health.
Of utmost importance as the pandemic ends and more of our members come back to the gym is continuing to be transparent and communicate often, specifically in regard to our impeccable cleanliness standards, ongoing sanitization efforts and new procedures for keeping members safe at all times.
We will continue to be innovative and will look at introducing relevant fitness solutions to help people remain happy, healthy and feel a sense of belonging within the VASA community.
Anonymous, Single Location Club
The last IHRSA convention was in 2019. While waiting for the other people in my group, I remember I was at the center by the front door, and I could pretty much see all the convention floor by moving my head. In my eyes, what I saw was just like a carnival, young women and men on stage bumping and grinding, loud music, etc. Being at a convention, this picture would not obviously affect our members, but it sends a message to the industry of what we are or what we should or need to look like. No matter what anyone says, we have failed. The percentage of the American population that comes to our clubs on a reasonably steady basis is still about 15%.
I'm not saying that a carnival look does not fit into a studio or space within our facilities; it does. However, we have an additional probably 55% to 65% of the population who don't want anything to do with our industry. We have turned them off:
- 1. We do not hire people with the proper education/degrees to SAFELY work with these people.
- 2. We do not create ways to measure our outcomes.
- 3. We do not create club-level and department-level certifications. I'm not talking about ACE or any company that certifies trainers. I'm talking about creating a certificate for a health club (or call it a medical wellness center). Such a certificate system would be one that gives us standing in the medical community because we are properly run.
Club Consultant Views
Comments From Casey Conrad,
President of Communication Consultants, WBS, Inc.
Never in the history of our industry have we had such a prolonged and horrific disruption to business. Yes, that is the blinding flash of the obvious, but it's important to setting the stage for where we go.
Radical situations require radical shifts in thinking. The businesses that have survived the lockdowns and drastic regulations did so for several reasons. First, they probably had a strong base of committed members who continued to support them despite the interruption in services. But, that only takes you so far for so long. Second, some operators were able to think outside the box and quickly move to online delivery of fitness services. Although this served as a great, short-term solution, it also spawned acceleration of other online, interactive fitness platforms that become direct competitors, having technology and equipment to sell (Do you think it is by chance that Peleton just bought Precor?).
It is my humble opinion --and something that I have been screaming from the mountain top for over three years now-- that, to thrive in the fitness industry, an operator must become wellness-focused. People from many walks of life want to be fit, but every person wants to be well, to feel better and live the best quality of life. Furthermore, people are willing to pay a lot more for wellness services than they do for commoditized fitness. Diabetes, joint issues, cardiovascular health, digestive issues, brain health, and yes, immune health are all huge issues that North America (and all westernized countries) face. Integrating wellness with fitness is where the real opportunities exist.
Pull out the book, Blue Ocean Strategy, and their newer book, Blue Ocean Shift, to put together a plan of action to find that 4th quadrant of opportunity that is not being fulfilled in today's hyper competitive marketplace. Instead of just trying to compete in your area, be an innovator and you will be more likely to insulate yourself from forces outside of your control.
Comments From Derek Barton,
Owner of Barton Productions
As a marketer, you have to know what your target audience is thinking at any given time. During this pandemic, gym members are wondering if their gym is safe enough for them to return. They will struggle with the choice of risking their health at your facility or continuing to exercise in the safety of their own homes.
You just can't talk about safety, you have to do something about it. You have to dial up the 'health' in health and fitness, as some gym owners have done by installing HEPA air filtration systems like airPHX, which sterilizes particles in the air since COVID is a deadly airborne virus. Many gyms have stations with disinfectant wipes and use electrostatic sprayers with hospital-grade disinfectants to sanitize surfaces, and some are looking into state-of-the-art autonomous UVD robots and selling immune-booster supplements. It won't be cheap to initiate some of these changes, but if gyms want to thrive in the future, they first have to become safe havens for their members' health.
With that in mind, it may be the right time to settle on one descriptor regarding your facility. The top three descriptors I've heard when owners describe their place are a 'gym,' a 'fitness center,' and a 'health club.' They all work, but the term 'health club' seems more fitting now. As always, marketing is key. Maybe 'health clubs' should now market a three-tiered membership: (1) in-person training only, (2) online training only, (3) combo of both.
The health club industry has always preached the importance of health and fitness. This pandemic has reminded us that, if you are healthy, fit and have a strong immune system, the odds are in your favor that you'll be better equipped to fight off illnesses and viruses like COVID-19. So, keep the pedal down!
Comments From Jim Thomas,
President of Fitness Management USA, Inc.
GOT FITNESS? Over 25 years ago, the milk industry raised public con-sciousness with these two simple words: GOT MILK?
This is the direction the fitness industry needs to take immediately. We can't just sit around and take it. We need to create a platform to raise the public awareness of the benefits of fitness.
I remember talking to a member of a gym, and upon discovering where they lived, I asked why she drove so far when there were so many gyms that were near her home... Her simple answer, 'This is where all my friends are.'
I recall a national fitness company (at the time) running TV ads that said, 'If you want to get HERE (all the fun activities they want to participate in), then you need to get HERE (the gym).'
The fitness industry needs to join together to raise the public awareness on how we can solve problems, provide solutions and bring more fun back to life. We want the public to feel an emotional connection to our industry.
Fitness: It Does A Body Good. Of course, I borrowed that from the Milk industry, but you get the idea. This is where we go from here. GOT FITNESS?
Comments Karen Woodard-Chavez,
President of Premium Performance Training
The pandemic has been the most significant disruptor we have experienced in a long time, if ever. As disruption always does, it has changed so much for so many. If you are reading this as a business operator, it may be difficult to see the positive in the pandemic because your business has likely been hit hard.
If you have not already done so, please pause with introspection to account for the positive changes that may have occurred in your business over the past year.
This might include realizing how many and who your most supportive members are; the fat you have cut from your business to be a leaner, better organization; how your staff upped their game and the new strengths that came to the surface to make sure the business survives (and can thrive again); the creativity, innovation and grit that has bubbled to the surface providing new solutions to get to the other side of this disruption; the positive operational changes you have made that will remain after this crisis has passed, etc. There are likely many more to list. It is important to recognize these elements, because these are things that got you through and will become part of the new mode of operation.
Will you create an inner circle of Honored Members? Consider how you will reward your most supportive members that stayed with you and had your back. Consider how you will reward and retain that talent of your staff that collaborated to get your business through this crisis. As you prove that you can get through this immense threat to your business, require nothing less in your organization's culture that the energy, creativity, care, commitment and innovation become part of your everyday operations regardless of crisis.
Comments From Thomas Plummer,
Founder of National Fitness Business Alliance
Relentless pressure reveals the flaw, and the beauty, of what lies beneath. The virus left us with two types of owners:
- 1. The large majority who cling to the past waiting for 2019 to come back to save them. This group has learned nothing, changed nothing and seeks to blame everyone else for what is going on in their lives.
- 2. The smaller group is seizing the opportunity and is in full attack mode. This group understands the client has changed and what these clients want from the fitness industry has changed forever.
Where do we go from here? We let go of the past, unemotionally understanding where we are today in the fitness industry and embracing what can be in the future. If you go hard, you will win in 2021, but only if you understand what we were, and what we believed in as an industry, is gone.
• • •
Sincere thanks to Larry Conner, Marco Fiorini, Scott Gillespie, Rich Nelsen, Casey Conrad, Derek Barton, Jim Thomas, Karen Woodard-Chavez, Thomas Plummer and two individuals who elected to remain anonymous for their thoughts and insights.
The question, Where Do We Go From Here?, is not an easy one to answer. The answer will develop over time, yet it will not be the same for all. Across markets, models and management styles, there will be failures, as well as victories. Now, more than ever, this means our industry must work together to learn from each other to implement micro-level solutions but also truly band together to develop a macro-level voice and the data to support it. We must reach a tipping point, where collectively, we cannot be ignored!
If you would like to be included in future iterations of this article, answering the question, Where Do We Go From Here?, please send me an email at Justin@clubinsideronline.com.