Clubs post strong financial performance - Trends

American Fitness, Jan-Feb, 2002

For the second consecutive year, health, racquet and sports clubs turned in a strong performance with EBITDA (earnings before interest, taxes, depreciation and amortization) averaging 22 percent of revenue, according to the 2001 Profiles of Success, a report published annually by the International Health Racquet & Sportsclub Association (IHRSA). Profiles of Success also report that earnings before income taxes (EBIT) held steady at 11 percent--overall good news for the club industry. "The strong performance of clubs in 2000 can be attributed to a combination of better membership retention, sales and expense management," says Bill Howland, author of the report and director of research for IHRSA.

The study, based on a survey by the associations North American membership, reveal that club payrolls rose an average of 7.8 percent in terms of actual dollars. As a percentage of revenue, however, payroll increased by only one point from 41 percent in 1999 to 42 percent in 2000. In the same period, membership retention increased from 64 percent to 65 percent and net membership growth increased from 4.4 percent to 6.5 percent. Overall revenue growth was 2.8 percent. "Other than for payroll, we didn't get detailed expense information from most participants," says Howland. "But given the incremental increases in retention and revenue, the numbers imply that expense management was a key factor in maintaining 1999's profitability level."

In addition to demographics and financial benchmark data, the 2001 Profiles of Success include a section on club employee compensation and benefits. Highlights follow:

Club Staff Sizes: (median)       1999       2000

Full-time Employees               9.0        9.0
Part-time Employees              39.5       41.0
Full-time Equivalents            27.0       26.0

Revenue Generated per Employee: (full-time equivalent)

                                Mean      Median

All Club                      $70,180    $62,857
Fitness-only                  $56,353    $48,905
Multipurpose                  $72,987    $64,681

Profiles of Success detail a wide range of information including data on club pricing, facilities, programs and facilities reinvestment, among other topics.

The 2001 issue of Profiles of Success costs $125 for IHRSA members and $350 to non-members. To order a copy, call IHRSA at (800) 228-4772 (United States and Canada), (617) 951-0055 or purchase and download a PDF version of the report at www.ihrsa.org.

Reprinted by kind permission of the International Health, Racquet & Sportsclub Association (IHRSA)