The Leisure Media Company Ltd
The Leisure Media Company Ltd
The Leisure Media Company Ltd

Talking point

The cost of living crisis

Hot on the heels of the global pandemic, we now have a global cost of living crisis. With purse strings tightening, will health clubs be budgeted out? Kath Hudson reports

Netflix, which boomed during lockdown, lost almost a million subscribers in the first three months of 2022, a fact attributed to the global cost of living crisis. One might have assumed that the relatively inexpensive streaming service which can serve the whole family would be immune to a budget cull. Not so, apparently. Research is showing consumers defending their “real world” spending, such as holidays and dialling back on remote spend such as Netflix, online gaming and takeaways. Maybe we all did enough of that in 2020 and 2021.

While the poorest segments of society pay the highest price again, being hit by hikes in the cost of non-discretionary items such as fuel, energy and food, the impact of government support means it will be mid-earners who will feel the pressure the most.

With people thinking carefully about where they spend their cash, will they still choose the gym? We ask the experts what is happening...

John Penny
The Third Space
photo: The third space

As people slowly return to the office in both the city and financial districts, we’re still seeing a net return from lockdowns. As our customers prioritise spend on fitness, wellbeing and self-investment, there doesn’t appear to be a discernible cost of living impact yet. Lead generation from marketing and sales performance metrics are still tracking well, we’re not seeing an impact on secondary spend and the spa continues to perform well.

We’re not offering any new packages or incentives to make it more cost-effective to use our facilities, apart from expanding our collection of clubs, which further strengthens the group membership offering. However, we continue to debate what packages could look like if we were to adopt any to combat the work-from-home effect in some areas.

Despite the headwind costs with facilities, we haven’t had to make any cuts. We’re focusing on optimum energy consumption and observing our variable costs closely, but we’re still pressing on with our club investment and refurbishment cycle, as well as the team development programme, in order to improve the member experience and value perception further.

As normal, we increased some prices in 2022 – including for food and PT – passing some wage increases on to the team. We’ll evaluate our membership fees as per normal for 2023. Going forward, operators need to keep a close eye on variable costs, ensure teams are supported and stay focused on creating an excellent experience.

Despite the headwind costs with facilities, we haven’t had to make any cuts as a result of the cost of living crisis”
Third Space has not had to make any cuts due to the crisis / photo: The Third Space
Shane Collins
Circuit Society

The cost of living crisis is certainly having an impact on the market, but not in the way we may have expected. Over the last 10 years, we’ve seen customers craving flexibility and willing to pay a premium for it. Now we’re actually seeing customers seek the security and value that memberships provide.

As a result, we’re achieving steady growth in membership sales and bulk purchases rather than single class sales, suggesting people are looking for value and are willing to sacrifice some flexibility to get it.

Community is at the heart of everything we do, so it’s so pleasing to see that, for the majority of our clients, coming to Circuit Society is an essential part of their lives. We make sure we reward that loyalty by giving our members the best deal.

Our 10-Day trial is a good value introduction: essentially £1 a class for 10 days. We then incentivise people on their first class package with a discount. Our current membership model increases in discount the more classes you buy and offers discounts on merchandise, smoothies and deals with our brand partners, which has kept retail spend consistent.

Our marketing has become more focused: we’re actively targeting campaigns to the local area surrounding. Although we’re being as efficient and streamlined as possible operationally, we’re still adding to the team every month, especially with the launch of our new boxing concept. So far, we’ve been able to swallow any cost increases, and we will avoid passing them on to the consumer unless it becomes absolutely necessary. The boutique gym market thrived during the Wall Street crash by reacting to the needs of the consumer: giving them a sense of community amidst the madness and a level of flexibility the big chain gyms didn’t provide. That nimbleness led to the ensuing boom in boutique fitness.

The world is in a similar flux now, so maintaining that nimbleness, earnestly listening and working to give the consumer what they want is key to success.

People are looking for value and are willing to sacrifice some flexibility to get it
Member sales are still growing, but people want more flexibility / photo: CIRCUIT SOCIETY
Sophie Lawler
Total Fitness: CEO
Total Fitness has returned to pre-pandemic membership levels / photo: TOTAL FITNESS

Our high-value, high variety offering is standing up in the face of an increased cost of living and I think that’s a matter of value proposition for us as a mid-market club.

In May this year, we returned to pre-pandemic membership levels (as at February 2020) and bucked the summer trend by growing in June, July and into August. Since reopening, our membership growth has spanned all ages and demographics, albeit we’ve over-indexed in younger joiners compared to historic trends. Although the monthly attrition rate has increased, it under-indexes when compared to the increase in joiners, so the underlying growth trend remains healthy.

However, our rising costs and rising costs of living for our members make a difficult landscape to navigate. At Total Fitness, we do an awful lot of listening to the market, ensuring that – despite our experience, we never assume.

Working with a third party, we recently completed a reputation survey, which covered 11,000 members and ex-members (from all sorts of health club chains), as well as non-members, partners and suppliers. We were pleased to find reasons for us to be confident about the future. Our members are really active, with more than 60 per cent working out twice a week or more.

It’s no surprise, therefore, that almost half our members consider their memberships essential and would cut other expenditures before considering cutting their gym membership. Sixty-five per cent of our ex-members are currently not members elsewhere, with more than 60 per cent of all ex-members likely to return to Total Fitness.

We’re trading steadily, which has allowed us to absorb the cost of increasing all salaries, however, we’ll need to revisit our pricing to absorb future utility increases. We must keep the right value equation for members, and while that’s something we’re well set up to do, it’s clear that we’re a sector needing structural support from government.

This is especially true of public sector wet-side operators who are most sensitive to rising costs and continue to provide facilities for the low impact, lifesaving, confidence and fitness building service that is swimming. I must remain hopeful on this point because while what we do as a sector is brilliant, it’s also supremely important.

We’re trading steadily, which has allowed us to absorb the cost of increasing all salaries
Mark Sesnan
GLL: managing director
photo: GLL

In most areas, we’ve seen a strong bounceback from the lockdowns and even stronger sales where we’ve opened new facilities, such as Belfast and Hackney. It’s still early days, but we’ve not yet seen any new drops in memberships due to the cost of living.

Generally, we believe the value price bracket we’re in – an average yield of £30 for swim, gym and classes – is likely to be more resilient as the wider economy tightens. We’re not yet seeing any impact on our secondary spend or our high-end spa and related products. Our marketing ROI is good, with new membership sales strong. Increasingly this is through different channels, such as incentivised referrals.

Everywhere we operate, we have concessionary pricing schemes in place to ensure those on benefits and other people who are financially disadvantaged do not have price as a barrier to participation.

Additionally, we ran our ‘Kids for a Quid’ sessions at all our pools across the UK during the summer holidays to ensure affordable swim sessions are available to children every day.

As the UK’s largest operator of public pools, energy costs for us are massive and could threaten the future of many of our swimming pools.

We’re currently reducing energy consumption, reviewing pricing and lobbying central and local government for financial support alongside UK Active, CLUK, the LGA, RLSS and Swim England. These astronomic energy costs are the biggest threat we have ever seen to the future of our swimming pools.

Inevitably, the UK will need to invest quickly in a network of fewer energy- and staff-efficient facilities. This will help us meet the zero carbon challenge, the energy cost crisis and the shortage of staff issues we face across our industry.

Generally, we believe the value price bracket we’re in – average yield of £30 – is likely to be more resilient”
GLL has not yet seen any impact on secondary spend / photo: GLL
Neil Randall
Anytime Fitness: CEO
photo: Anytime fitness

We haven’t noticed a significant negative impact of the cost of living on membership numbers: our clubs are continuing to recover well following the impact of the pandemic and earning more secondary revenue than in 2021. Given our mid-market positioning, we have more members than we’ve ever had before. It’s great to see people continuing to invest in their health and perhaps make financial sacrifices in other areas of their lives to accommodate a gym membership and as well as make purchases which support their goals.

We’ve worked hard to ensure members have more added-value as part of their membership, including our online platform AF Connect Online, offering on-demand workouts, wellbeing content and exclusive partner discounts. We’ve also been clearer in communicating our ‘join one, join all’ aspect of our membership, where members can access any of our 185+ UK clubs and 4,500+ global clubs.

We’re being considered in our marketing: providing clubs with further materials and increased digital content, which is having a positive impact on key digital metrics, such as cost-per-click. We’ve also analysed each step of the marketing funnel to ensure we communicate clearly and drive the correct calls to action.

We haven’t made any cuts to resources or personnel because of the current financial climate, but given the increased overheads of our clubs, some of our franchisees have had to increase their membership rates. Any price increases are at the discretion of our independently-owned clubs and our franchisees have been doing everything they can to make any cost rises as modest as possible, while continuing to offer high-quality, value-for-money facilities.

With people increasingly looking at their outgoings each month, we need to be effective as a sector in demonstrating the wider health benefits that come from being active, and ensure consumers see a membership as an investment in their health, rather than an outgoing they could do without.

We have more members than we’ve ever had before
Anytime Fitness is building in more added value for its members / photo: Anytime fitness
Ben Beevers
Everyone Active
photo: Everyone Active

Following the lockdowns, people really understand the value in investing in their own health and wellbeing and we’re still seeing large numbers of people maintaining regular physical activity.

Although we haven’t yet seen a direct impact on our membership numbers or an increase in attrition levels or negative responses to exit questionnaires, we do have concerns the rising living costs will impact us in the near future, so are closely monitoring the situation.

Increased costs in manufacturing and logistics, such as fuel, means the prices of almost everything we purchase are rising, with the most obvious challenge being utilities. As a result, our ability to supply retail and pool chemicals to our facilities and keep pools open has been a real challenge over the last few months. We’re continually looking at how we can be more efficient as a business, particularly around energy efficiency, as our energy costs are currently two to three times higher than the levels we were paying in 2019/20. We’re working closely with our local authority partners to find sustainable solutions.

We pride ourselves on our diverse offering and have several concessionary memberships and some complimentary memberships for certain groups. We might need to provide additional financial support for disadvantaged groups to attend our leisure facilities, and we’ll be looking at solutions to offer leisure opportunities which are cost-effective for these target groups.

Going forward, the sector must work closely with NGBs, and the health and education sector on a nationwide reporting method to showcase our value as an industry. Secondly, we need to make our industry more accessible for people to find the facilities to get active and build their understanding of the benefits to their health and wellbeing.

Our energy costs are currently two to three times higher than 2019/20. We’re working with our partners to find sustainable solutions
Extra support may be needed by lower income groups / photo: Everyone Active
Everyone Active invests in solar

Everyone Active has been working with Bristol City Council at Easton Leisure Centre to install 800 solar thermal tubes, reducing energy usage on its 25m pool by 100 per cent during the summer months.

The pilot project cost £89,000 and will save almost 13 tonnes of CO2 from entering the atmosphere each year, contributing to the council’s net zero targets.


Easton’s pool energy usage reduces by 100% in summer / photo: Everyone Active
company profile
Company profile: Alliance Leisure
The company’s core business is the provision of facility development and support for local authorities, educational establishments and leisure trusts that want to improve or expand the leisure products and services they offer.
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