Fitness Centers

About 15,000 companies and nonprofits in the US operate over 26,000 fitness and recreation centers, with combined annual revenue of $15 billion. Large companies include Bally Total Fitness, 24 Hour Fitness Worldwide, and Town Sports International, operator of the Sports Club brand. About 5,000 centers are operated by nonprofits like YMCAs. The industry is extremely fragmented: the 50 largest companies hold only about 30 percent of the market, and only a few dozen companies own more than 10 centers. A typical large fitness center has $3 million of annual revenue and 65 employees.

COMPETITIVE LANDSCAPE

Demand is partly linked to income levels and partly to market demographics. The profitability of individual companies depends on good marketing. Large companies have economies of scale in advertising and buying equipment. Small companies can compete effectively if they have favorable locations. The industry is highly labor-intensive: average annual revenue per worker is just $35,000.

PRODUCTS, OPERATIONS & TECHNOLOGY

Major services include facilities for aerobic exercise and weightlifting. Running, swimming, racquet sports, yoga, karate, basketball, and swimming may also be offered. Small studios may cover just a few thousand square feet while multi-activity operations can cover 200,000 square feet. The operations of all fitness centers are similar: the operator makes space and equipment available for customers to engage in various types of fitness activities, provides staff to help customers properly use the equipment, maintains the facilities, and provides various other services such as ...