The Australian Fitness Industry

Reference No. 18008 February 2009

Table of Contents
Background, Aims and Methodology ........................................................................... 3 Background ..............................................................................................................4 Research Aim & Objectives .........................................................................................5 Methodology .............................................................................................................6 The Key Headlines....................................................................................................... 7 The Key Headlines .....................................................................................................8 Snapshot of the Fitness Industry .............................................................................. 10 Fitness Industry Snapshot ........................................................................................11 Main Detailed Findings .............................................................................................. 13 Organisation Type....................................................................................................14 Facilities and Services ..............................................................................................16 Fitness Industry Customers.......................................................................................22 Fitness Industry Employees ......................................................................................28 Membership ............................................................................................................30 Membership ............................................................................................................30 Financial Details ......................................................................................................31 Appendix 1: Fitness Industry Profiling Questionnaire ............................................... 36

Background, Aims and Methodology

Background
Fitness Australia is the national industry association for the health and fitness industry in Australia. Fitness Australia has a wide membership base consisting of 800 business members and 18,000 registered exercise professionals, offering a wide range of services, including The Business Membership Scheme - providing tailored benefits and services for fitness providers and industry suppliers The Fitness Professional Registration Scheme - setting an industry standard, encouraging best practice for the industry and its professionals The Continuing Education (CEC) Scheme - providing courses and programs for industry professionals and helping keep the fitness industry innovative Recently restructured to form a single main operating entity across Australia, Fitness Australias mission is

Towards 2010
Fitness Australia's new strategic framework, "Towards 2010", reflects the important interrelationship within the fitness industry and provides an appropriate organisational focus for Fitness Australia in four key areas their members, their industry, their community and their future. Fitness Australia will do this by focusing on the following strategic goals: Build foundation and core capabilities Build scale and focus on member services Increase organisational and industry profile Maintain and enhance standards of excellence This strategic focus will help drive Fitness Australia toward their overall vision

to set standards, promote and represent the fitness industry in pursuit of a fitter, healthier nation.

With this aim in mind, Fitness Australia has commissioned research to better understand the Fitness Industry in Australia. In particular, the objectives of the research are to better understand the fitness industry, the industry customers and produce an industry overview. This report represents the findings from this Fitness Industry profiling research.

"working for a fitter, healthier Australia".

Research Aim & Objectives

The business objective of the research is

To support the ongoing positioning of the fitness industry with all levels of government

The specific research objectives that have been addressed to help achieve this are

Understand the fitness industry

Collect profile information across fitness industry businesses, including Business type Services provided Location Membership data Employee numbers Financial status

Understand the fitness industrys customers

Collect profile information across fitness industry customers, including Socio-economic profile Demographic data Location

Report on key industry statistics

Produce an industry overview

Identify emerging trends Produce a report that is relevant to Fitness Australia and key stakeholders within the industry

Phase two the research of the research will examine the economic impact of the industry in more detail, in particular the benefits of the fitness industry to preventative health.

Phase One

Methodology
The results for the Fitness Industry Profiling Research are based on a total of 312 interviews across Australia. Interviews were conducted online during December 2008 and January 2009. The underlying structure of the sample of 312 is shown in the table below. These proportions are in line with the geographical spread of the Fitness Australia contact database.

Table 1: Sample Profile State

NSW Victoria Queensland Western Australia South Australia Australian Capital Territory Tasmania Northern Territory

Sample Size #
128 67 59 19 18 9 7 5

Sample proportion %
41 21 19 6 6 3 2 2

Total

312

100

All e-mail contacts from the Fitness Australia member database and potential member database (comprising non Fitness Australia members) were approached to conduct the research (a total of 1315 businesses). Overall, 53% of interviews were conducted amongst Fitness Australia member organisations and 47% with nonmembers. The client name for the survey was revealed at the outset of the interviews and all participants were given the opportunity to win a back pack donated by Champion Sport. Interviews lasted approximately 25 minutes on average. In addition to results from the Fitness Industry Profiling Research, the report includes data sourced from the Sweeney Research Sports Report which profiles trends in sports interest and participation. Further details of the Sweeney Sports Report can be found here
http://www.sweeneyresearch.com.au/research-and-consulting_sports-entertainment-leisure.aspx

The Key Headlines

The following two pages outline the key headlines of the research and the potential implications for the fitness industry

The Key Headlines

Increase in customer base in the last 12 months
The fitness industry has enjoyed considerable recent growth (estimated by IBISWorld to be in excess of 15% over the past five years) and has increasingly diversified into areas beyond the traditional fitness regimes to further encompass the broad area of wellbeing, such as health and nutrition. Over the last 12 months two thirds of fitness organisations stated they experienced an increase in their overall customer base, helping drive revenues into the industry. This suggestion of growth in the industry reflects the booming economy and the pinnacle of 16 years growth in the economy. Similar success will obviously be more difficult however in the current economic climate. Sweeney Researchs Financial Firestorm report (conducted in November 2008) also provides indications that consumers are becoming more prudent with their finances. Entertainment, sport and leisure spend may well be in line for cuts, with 41% of Australians expect to have to cut down on these types of expenditure in the coming months. In addition, not all organisations have grown, one in ten fitness organisations experienced a drop in customer numbers over the last year. These drops mainly came from the more established fitness organisations (open for more than 10 years) and from larger fitness centres. The growth of the smaller, more specialised fitness organisations at the expense of these larger centres is an interesting parallel with an emerging trend also identified in the firestorm report that sees Australians increasingly interested in helping their local businesses through difficult times.

Revenues and profits increasing

Membership is the single most important source of a fitness organisations revenue, and in line with the growth in customer numbers, revenues have tended to increase over the last year (for two thirds (64%) of fitness organisations). As times get tough, new customers may be more difficult to attract and are likely to be increasingly wary of committing to long term contracts. It is clear from this research that fitness organisations are already offering a range of fixed term contract offers, and it is likely that shorter term/more flexible contracts are will become increasingly important in attracting consumers who are in a more precarious financial situation.

Active membership base

With more and more demands on peoples free time, attending fitness classes or gyms can be difficult. It is therefore important that fitness organisations are flexible and are meeting the specific needs of their customers. A strong indication that these requirements are, on the whole, being met is the relatively high attendance rate estimated across the industry. On average, around two thirds (77%) of customers are said to be active (regularly use fitness services) users of their gym.

Key customer base

The profiling research survey results complement the Sweeney Sports Report in identifying women as a core group for the fitness industry, in particular those aged between 25 and 44. Below are some observations on Australian women aged 29-39 taken from our Financial Firestorm report which illustrate their mindset from a financial perspective

Table 2: Core Market Attitudes

Females 29-39 % Agree
Will cut back on entertainment, sport and leisure Partner is working Worried about job security in economic downturn Better off than six months ago 71 83 24 10

Population % Agree
47 63 14 19

Difference +/+24 +20 +10 -9

Notes: Interviewing online amongst n=500 Australian adults. Interviewing November 2008 Base: Total Population (n=500), Females 29-39 (n=48)

The results clearly indicate that the fitness industrys core market is more likely than average to cut back on entertainment, sport and leisure over the next few months. This could potentially have some repercussions for the industry as memberships expire and strategies should be seriously considered going forward to ensure the continued growth of the industry.

Snapshot of the Fitness Industry

The following two page snapshot of the Fitness Industry provides the core statistics and findings from the profiling research study

10

Fitness Industry Snapshot

The following table summarises the key findings from the Fitness Industry Profiling Research

Key findings
Most fitness organisations classify themselves as either a personal fitness service (30%) or a Fitness Centre (28%) In the main, fitness organisations tend to be privately owned (68%), but other organisational structures are relatively common, for example Franchise (9%) Government owned (7%) Not for profit (4%)

Organisation Type

A quarter (26%) of fitness businesses are run without their own fitness facilities

Fitness Facilities

This is particularly common amongst personal fitness services (75% run without fitness facilities)

Two thirds of fitness organisations operate across multiple sites

Almost all offer personal training (94%) Most provide free weights (85%) and group exercise (81%)

Where group exercises are provided, the most common classes are Strength and resistance (77%) Flexibility/stretching abdominals (74%) Boxing/combat (72%) Circuit classes (71%)

Fitness Services

Other classes which are less common include Age specific classes (39%) Dance related classes (23%) Aqua fitness classes (23%)

Around four-in-ten Australians participate in gym workout or group exercise Fitness customers are skewed towards females and those aged 25-44 Males aged 45+ are the demographic least engaged with the fitness industry (group exercise/gym workout)

Customers

Two thirds (67%) of fitness organisations experienced an increase in their customer base over the last 12 months, suggesting growth in the industry overall Just one in ten experienced a drop in customer numbers

Around three quarters (77%) of customers are thought to be regularly using fitness facilities

11

73% of fitness organisations have employees (i.e. 27% are single person businesses) Businesses that employ staff have an average of 53% casual staff Fitness organisations employment tends to be skewed slightly towards females (61%) and fitness staff (70%) Fitness employees are required to have minimum qualifications in almost all cases (98%) Certificates III and IV are common requirements

Employees

Two fifths (39%) say they charge their customers a joining fee

Membership

Around half of fitness organisations (55%) offer minimum term membership The term length varies considerably annual (67%), half yearly (49%), quarterly (57%), monthly (47)

Driven by growth in customer numbers, revenues have increased over the last 12 months for two thirds (64%) of fitness organisations Membership fees and personal training fees are the two key sources of revenue for fitness businesses

Financials

Relatively little (3% on average) tends to come from merchandise sales

Employment is the most costly outgoing for fitness businesses (accounting for 33% of outgoings on average) Around half of fitness organisations (54%) made an operating profit over the last 12 months. A quarter said they had made a loss (27%)

12

Detailed Findings
Over the following pages, we examine in detail the types of organisations prevalent in the industry, the services they offer and their customer details, as well as identifying some broad key financial trends in the industry over the last year.

13

Organisation Type
The level of diversity in the industry is reflected in the range of fitness industry organisations included in the survey results. Whilst most businesses classified themselves as either a personal fitness service (30%) or a fitness centre (28%), responses from community centres (3%), health/wellness centres (5%) and leisure/aquatic centres (7%) were also captured. In the table below we highlight the key findings on organisation type. The spread of organisation type across state is relatively consistent, although (whilst not a significant difference) personal fitness services tend to be a little more prevalent in VIC/TAS compared to other states

Table 3: Organisation Type

TOTAL (n=312)
Personal Fitness Service Fitness Centre Fitness Studio Leisure/Aquatic Centre Gym Health/Wellness Centre Community Centre
Base: Q.

NSW/ACT (n=137)
26 28 15 7 8 7 1

VIC/TAS (n=74)
42 24 11 9 4 3 0

QLD (n=59)
29 31 14 5 3 5 8

SA/NT/WA (n=42)
26 26 14 10 7 5 2

30 28 13 7 6 5 3

All Fitness Organisations Which of the following types of organisation best describe your business?

14

The organisational structure of fitness organisations can also take many forms.

Most commonly, fitness

organisations are privately owned (either single site 57%, or multi site 11%), but they can also take the form of a franchise (9%), a government owned organisation (7%), a not-for-profit organisation (4%) or a licensed club (2%).

Business Type
Organisation Type Organisational Structure

Personal Fitness Service Fitness Centre

30%

Privately owned, single site Privately owned, multi site Part of a franchise

57% 11% 9% 7% 4% 4% 3% 2% 4%

28%

Fitness Studio

13%
Government Owned

Leisure/Aquatic Centre

7%

Company / Part of a Corporate chain Not-for-profit University based centre

Gym

6%

Health/Wellness Centre

5%
Licensed Club

Community Centre

3%
Note: Other organisation types <3%

Don't know

Base: S1. Q1.

All fitness organisations (n=312) Which of the following types of organisation best describe your business? Which of the following best describes your [business/centre]?

15

Facilities and Services

Facilities
Survey participants were asked whether their business had its own fitness facilities or centre. Overall, the majority of fitness organisations (74%) have their own facilities, but a significant minority (26%) do not. These figures are quite different when looking only at personal fitness services. These types of fitness business are often run out of facilities owned by other gyms/fitness organisations, in fact two thirds (64%) say they operate without their own facilities

Table 4: Fitness Facilities

Personal Fitness Service (n=95) %
36 64

Total (n=312) %
Own Fitness Facilities No Fitness Facilities
Base: Q.

Fitness Centre (n=86) %

95 5

Fitness Studio (n=42) %

100 0

Leisure/ Aquatic Centre (n=23*) %

87 13

Gym (n=19*) %
100 0

Health/ Wellness Centre (n=16*) %

94 6

74 26

All Fitness Organisations *small base size, results are indicative only Does your business have its own fitness facility(ies)/centre

Overall, around two thirds of fitness organisations operate across multiple sites. run across more than one location

This split is relatively

consistent across different types of fitness organisations, although Fitness Studios are slightly less likely to be

Table 4a: Multi-site Businesses

Personal Fitness Service (n=95) %
35 65

Total (n=312) %
Multi Site Single Site
Base: Q.

Fitness Centre (n=86) %

40 60

Fitness Studio (n=42) %

14 86

Leisure/ Aquatic Centre (n=23*) %

61 39

Gym (n=19*) %
28 72

Health/ Wellness Centre (n=16*) %

40 60

36 64

All Fitness Organisations *small base size, results are indicative only Is your business a combination of sites and centres?

16

The facilities that are used to run fitness organizations are hugely varied in terms of their size. As part of the survey, fitness businesses were asked to estimate the size of the facility in which they are based. A fifth of fitness businesses are based in facilities that are less than 100m2, whilst 11% of businesses are run out of facilities that are more than 3000m2.

Facility Details
Facility Size

Less than 100m2 101m2 - 250m2

17%

15%

251m2 - 750m2

16%

751m2 - 1500m2

11%

1501m2 - 3000m2

10%

3001m2 - 5000m2

6%

More than 5000m2

5%

Don't know

21%

Base: S4.

All fitness organisations (n=312) How large is the facility in which you are based?

17

Non Fitness Services

The range of fitness related services provided by fitness businesses will be explored on the following page of the report, but the survey also revealed a number of non-fitness related services that are being offered to customers.

Services
Non Fitness Services Offered

Parking Disabled access Child care Allied health services Sauna/ Spa / Steam Room Cafe Tennis/ Squash Solarium Massage (various) None

66% 48% 32% 25% 23% 21% 11% 4% 3% 23%

Note: Other services offered <3%

Base: S4. Q6.

All fitness organisations (n=312) How large is the facility in which you are based? Which of these additional facilities/services does your [business/centre] offer?

Fitness organisations commonly offer parking (66%) and disabled access (48%), as well as child care (32%), allied health services (25%) and cafes (21%). These figures are higher amongst those fitness organisations that own their own facilities

18

Table 5: Non-Fitness Services

Total (n=312) %
Parking Disabled access Child care Allied health services Sauna/Spa/Steam Room Cafe Tennis/Squash Solarium Massage None of these
Base: Q.

Own Fitness Facilities (n=231) %

79 58 38 28 28 26 14 6 4 9

No Fitness Facilities (n=81) %

30 22 14 16 9 5 2 0 0 63

66 48 32 25 23 21 11 4 3 23

All Fitness Organisations Which of these additional facilities/services does your [business/centre] offer?

19

Fitness Services
In terms of fitness services, the most commonly provided services are personal training (94%), free weights (85%) and group exercise (offered by four in five fitness organisations - 81%). A strong indication of the diversification of the fitness industry is the extent to which wellness services (such as dieticians/nutritionists) are being made available. Two fifths (40%) of fitness organisations currently provide these types of services for their customers

Fitness Services
Services Provided
Personal training Free weights Group exercise Resistance equipment Cardiovascular equipment Circuit training Boxing training Boot camp/Outdoor programs Wellness services (e.g. dietician/nutritionist) Aquatics Sports facilities
Base: All fitness organisations (n=312)

Group Exercise Provided

94% 85% 81% 76% 75% 68% 63% 58% 40% 21% 16%
Note: Other services provided <4% Base:

Strength and resistance classes Flexibility/stretching/ab dominal workouts Boxing/Combat training classes Circuit classes Specialty classes (e.g. Yoga, Pilates, Tai Chi) Aerobics Bootcamp Cycle classes Outdoor Age specific classes Dance related classes Aqua fitness classes
All that offer group exercise (n=252)

77% 74% 72% 71% 61% 52% 50% 49% 48% 39% 23% 23%
Note: Other classes provided <1%

Q4. Q5a.

Below are a number of fitness related services. Please indicate which of them your [business/centre] provides. Which of the following categories of group exercises does your [business/centre] offer?

The forms of group exercise offered are also wide ranging. of organisations that provide group exercises).

Most common are strength/resistance classes,

flexibility/stretching/ad based classes, boxing/combat classes and circuit classes (all offered by more than 70%

20

In terms of the frequency with which classes are run, a quarter (23%) of fitness organisations run, on average, fewer than five classes per week, one in seven (14%) run over fifty classes in a typical week. Personal Fitness businesses are smaller and as such run classes far less frequently than larger fitness or leisure centres. Over half of personal fitness businesses (54%) run fewer than 5 group classes per week, and they average nine classes per week compared to an average of 35 classes amongst fitness centres.

Number of classes per week

Less than 5

23%

6-10

15%

11-20

15%

21-30

17%

31-40

7%

41-50

7%

Mean = 23 classes per week

51-60

7%

61-70

3%

More than 70

4%

Base: Q5d.

All fitness organisations that offer group fitness (n=252) On average, how many group exercise classes does your [business/centre] run per week?

Across all fitness organisations that run fitness classes, eight out of ten run freestyle classes and half run prechoreographed classes.

21

Fitness Industry Customers

Sweeney Sports Report
The Sweeney Sports report collects data on sports interest and participation via a telephone survey amongst a representative sample of the Australian population in major cities. The survey assesses interest and participation on a wide variety of sports including gym workout and group exercise. Data for gym workout and group exercise has been collated from the Summer 07/08 Sweeney Sports Report, with historical data included to illustrate trends over the last three years of reporting. There is some indication that participation in gym workout and group exercise has dipped in the last three years, down very slightly from 44% in 05/06 to 38% in 07/08. Participation is highest in Sydney and Brisbane and slightly lower in Adelaide and Perth. As discussed later in the report, the industry view is that customer base sizes have been increasing over the last year. The fact that this is not reflected in the Sports Report data suggests that much of the customer growth is occurring in fitness sectors outside of the more traditional gym workout or group exercise.

Interest in Gym Workout and Group Exercise

Total Interest Trends
% of Australians

Participation Trends
% of Australians

44%

40%

39%

42%

39%

38%

Summer 05/06
Base: Total Sample

Summer 06/07

Summer 07/08

Summer 05/06
Base: Total Sample

Summer 06/07

Summer 07/08

Interest by City (Summer 07/08)

Total Interest % 39 47 36 43 25 30 38 43 Watch on TV % 4 5 5 2 0 3 0 6 Listen on Radio % 1 0 1 2 0 3 0 0 Read in Press % 2 2 3 2 0 0 0 0 Search Internet % 1 0 3 2 0 0 0 0

Total population Sydney Melbourne Brisbane Adelaide Perth Canberra Hobart

Participate % 38 44 35 43 25 27 38 40

Attend % 2 1 3 2 0 1 0 0

22

The data collected in the Sweeney Sports Report provides a profile Gym and Group Exercise followers by key demographics

Profile of Gym Workout and Group Exercise Followers

Interest by Demographics (Summer 07/08)
Listen Read in Search on Radio Press Internet % % %

Interest by Lifestyle Aspects (Summer 07/08)

Total ParticiInterest pate % % 39 38 40 40 40 38 46 44 44 41 46 46 43 41

Total ParticiInterest pate Attend % % %

Watch on TV %

% in each category who:

Total population Business travellers High income earners Investors Savers Art followers New car owners Overseas holiday makers Home owners Car drivers Restaurant goers Fashion followers CD buyers PC owners Internet users Mobile phone users Foxtel TV subscribers FOX SPORTS viewers Optus TV subscribers Cinema goers Gym attendees Extreme sports fans Do-it-yourselfers Gardeners Soft drink buyers Grocery buyers Cereal eaters Fast food outlet users Wine buffs Beer drinkers Spirit drinkers Regular gamblers

Total population Males 16-29 30-44 45+ Total males Females 16-29 30-44 45+ Total females Income High Medium Low Marital status Single Married/no kids Married with kids

39

38

53 36 16 32 51 45 46 47 44 42 28 40 34 43

50 36 15 31 50 43 43 45 43 41 24 39 32 42

7 0 1 2 3 0 1 1 2 4 1 3 1 1

7 2 1 3 3 5 6 5 2 6 5 5 4 3

3 0 0 1 3 0 1 1 0 3 0 0 1 2

2 2 1 2 3 2 1 2 1 3 1 3 1 2

4 0 0 1 3 0 1 1 1 3 0 2 0 2

Attend % 2 0 3 3 3 2 2 2 1 1 1 2 1 2 1 2 1 1 0 4 6 3 1 2 2 2 2 1 2 3 0 2

Watch on TV % 4 0 5 4 6 4 5 5 4 3 3 6 4 3 3 4 4 4 5 7 6 4 4 6 6 4 5 1 2 3 0 5

Listen on Radio % 1 0 0 0 1 1 2 1 1 1 1 2 2 1 1 1 1 1 0 2 2 1 1 2 2 1 1 1 1 0 2

Read in Search Press Internet % % 2 1 0 0 2 2 2 2 2 2 3 2 2 2 2 1 1 1 3 1 2 2 2 1 1 0 3 3 2 3 3 3 2 3 1 1 1 0 2 2 1 1 1 2 1 1 1 1 0 0 0 2 3 1 2 1 2 1 1 1 2 1 0 2

55 40 40 46 53 46 41 40 42 42 44 39 60 65 42 42 37 41 40 42 35 39 38 16 51

55 39 39 45 50 44 39 39 40 39 41 34 60 62 41 40 35 39 38 40 35 38 38 16 49

The sports report confirms the industry view that fitness customers are predominantly female - almost half of Australian women (45%) participate in either gym workout or group exercise compared to 31% of males. Amongst women, participation is spread relatively evenly across age groups, assisted by specialist female gyms (e.g. curves) and classes run to appeal to women in older age groups (39% of organisations that run group exercise classes include age specific classes). The fitness industry has successfully maintained its appeal amongst older females 43% of females aged 45+ attend gym workout or group exercise. Participation amongst males meanwhile is strong in the 16-29 age group (50%) but drops off markedly in the 45+ age group (15%). A key challenge for the fitness industry will be increasing its appeal amongst this older male demographic. Sports Report data also suggests that medium to high income earners are the core market for these types of exercise. Only a quarter of those living on low incomes participate in group exercise/gym workouts.

23

Customer Profile An industry view

The Sweeney Sports Report has given us an insight into gym workout from a customer perspective, the Fitness Industry Profiling Research approaches same topic from a businesses point of view. same Given the variety of business models the fitness industry accommodates, it comes as no surprise that there is considerable variation in the number of customers on the books of fitness organisations. A quarter of organisations have less than 50 customers, whilst a fifth (18%) say they have more than 2000. This equates to an average of just over 1,000 customers per fitness organisation with 77% of these defined as active customers (regularly using fitness services). The type of business is a key determinant in the size of the customer base of the organisation. Personal Fitness Services tend to be much smaller (average 238 customers) than fitness centres (average 1744 customers) for example. The story is much the

Fitness Organisation Customers

Number of Customers Gender

Less than 50 51 - 100 101 - 250 251 - 1000 1001 - 2000 2001 - 5000 More than 5000 4% 9% 14% 12% 13%

25%
Male 37% Female 63%

22%

Mean = 1,102 customers

Age
Under 17 5% 10% 30% 29% 13% 14%

Average Number of Customers Fitness Centre (n=86) Gym (n=19*) Personal Fitness Services (n=95) Other (n=112) 1744 1641 238 1244

18 - 24 25 - 34 35 - 44 45 - 54 55+

Base: Q8. Q8b. Q8c.

All fitness organisations (n=312) *Note: small sample size, results are indicative only How many customers in total does your [business/centre] have? And what proportion of your customers would you say are male and what proportion would you say are female? What proportion of your customers would you say fall into each of the following age groups?

Across all types of fitness organisations, the estimated gender split of customers is skewed slightly towards females (63%) and those aged 25-44 (59%).

24

Fitness organisations in general (67%) feel that their customer base has been growing over the last 12 months and a quarter of these have experienced a rapid growth in their membership numbers (27% have increased their membership by at least half). Businesses with extremely strong growth tend to be start up businesses that have been open for less than a year. Only one-in-ten fitness organisations have shrunk in size this year and the declines tend to be relatively small (48% have experienced less than 10% decline). Where businesses have experienced drops in their customer base, they tend to be organisations that have been in business for a length of time. 17% of businesses that have been open for more than ten years have seen a decline in customers over the last year.

Fitness Organisation Customers

Annual Change in Customer Base

Increased, 67%

Stayed the same, 23%

Decreased, 10%

% Increase
Less than 5% 6 - 10% 11 - 20% 21 - 50% 51 - 80% More than 80%
Base: All with increased customer base ( n=210) Base: Q10b. Q10c.

% Decrease
9% 22% 17% 24% 9% 18% Less than 5% 6 - 10% 11 - 20% 21 - 30% More than 30% Don't know 3% 10% 13% 26% 16% 32%

Base: All with decreased customer base (n=31)

All fitness organisations (n=312) Over the last 12 months, would you say your customer base has increased, decreased or stayed the same? By how much would you say your customer base has [increased/decreased FROM Q10B] in the last 12 months?

25

Barriers to Increasing Customer Base

Fitness organisations were asked what they felt the key barriers were to them increasing their customer base. Their responses have been grouped, quantified and are shown in the graph below

Barriers to Increasing Customer Base

19%

Unstable economy

Too much competition Marketing opportunities/ increasing awareness of what I offer/ finding own clients Cost of advertising

16%

15%

12%

Overhead/running costs/budget to maintain premises/ licenses Financial concerns/increased cost of living for potential members

12%

11%

Location/not a lot of pass by traffic

10%

Lack of qualified staff

10%
Note: All other barriers <8%

Base: Q10d.

All fitness organisations (n=312) What are some of the barriers your [business/centre] faces in trying to increase its customer base?

Key concerns include... the state of the economy and the effect this will have on consumers willingness/ability to spend their money on fitness activities Current economic situation is one of the main factors, especially as our facility is in a drought affected area One of the first things that people do in the current financial situation is cutout personal training Difficulties exploiting marketing possibilities (a particular difficulty for new start ups) Very small marketing budget and general advertising restrictions. Location away from the main walking beat. The gym manager does, marketing, sales, classes, fitness assessments, programs, floor supervision, admin, etc. Support is available, but we do not have a dedicated sales and marketing team, group exercise manager etc.

26

Increasing competition We're in a shopping centre which is attracting the wrong type of clientele and there is a loss of quality enquiries. Local competition is also undercutting price e.g. local aquatic centres recently upgraded and reduced prices Increasing costs Increases in running costs, e.g. insurance, utilities, wages and rent. We also have competition from local government run aquatic centres and the big multinational chains. Additionally, there is no government support or funding for providing services such as teens and elderly programs (reduce obesity/improve health of elderly) A lack of suitable staff Lack of staff with the qualifications and experience that I want i.e., tertiary qualifications in exercise science or similar

These are the sorts of issues that Fitness Australia should be focussing on with their training and initiatives going forward.

27

Fitness Industry Employees

Employee Profile
Across the industry, 73% of fitness organisations have more than one employee. organisations that create employment, there is an average of 30 employees. Where businesses are run as a single person business, they tend to be Personal Fitness Services 65% of these types of fitness companies have no employees. Although the fitness industry creates a number of Australian jobs, relatively few of them are on a permanent basis. Casual employees are particularly common an average fitness organisation (with employees) will have around half of its employee base made up of casual employees and a further 13% made up of independent contractors. For each of these

Employees
Employment Type
% of employees

Employee Gender

Full time Permanent

17

Female 61%

Male 39%

Part time Permanent (i.e. are employed on a permanent basis but work less than 38 hours per week)

17

Employee Role
Casual (i.e. a staff member that is not permanently employed) 53

Independent Contractors (i.e. staff contracted from business entities to work with your customers)

Fitness 70%
13

Other 30%

Base: Q11a. Q11b. Q12.

All fitness organisations with employees (n=228) You said earlier that you have [INSERT FROM Q3] employees in total, how many fall into each of the following categories? Please indicate the proportion of the employees of your [business/centre] that are male and the proportion that are female. Please include all staff as well as contractors. Please indicate what proportion of the employees of your [business/centre] are fitness employees and the proportion that work only in other capacities (i.e. reception, sales, management, administration)

Across all types of fitness organisations, an average business will tend to employ more females and have a relatively high proportion of employees (70%) working under the banner of fitness employee (i.e. excluding admin, reception management etc).

28

Employee Qualifications
Almost universally, fitness employees are required to have a minimum qualification. In the majority of cases this is either a Certificate IV, or a certificate III.

Employee Qualifications
Qualifications Required Type of Qualifications

Certificate IV

78%

Certificate III Exercise Science (or equivalent) Degree

71%

19%

No 2%

Yes 98%

Diploma

13%

Post Graduate Degree Discipline specific qualifications (e.g. swim coach) First aid certificate

5%

4%

2%

Seniors first aid

Base: All fitness organisations with employees (n=228) Base:

2%
Note: Other qualifications <2%

All employees with qualification (n=223)

Q13. Q14.

Are your fitness employees/contractors required to have a minimum qualification? What type(s) of qualification , if any, are your fitness employees/contractors required to have?

Other qualifications that can be required include exercise science degrees (19%), diplomas (13%) and, less frequently, post grad degrees (5%).

29

Membership
Types of Membership
A variety of membership types are used across the fitness industry. Per visit passes are most common (used by 73% of organisations), followed by multi visit passes (56%) and minimum term memberships (55%). Where minimum term memberships are offered, they can take many forms and most organisations offer a variety of minimum term contracts. Two third offer annual minimum term contracts (at an average cost of just under $700), whilst around half offer six monthly (49%) quarterly (57%) and monthly contracts (47%). Three in ten (30%) say they offer flexible fixed terms that can be tailored to meet individual customer needs.

Membership
A relatively small proportion of fitness organisations (39%) say they charge joining fees

Membership Type

Minimum Term Contracts

Average Cost
73%

Per visit pass

Annual

67%

$689

Multi visit pass

56%

Average Cost = $20

Six months

49%

$434

Three months Membership minimum term

55%

57%

$337

One month Membership no minimum term

47%

$94

40%

Flexible terms

30%

Base: Q15. Q16b Q16a.

All fitness organisations (n=312) What type(s) of membership does your [business/centre] offer? Please indicate the average price of these memberships in the boxes provided. What length(s) of minimum term contract does your [business/centre] offer?

Base: All who offer minimum term memberships (n=171)

Note: All other contracts <4%

30

Financial Details
Revenues
Fitness organisations that had been established for over a year were asked how their revenues had changed over the last 12 months. In line with the growth in customer numbers seen earlier in this report, revenues have tended to increase over the last year (for two thirds (64%) of fitness organisations).

Financial Details - Revenues

Annual Revenue
$1K - $10K $10K - $50K $50K - $150K $150K - $500K $500K+ 5% 14% 18% 23% 39% Personal training 39%

Sources of Revenue

Median Revenue: $300,000

Membership (including joining fees)

43%

Change in Revenues*

Casual Visits

9%

Increased, 64%

Stayed the same, 24%

Decre ased, 12%

Merchandise (e.g. apparel, supplements)

3%

Other products / services (e.g. caf sales)

Base: All fitness organisations (n=312)

6%

Base: Q18. Q19. Q20.

All fitness organisations in business for at least a year (n=250) *Note: Excluding dont know Please indicate the revenue for your [business/centre] over the last tax year. Compared to this time last year, would you say your revenue has increased, decreased or stayed about the same? What proportion of your total revenue comes from the following sources?

Most fitness organisations (62%) have annual revenues of over $150K, two fifths (39%) have a revenue exceeding $500K. The median revenue collected over the last year is $300,000. The main sources of revenue for fitness businesses are membership fees and personal training fees. average, these account for around 80% of revenues. Fitness businesses in general generate only a small proportion of their revenues from merchandise sales. Unsurprisingly given their size, personal fitness businesses tend to have the smallest revenues, whilst fitness centres turn over the largest revenues on an annual basis, illustrated in the following table On

31

Table 6: Annual Revenue

Personal Fitness (n=38) %
$1K - $10K $10K - $50K $50K - $150K $150K - $500K $500K+ 21 34 29 8 8

Fitness Centre (n=69) %

0 3 9 28 61

Fitness Studio (n=24*) %

0 33 25 21 21

Median
* small base size results are indicative only

$40,000

$720,000

$110,000

Q18 Please indicate the revenue for your business over the last tax year

32

Costs
Most of a fitness organisations costs come from either employment costs (33%) or property costs (19%, including rent, utilities and taxes).

Financial Details - Costs

Cost Structure

Employment Cost Property costs (incl. rent, utilities and taxes) Equipment leasing and maintenance

33% 19% 10% 9% 8% 6% 1% 6% 7%

Supplies/consumables

Marketing Insurance Franchise fees Other costs Other overheads

Base: Q21

All fitness organisations (n=270) figures exclude Dont Knows Thinking about all the costs involved in running your [business/centre], what proportion of your total revenue goes towards each of the following types of cost?

The way in which costs are split is similar across organisation type, however fitness centres have a much larger proportion of their costs tied up in employment and wages

33

Table 7: Cost Split

Total (n=270) %
Employment cost Property costs (incl. rent, utilities and taxes) Equipment leasing and maintenance Supplies/consumables Marketing Insurance Franchise fees Other costs Other overheads
Base: Q.

Personal Fitness Service (n=81) %

17 18 9 12 11 10 2 12 8

Fitness Centre (n=76) %

42 19 11 6 6 3 1 5 4

Fitness Studio (n=36) %

25 27 13 9 8 6 2 7 6

33 19 10 9 8 6 1 6 7

All Fitness Organisations *small base size, results are indicative only Thinking about all the costs involved in running your [business/centre], what proportion of your total revenue goes towards each of the following types of cost?

34

Profit and Loss

Around half of fitness organisations (54%) have made a profit in the last 12 months, a quarter (27%) have made a loss.

Financials Profit and Loss

Profit and Loss in Last Year*

Made a profit, 54%

Broke even, 19%

Made a loss, 27%

Operating Profit
Less than $50,000 $50,001 - $100,000 $100,001 - $150,000 More than $150,000 Prefer not to say Don't know
Base: All who made a profit (n=140) Base: Q22 Q23

Operating Loss
39% 21% 8%

Less than $50,000 $50,001 - $100,000 More than $100,000 12% 9% 9% 7%

60%

15% 16% 1%

Prefer not to say Don't know

Base: All who made a loss (n=68)

All fitness organisations (n=312) *Note: Excluding dont know and prefer not to say Did your [business/centre] make an operating profit over the last tax year? Please indicate the before tax operating [profit/loss] of your [business/centre] over the last tax year.

Organisations that are more established (have been open for more than 10 years) are more likely to have made a profit, reflecting their experience in the market

Table 8: Profit and loss

Open for up to a year (n=43) %
37 19 44

Total (n=312) %
Made an operating profit Broke even Made an operating loss
Base: Q.

Open 1-2 years (n=37) %

46 30 24

Open 2 - 3 years (n=29*) %

48 17 34

Open 3-5 years (n=34) %

56 18 26

Open 5-10 years (n=38) %

58 18 24

Open for more than 10 years (n=76) %

67 17 16

54 19 26

All Fitness Organisations *small base size, results are indicative only. Figures exclude dont knows and refuseds Does your business have its own fitness facility(ies)/centre

35