Our latest edition of RIDE HIGH includes a must-read supplement – A Global Crisis? – in which we speak to operators across Europe, Asia-Pacific, Africa and the Americas to understand the region-by-region challenges facing the fitness sector at the moment, and the strategies that might be deployed to navigate them.

Check out all our expert comments here or download a PDF of the full magazine, including the supplement, above.

Here, we share the perspective of Jordy Kool, chair of Urban Gym Group in the Netherlands. Interview conducted 2 November 2022.

Urban Gym Group is performing well. Profitability isn’t yet back to pre-COVID levels – not least because we’ve made a number of acquisitions and opened new clubs – but average club attendance is exceeding 2019 levels, driven in particular by our Trainmore brand.

There are a number of headwinds, but decisions we’ve made over the last couple of years are helping us navigate these.

Prices of equipment are up; one supplier has raised its prices by 16 per cent. Fortunately we saw COVID as a time to invest, including new equipment across our estate. In combination with a diversification of our supplier portfolio, we’ve avoided the worst of the price increases.

There’s huge pressure on salaries, too. Our staff make a difference in our business, so we’d already planned to pay them more to help with their own rising costs. However, this is a major consideration for all operators right now.

Rent is also up: in the Netherlands, landlords are allowed to increase rent in line with the consumer price index, which is currently 14 per cent. I’m expecting the government to get involved, so that may change, but meanwhile we’re in a good position: our strong footprint in Amsterdam and our continued growth makes it wise for landlords to support us.

Rising electricity and gas prices are having a huge impact on the sector, but we hedged our costs for the long term and aren’t feeling it yet: at the majority of our clubs, we’re still on the old prices until the end of 2023. 

“We’re doing what we can to lower our energy consumption, including speaking to landlords about co-funding solar panels”

It will come, though, so we’re doing what we can to lower our consumption now: building smarter, including LED lighting, and speaking to landlords about co-funding solar panels, as well as a range of other things. We’re also getting better at simply turning things off when not in use. 

We already removed sunbeds as not core to our healthy offering, and in some clubs removed saunas that weren’t used much to expand the gym. Both decisions, while not driven by energy costs, have positively impacted our energy use.

But some things are harder to control: air conditioning, for example, which members can sometimes even turn on themselves, and the length of people’s post-workout showers. And in the end, however much you try to cut consumption, you still have a service and a product to offer. I can only sympathise with those who have swimming pools to run. 

I’ve been speaking to operators whose electricity bills are five, six, seven times higher than they used to be. You’re never going to be able to compensate for that. Even two or three times will send some businesses into a loss. 

And all of this at a time when interest rates are rising and impacting the ability to raise debt; when customer acquisition costs are going up and lifetime value down as members pay less and don’t stay as long; when over-supply in the boutique segment means aggregators won’t be able to subsidise everyone; and when even high-end wellness operators, unless they have particularly strong margins and non-price sensitive members, will find it tough.

We aren’t exempt from the pressures. We’ve closed two of four standalone High Studios, for example, as they weren’t making a profit, and put the programming into GX studios at our other clubs instead. But we’re in a good position having raised new debt at good rates during COVID. We may not have the deepest pockets, but we  do at least have pockets. We can survive another crisis and make further acquisitions. And we do expect to make acquisitions. How can smaller operators survive in this climate? There’s only so far you can raise prices for the consumer, if at all. 

Our latest edition of RIDE HIGH includes a must-read supplement – A Global Crisis? – in which we speak to operators across Europe, Asia-Pacific, Africa and the Americas to understand the region-by-region challenges facing the fitness sector at the moment, and the strategies that might be deployed to navigate them.

Check out all our expert comments here or download a PDF of the full magazine, including the supplement, above.

Here, we share the perspective of Andreas Paulsen, CEO of EuropeActive. Interview conducted 18 October 2022.

Across Europe, we’re seeing governments collaborating and taking extraordinary steps to bring energy prices – particularly electricity and gas – under control. Political efforts are being coordinated through the EU to ensure gas reserves are full, for example, and significant political measures are being taken to bring more energy supply into the market and to temporarily cap energy company profits to quickly bring down consumer prices. 

As a result, we’re seeing gas prices begin to flatten and even fall. This is likely to continue in the coming months as the EU’s domestic production of gas and other types of energy is dramatically increased, reducing reliance on import from places like Russia. 

“If we bring energy under control, it is likely that the cost of living crisis can be brought under control generally”

In the current cost of energy crisis, inflation seems largely centred around energy and food supply, which in turn is directly linked to the situation in Ukraine; it is not general inflation. If we bring energy under control, it is likely that the cost of living crisis can be brought under control generally. 

With this in mind, we cross our fingers that EU and national measures take effect and start to improve the situation quickly. And, of course, we appeal to everyone to take societal responsibility as citizens, reducing daily energy consumption as much as possible.

For our sector, there are significant challenges; for many businesses, they are existential. Yet even amid these challenging circumstances, we must keep fighting and stay focused on our bright future; over the next couple of years, leadership will be defined by effectively addressing current circumstances, turning challenge into opportunity.

I believe one way for our sector to get value from the current situation is to use it to inform our long-term energy and environmental sustainability. We must look at ways to cut superfluous or unnecessary energy consumption, and crucially, we must do it in dialogue with club members, communicating strategically with them both now and moving forward. 

Short term, as a reaction to the current situation, I’m sure most members will understand that tough decisions have to be made. Clubs with facilities like saunas, for example, will likely have to temporarily close them. Open, honest conversations with members will be necessary.

Longer term, it’s about building sustainability into our strategies, looking at things like insulation, smart electricity, heating and water systems. Put together, they can significantly reduce energy consumption and costs. They can also be part of our collective image-building as a sector for the future.

In Denmark, for example, people are being offered government-backed loans to gradually pay back any energy costs that exceed their Q4 2021 baseline. Similar measures are being offered elsewhere in Europe. This represents a valuable opportunity to build cost-reduction measures into our longer-term strategy – starting now – and factor repayments into our recovery plans.

I see a crucial role for industry associations, too. We must actively encourage sharing of best practice among our members and partner associations across Europe, and ensure politicians understand the negative impact on population health that will result from our sector not being able to deliver its services.

I see a very positive future for our sector as we position ourselves as need-to-have health rather than nice-to-have leisure and consumer demand for personalised health and wellbeing continues to grow. But there will be challenges on the way. Overcoming the present need to balance rising energy costs against squeezed disposable income among consumers is unquestionably one of them.

Our latest edition of RIDE HIGH includes a must-read supplement – A Global Crisis? – in which we speak to operators across Europe, Asia-Pacific, Africa and the Americas to understand the region-by-region challenges facing the fitness sector at the moment, and the strategies that might be deployed to navigate them.

Check out all our expert comments here or download a PDF of the full magazine, including the supplement, above.

Here, we share the perspective of Michal Homola, founder of Terra Hale in the UK. Interview conducted 13 October 2022.

It’s true that the current energy crisis is impacting everyone. However, our lower energy usage means we are less affected than others.

Ours is a group of three – soon to be four – personal training and body transformation studios in London, UK, where everything revolves around being eco-friendly. And I mean everything, from plants in our studios for oxygen to exploring ways to minimise our carbon footprint. For example, as we look to expand overseas, we want to minimise how much equipment we need to import, so we’re experimenting with gathering plastic waste and using it to 3D print the equipment we need. In the process, we’ll also help clean up the locations where we want to build. It’s a win-win.

We teach our customers to be more eco-friendly in their lives, too, from giving them bamboo toothbrushes to educating them on eliminating the big users of electricity from their lives.

We’ve certainly done that in our clubs. Our lighting is the most energy-efficient LED lighting you can get, and we’ve kept the set-up pretty simple. There’s nothing flashing, nothing fancy, and at any point in time, we only have the lights on in rooms that need to be lit. The same applies outside: the lighting in our external signage is only switched on at night.

“We define ‘warm enough’ differently from most. Even when it’s cold outside, we focus on getting our clients warm through exercise”

It’s similar with heating. We have no boiler at all – just electric panels in the ceiling that heat up really quickly. As soon as the room is warm enough, we turn them off. And we define ‘warm enough’ differently from most. Even when it’s cold outside, we focus on getting our clients warm through exercise rather than having the room really warm when they come in. That’s not to say we make it uncomfortable for people, not at all, but our rooms are always a bit below your typical room temperature. We soon get them – and the people in them – warm through working out!

Other than that, all we have plugged in are a music speaker and a coffee machine. We don’t provide towels for our customers so we don’t have to wash them – that’s a very power-intensive process. Neither do we have steamrooms or saunas. And while we do offer showers, only around 10 per cent of our members use them. They’re also electric showers, so we’re only heating the exact amount of water we need.

We use clean energy – wind, solar and hydro power – via our renewable energy providers, and none of our equipment is powered. Our rowers use water resistance, our treadmills are self-powered and our bikes actually generate electricity that we sell back to the grid. It isn’t enough to live on or run the business on, but compare that to having to power plugged-in bikes and treadmills and it isn’t hard to see which is the most sustainable.

I know this might all sound like small details, but it really does add up. I would estimate that we use around 80 per cent less energy than the typical gym, in spite of being open from 5.00am to 10.00pm.