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									2008   The IHRSA
   PROFILES OF SUCCESS




The Annual Industry Data Survey
of the Health and Fitness Club Industry




Compiled by The International Health, Racquet & Sportsclub Association,
and Industry Insights, Inc.
                                                                          ®
  IHRSA’s Industry Data
Survey of the Health and
   Fitness Club Industry

 Compiled by The International Health,
   Racquet & Sportsclub Association,
       and Industry Insights, Inc.




                                         International Health, Racquet
                                         & Sportsclub Association
                                         70 Fargo Street
                                         Boston, MA 02210

                                         +1-617-951-0055
                                         +1-617-951-0056 fax
                                         800-228-4772 (U.S. & Canada)

                                         www.ihrsa.org




                                         Copyright 2008
                                         International Health, Racquet
                                         & Sportsclub Association

                                         All rights reserved. No part of this report may be
                                         reprinted, reproduced, stored in a retrieval system,
                                         or transmitted in any form or by any means —
                                         electronic, mechanical, or otherwise — without
                                         the express written consent of IHRSA.

                                         The International Health, Racquet & Sportsclub
                                         Association is a non-profit trade organization serving
                                         the commercial club industry. To order copies
                                         of this report or other IHRSA publications,
                                         visit www.ihrsastore.com.
CONTENTS |

                         INTRODUCTION                                   3
                         METHODOLOGY                                    4
                         INDUSTRY IN REVIEW                             6

The 2008 IHRSA           INDUSTRY AT A GLANCE                           10
Profiles of Success         U.S.   Health, Racquet, and Sportsclubs
                            U.S.   Health Club Membership
is divided into three
                            U.S.   Health Club Patronage
parts. To learn more        U.S.   Health Club “Core” Members
and to order Profiles       U.S.   Health Club Industry Revenue
in its entirety, visit      U.S.   Health Club Member Market Share
www.ihrsastore.com.      CLUB MEMBER DEMOGRAPHICS                       13
                            Gender
                            Age
                            Annual Household Income
                            Region
                            State
                            City

                         CLUB MEMBER PARTICIPATION BY EQUIPMENT
                         AND GROUP EXERCISE                             19
                         CLUB OPERATING BENCHMARKS                      22
                            Club Type
                            Club Size

                         CLUB MEMBERSHIP GROWTH & TRAFFIC               26
                            Club Type
                            Club Size

                         CLUB PRICES                                    29
                            Club Type
                            Club Size

                         CLUB PAYROLL AND STAFFING                      31
                            Club Type
                            Revenue per Full-Time Equivalents

                         CLUB FACILITIES AND PROGRAMMING                32
                            Facility Reinvestment
                            Most Commonly offered Facilities
                            Most Commonly offered Programs

                         2007 INCOME STATEMENT AND BALANCE SHEET DATA   36
                         WORKBOOK                                       46
ACKNOWLEDGEMENTS |

                 Katie Rollauer, Senior Manager, IHRSA, who
                 served as project manager for the report,
                 performed data analysis, and wrote this report.

                 Melissa Rodriguez, Manager, IHRSA, who
                 performed data analysis and contributed to
                 this report.

                 Greg Manns, Vice President of Industry Insights,
                 Inc. who supervised survey development, survey
                 execution, data management, data analysis, and
                 contributed to this report.

                 Richard M. Caro, Jr., President of Management
                 Vision, Inc., who provided advice on the report.

                 Jay Ablondi, IHRSA Vice President of Publishing

                 HM Studios, which developed the design and
                 layout of this report.

                 In particular, the 138 IHRSA members who
                 contributed their time and effort in order to
                 complete the 2008 Industry Data Survey.
INTRODUCTION |


I
    HRSA is pleased to present the 27th edition of the annual Industry Data Survey (IDS) and the
    accompanying publication, Profiles of Success. As it approaches the end of its third decade, the
    commercial fitness club industry continues to develop and evolve in serving a public increasingly
    concerned with its health. The industry in Canada and the United States is a dynamic one composed
of large multi-chain clubs and smaller, independently-owned studios—all seeking to improve their
operations and differentiate their services to meet the needs of a changing population.



A PROMISING AND DYNAMIC INDUSTRY
The North American health club industry continues to hold       well for future growth in the fitness club industry. Recent
a solid position: more than 29,000 clubs serve 41.5 million     research shows that regular physical activity enhances
members, generating revenues totaling to $18.67 billion in      overall quality of life, lessens the effects of aging, increases
2007. Although membership dipped by about 3% in 2007,           life expectancy, helps to prevent diabetes and cardiovascular
total industry revenue increased by 5%, highlighting the        disease, improves mood and energy levels, and can help treat
industry’s ability to encourage consumers to invest in their    cancer and osteoporosis. Most recently, experts have found
health through club programs such as personal training, child   that intense aerobic interval training staves off metabolic
care, and spa services. Membership growth over the past five    syndrome, and walking on a treadmill helps improve brain
years amounted to 5%, while the CAGR for industry revenues      function in stroke survivors.
totaled 1% during the same period.                                 In the United States, two innovative and practical programs
  In recent years, new club models and demographic              are under active consideration in Congress and have received
segments have emerged in the fitness club industry, which       broad support from numerous business and health promotion
have in turn led to both market growth and fragmentation.       organizations. The Workforce Health Improvement Program
Multi-purpose and fitness-only clubs still thrive in the        (WHIP) Act would enable employers to provide subsidies
marketplace, but a diverse U.S. public has made way for         to employees to enroll in fitness programs—without that
niche clubs. Franchises that focus on particular market         subsidy being taxed as additional income to the employee.
segments have prospered in recent years, targeting, for         The Personal Health Investment Today (PHIT) Act would
example, women, budget-conscious consumers, and young           allow taxpayers to use up to $1,000 a year from pre-
exercisers. Similarly, the growing population of retirees       tax accounts (similar to flexible spending accounts for
calls for “soft” fitness programs, and club companies have      other employee benefits) to pay for fitness clubs, YMCA
responded to this market segment’s needs.                       memberships, or home fitness equipment.
   Medical research findings and public policy initiatives
have encouraged people to exercise regularly, which bodes




                                                                                              IHRSA Profiles of Success 2008 | 3
INDUSTRY DATA SURVEY | Methodology


                                               T
                                                       his 2008 Profiles of Success           The data and findings contained
                                                       report is the result of a joint     within Profiles of Success do not
                                                       effort between the International    present an absolute standard for any
                                                       Health, Racquet & Sportsclub        individual company’s performance.
                                               Association (IHRSA) and Industry            Instead, the report provides a median
                                               Insights, Inc. This study is based upon     financial and operating performance
                                               a detailed survey of IHRSA member           metrics for several types of commercial
                                               clubs in the United States and Canada.      health and sports clubs. The North
                                                  Unless otherwise noted, data reflects    American health club industry remains
                                               the median value for each individual        very entrepreneurial, and, local market
                                               set of responses to a question. The         conditions, owners’ preferences, and
                                               median represents the mid-point for         unique business models may well cause
                                               a given data set: it is determined first    substantial variation among performance
                                               by rank ordering a series of numerical      reported in this study and what readers
                                               values (from highest to lowest) and         have seen in their own business.
                                               then by selecting the value that falls      Accordingly, readers should use this
About Industry Insights, Inc.                  exactly in the middle—that is, with         report more as a source of information
                                               one-half of the values above it and         on how others have performed than as
Based in Columbus, OH, Industry                one-half below. Unlike the mean—the         a set of explicit targets.
Insights has been in business since 1980       arithmetic average—the median is less          We at IHRSA welcome your comments
and specializes in conducting industry         likely to be distorted by a small number    and questions on the methodology, data
performance research for industry trade        of unusually high or low values that        collection, and analysis in this report
associations and professional organizations.   may occur in a sample. Each median          and would be pleased to hear from you.
For the purposes of this study, Industry       and mean was independently identified       Please contact research@ihrsa.org with
                                               for each individual set or subset of        your feedback.
Insights consulted on survey development,
                                               responses to a given question. As a            In an effort to allow comparison of
and managed returned surveys, data entry,      result, component values often do not       financial data across companies and
data cleaning, and data processing.            total 100%.                                 segments, questions were adapted to
                                                  To provide additional insight into       conform to the Uniform System of
                                               the data, the 2008 edition of Profiles      Accounts for the Health, Racquet, and
                                               of Success presents the middle              Sportsclub Industry.
                                               range for values of some important             Data attributed to American Sports
                                               measurements. This middle range             Data was published in the IHRSA/
                                               consists of the span of the middle 50%      American Sports Data Health Club
                                               of the reported values—that is, the span    Trend Report, which is sponsored by
                                               of the values that did not fall within      IHRSA. This data is derived from a
                                               the lowest quartile (the bottom 25%         survey of 30,000 U.S. households, and
                                               of all values) and the highest quartile     represents demographic findings for
                                               (the top 25% of all values).                Americans over the age of six.




                                                  Smallest           “Lower Figure”   Typical      “Upper Figure”                Largest
                                                  Number Reported                                                        Number Reported

                                                   Lower 25% of          Middle 50% of Reported Figures              Upper 25% of
                                                  Reported Figures             (or Middle Range)                    Reported Figures

                                                                                      Median




4 | IHRSA Profiles of Success 2008
INDUSTRY DATA SURVEY | Sample Characteristics

SAMPLE CHARACTERISTICS AND                   Figure 1: Club Type                   Figure 2: Company Type
DEFINITION OF CLUB TYPES
A total of 138 IHRSA member companies
completed the comprehensive Industry
Data Survey (IDS) on which this report
is based. They came from the following
categories:
                                                   68%          32%                             68%      32%
Multipurpose (68% of respondents):
These clubs have fitness facilities—
either an aerobics/dance exercise studio,
and/or fitness center—and typically
racquet sport courts. They may, or may
not, have additional facilities, such as a
gymnasium, swimming pool, etc.                      ! Multipurpose Clubs                        ! Individual Facility
Fitness-only (32% of respondents):
                                                    ! Fitness-only Clubs                        ! Multi-club Operation
These clubs have fitness facilities—either
an aerobics/dance exercise studio, and/
or fitness center—but they do not have
racquet sport courts. They may, or may       Figure 3: Club Size
not, have additional facilities, such as a
gymnasium, swimming pool, etc.

Multi-club Operation (32% of respondents):             12%
These clubs may be multipurpose,
fitness-only, or tennis-only clubs, but          15%             40%
they share a common ownership or
management with at least one other club.
                                                     34%




                                                    ! Less than 20,000 sq. ft.
                                                    ! 20,000 to 34,999 sq. ft.
                                                    ! 35,000 to 59,999 sq. ft.
                                                    ! 60,000 sq. ft. or more



                                             Table 1: Multi-club Company Growth
                                             (median number of clubs per company)

                                                         Year                    No. of Clubs
                                               December: 1990                         1
                                               December: 1995                         2
                                               December: 2000                         2
                                               December: 2005                         3
                                               December: 2006                         4
                                               December: 2007                         4




                                                                                          IHRSA Profiles of Success 2008 | 5
INDUSTRY IN REVIEW |

INDUSTRY CLIMATE                                                                 Another notable leading player, Gold’s Gym International,
                                                                              has come a long way from its beginning in bodybuilding
Leading Club Companies
                                                                              products and services during the mid-1960s. In response to
Despite flat or slow growth in total health club membership                   the evolving consumer market for fitness clubs, Gold’s has
in recent years, several companies have maintained strong                     expanded its offerings to include group exercise, personal
business models and developed promising new ones that                         training, spinning, Pilates, and yoga. Gold’s strategy to diver-
have fueled growth. In many respects, these organizations are                 sify services while staying true to its weight-lifting roots has
industry leaders that other club developers can consider as                   paid off: after 40 years, Gold’s Gym is one of the leading com-
they seek to develop successful, growing companies. Listed                    panies in memberships with 3 million members. Reporting
below are the top North American club companies in IHRSA’s                    revenues exceeding $120 million in 2006, the Texas-based
Global 25, ranked by revenue along with their market niches.1                 company is also one of the early pioneers of the fitness club
   From Club Corp’s focus on fitness and country club man-                    franchise model, others of which will be examined later on in
agement to Fitness Together’s emphasis on private training,                   this report.
these leading club companies portray the dynamic nature of                       A noteworthy forerunner to the franchise model in the
fitness industry leaders. Industry forerunners are paving the                 budget sector is Planet Fitness, which serves more than one
way for growth with solid business models, sound operational                  million members with a very basic fitness-only model. With
methods, and a clear focus on their respective target markets.                monthly dues as low as $10 per month, members have access
   Other companies warrant mention among leading players                      to essential cardio-training and strength-training equipment
for their innovative and nimble business strategies. Once a                   for a basic workout. This model has worked well for Planet
fitness-only company, 24 Hour Fitness has emerged as one                      Fitness, as it reported $48.8 million in revenue in 2007.
of the top U.S. fitness chains with a reported $1.3 billion in
revenue during 2006. The company has fueled its growth by                     PUBLICLY TRADED FIRMS
expanding its club portfolio to include six models, each with
                                                                              In the United States, there are three publicly traded fit-
a distinct specialization in fitness-only, multi-purpose, cir-
                                                                              ness companies: LifeTime Fitness (NYSE:LTM), Town
cuit-training, and spa services. In the past 15 years, 24 Hour
                                                                              Sports International (NASDAQ:CLUB), and Health Fitness
Fitness has grown from a 35-club California chain to a fitness
                                                                              Corporation (OTC: HFIC).
empire of 425 domestic and international locations.
                                                                                Since 2000, LifeTime Fitness has expanded operations from
Table 2: Leading Club Companies                                                                        the central states of the U.S. into the
                                                                                                       Midwest, Southwest, the Mid-Atlantic
                                                                                                       and the South. With four distinctive
   2Club Company                                Niche                           Revenue (2007)         club models, LifeTime Fitness has
                                                                                                       more than 70 multi-purpose clubs,
   Curves                    Women-only franchise                                    $2 billion
                                                                                                       and in 2007, the company generated
   Club Corp                 Fitness center/golf and country club                 $950 million         over $656 million in revenue and
                             management                                                                served nearly 500,000 members.
   LifeTime Fitness          Multi-purpose, multi-chain clubs                     $869 million            Similarly, Town Sports
                                                                                                       International (TSI) has grown from
   Town Sports               Urban/suburban fitness-only clubs                    $473 million
                                                                                                       an 11-club operation in 1989 to
   International (TSI)
                                                                                                       nearly 150 units throughout New
   Bally Total Fitness       Fitness-only, multi-chain                            $469 million         England, the Mid-Atlantic, and the
   GoodLife Fitness          Fitness-only clubs with corporate                    $167 million         South. TSI sales were $472 million
                             wellness component                                                        in 2007; membership has grown
                                                                                                       from 42,000 in 1993 to 486,000
   Millennium                Upscale fitness-only clubs with                      $112 million         in 2007.
   Partners Sports           spa services                                                                 Also publicly traded, albeit with
   Club Co.                                                                                            a less traditional business model,
   Lifestyle Family          Family-oriented fitness-only clubs                   $101 million         Health Fitness Corporation manages
   Fitness                                                                                             more than 400 clubs with corpo-
   Western                   Regional multi-purpose club chain                     $97 million         rate fitness, health assessment, and
   Athletic Clubs                                                                                      screening programs and services.
                                                                                                       Founded in 1993, Health Fitness is
   Spectrum Clubs, Inc. Luxurious, regional fitness-only clubs                     $94 million         a leader in corporate fitness man-
   Fitness Together          Personal training only franchise                      $92 million         agement, having served 225,000
   Franchise Corp.                                                                                     members and generated $70 million
                                                                                                       in sales in 2007.

1 IHRSA’s Global 25 provides basic, unaudited information on some leading club companies as of December 31, 2007. Several companies that should appear
  on this list are not mentioned because they did not participate in or provide information in time for Club Business International’s (CBI) deadline for
  IHRSA’s Global 25 feature.



6 | IHRSA Profiles of Success 2008
INDUSTRY IN REVIEW |

EMERGING FRANCHISES                                                                    Leading the budget club sector are Snap Fitness and Anytime
                                                                                     Fitness, franchises with 626 and 608 units, respectively. Open
The mid-90s and onward spurred on the growth of fran-
                                                                                     24-hours a day, Snap Fitness and Anytime Fitness cater to the
chise models led by Curves, the circuit training operation
                                                                                     consumer looking for a convenient, basic workout with few frills.
for women only. After a decade, several other franchises
have emerged to serve demographic niches. Once the most
dominant player in the women’s fitness market, Curves now                            MERGERS & ACQUISITIONS ACTIVITY
shares the market with Contours Express, Jazzercise, and                             Private equity investors are attracted to fitness companies by
Stroller Strides. Of these three relatively new franchise play-                      the top-line growth rates achieved by operators and by the pros-
ers, Contours Express is the only one with a circuit-training                        pect of profit improvement through professional management,
women-only model. Stroller Strides offers pre- and postnatal                         organization discipline, and operational efficiency. The follow-
exercise programs for mothers, while Jazzercise delivers                             ing table (Table 3) gives an extract of some of the major recent
total-body conditioning programs through dance for a co-ed                           financial transactions dating back to the beginning of 2007.
population. Although women-only franchises target a market
similar to that of Curves, they have yet to generate revenue                         HEALTH CLUB MEMBERSHIP
comparable to the pioneer in the women’s fitness market,
                                                                                     Attendance
which reported revenues of $2 billion in 2007.
   The Blitz Total Fitness leads the men’s fitness segment  Health club membership data indicates that the industry con-
with more than 300 franchise locations in the United States,tinues to make firm believers out of health club patrons, as
Canada, and Ireland. Based in Florida, The Blitz Total      the share of health club members to total patrons has risen
Fitness operates on a franchise model that offers an intensein the last decade. See Table 8; Figures 6 and 7. In 1998, 55%
20-minute circuit-training program designed for weight loss,of patrons were members, while 67% were in 2007. In 2007,
strength, and overall fitness.                              members used the club an average of 90 days, up from 84 in
                                                            1997. In addition, the health club industry has done an excel-
                                                                                         lent job recruiting and retaining
Table 3: Recent Mergers, Acquisitions and Business Transactions                          core/frequent participants—those
                                                                                         who use a club 100 or more
                                                                                         times a year or at least twice
                                                   Nature of      Type of               per week. This segment of heavy
 Date               Target         Bidder/Investor Buyer          Transaction           users increased by 137% between
  January 2007 Slender Lady       Healthy          Fitness club Merger                  1990 and 2007. There are more
                                  Inspirations     company                              than 16 million core users in the
                                                                                        United States, approximately 39%
  April 2007   Six Bally Clubs in Falconhead       Private        Purchase/
                                                                                        of the total healthclub member-
               Toronto, Canada Capital, LLC        equity firm    re-branding
                                                                                        ship population.
  October 2007 Alaska Club        Lincolnshire     Private        Purchase                 Casual attendees, defined
                                  Management       equity firm                          as patrons who visit a club 25
  October 2007 Bally’s Total      Harbinger        Private        Purchase              or fewer times per year, grew
               Fitness            Capital Partners equity firm                          52% between 1990 and 2007.
                                                                                        Nonetheless, neither core nor
  January 2008 Six Gold’s Gyms    Titan Fitness    Fitness Club Purchase (with          total health club attendance has
               in Virginia                         Company        funding secured       grown substantially since 2004.
                                                                  from WestView         The National Sporting Goods
                                                                  Capital Partners)
                                                                                        Association has also shown
  March 2008   WAC                KSL Capital      Private        Purchase              through its own research that
                                                   equity firm                          the number of fitness consum-
  March 2008   World              North Castle     Private        Purchase              ers working out at a club has
               Health Club        Partners         equity firm                          remained statistically the same
                                                                                        since 2005. See Table 4.


Table 4: Club Attendance from 1990-2007

   Date                                1990               1995              2000             2004           2005            2006           2007
    Workout at a Club                   20.3               22.0              24.1             31.8           34.7            34.9           33.8
    at least six times
    per year (in millions)

Source: National Sporting Goods Association Annual Sports Participation Study 2008


                                                                                                                    IHRSA Profiles of Success 2008 | 7
INDUSTRY IN REVIEW |

Demographics: Gender                                                      Demographics: Geography
Health club members are as diverse as the leading and emerg-              City
ing club companies that serve them. Women still out-number                Membership penetration rates for many large cities continue
men, 54% (22.5 million) to 46% (19 million), in health club               to exceed the U.S. average. See Figure 19. Minneapolis and
membership. See Figure 10. From 1990 to 2007, female gym                  Milwaukee lead all U.S. cities in penetration rates at 29.5%
membership increased by 117%, while gym membership                        and 26.9%, respectively. In the southeastern states, Atlanta
among men increased by 84%. See Figure 11. Over the past                  and Miami have the nation’s third and fourth highest city
five years, female and male membership have achieved a                    penetration rates at 25.2% and 25.0%. Opportunities for club
compound annual growth rate (CAGR) of 1.45% and 0.62%,                    and membership growth exist in Las Vegas and Sacramento
respectively. Club membership among men declined nearly                   where only ten out of 100 residents are health club members.
5% from 2006 to 2007, while female health club membership
experienced no significant change from the previous year.                 State and Region
                                                                          The Atlantic seaboard is home to the states with the highest
Demographics: Age                                                         penetration rates: Connecticut, North Carolina, and Maryland.
                                                                          See Figure 18. In fact, eleven of the 23 states with the penetra-
The adult population continues to dominate health club
                                                                          tion rates exceeding the U.S. average are located along the East
membership. See Figure 12. Consumers between the ages
                                                                          coast. This coincides with penetration rates attributable to the
of 18 and 54 make up two-thirds of all health club members.
                                                                          Northeast and South regions of the United States where a total
These consumers typically used a fitness club about
                                                                          of 33 out of every 100 residents are members of a health club.
90 days last year. The smallest age demographic consisted of
                                                                             Opportunities for club growth exist in West Virginia,
younger consumers of 6-11 and 12-17 years of age, who used
                                                                          Oklahoma, and Alabama, where the penetration rate is less
the club 42 and 67 days, respectively. Consumers under 18
                                                                          than half the U.S. average. In non-metropolitan areas of all
make up approximately 9% of total health club membership.
                                                                          southern states, the penetration rate is as low as 6.7%. Non-
Membership among health club patrons over the age of 55
                                                                          metropolitan areas in the North Central region also have a very
grew more than any other segment last year. With an average
                                                                          low penetration rate, at 8.4%. These areas represent markets of
usage of 98 days last year, the 55+ age group has increased in
                                                                          opportunity for a club operator with the right business model.
membership by 411% since 1990. At 7.78%, this group’s
5-year CAGR from 2003 to 2007 is low relative to the
astounding long-term growth it has achieved, but in the past
year alone, club membership in this age cohort increased by
16.45%. See Figure 13.                                                    Table 6: Lifestyle Segments with High
   Although this growth in older members may be a product
of general demographic changes—by 2020 there will be an
                                                                          Membership Penetration Rates
increase of 14 million people over the age of 65—these con-
sumers have different fitness goals and exercise limitations and             Lifestyle Segment                                  Penetration Rate
their needs will affect club offerings for years to come.
                                                                             Age: 25-44; HHI: $100,000+                                35.2%
   Incentives and exercise rewards such as raffles and com-
plimentary merchandise are seldom of interest to this group,                 HHI: $150,000                                             33.1%
which suggests that older adults are most driven by intrinsic                Education: Advanced Degree                                32.3%
motivation such as becoming stronger and more fit so they
can remain independent and healthy. See Table 5.                             Marital Status: Single; Income: $75,000                   29.5%
                                                                             Geographical location: Metro with                         28.5%
                                                                             pop. 2,000,000+; Income: $100,000
Table 5
                                                                             Marital Status: Both householders                         28.3%
                                                                             employed, no kids; Age: Each <45
   Common Club Preferences of Older Adults
                                                                             Age: 18-34; Education: Current,                           27.7%
    Availability of certified personal trainers                              full-time student
    Options for individual and group exercise                                Age: 55+; Income: $100,000+                               24.1%
    Safe and clean exercise environment                                      Age: Both 45+, no kids;                                    23%
    Friendly atmosphere                                                      Income: $75,000

    Convenient and accessible location                                       Geographical location: California                         22.3%
                                                                             residents; Age: 12-34
    Affordable
                                                                             Gender: Female; Age: 18-34                                 21%

Source: IHRSA/George Washington University, OLDER ADULTS’ EVALUATION OF   Source: IHRSA/American Sports Data, The Health Club Trend Report 2007
HEALTH CLUB FEATURES, Spring 2008



8 | IHRSA Profiles of Success 2008
INDUSTRY IN REVIEW |

Table 7: Lifestyle Segments with Low                                        On the other hand, the lifestyle segments with the lowest
                                                                         penetration rates are typically composed of people who reside
Membership Penetration Rates                                             in non-urban areas, have low incomes, and are particularly
                                                                         young or old. The segment with the lowest penetration rate
   Lifestyle Segment                                  Penetration Rate   (3.8%) consists of Americans residing in rural, non-metro
                                                                         areas with an annual income less than $25,000. Only six out
   Geographical location:                                    3.8%        of 100 people over the age of 55 who made less than $15,000
   Non-metro area; HHI: <$25,000
                                                                         last year were health club members. Americans between the
   Age: 55+; HHI: <$15,000                                   6.4%        ages of 6-11 and residents of the non-metropolitan areas of the
   Geographical location:                                    6.7%        Southern region of the United States each had a low penetra-
   Southern region, non-metro area                                       tion rate of less than 7%. Less than 8% of pre-teen and high
                                                                         school males were members of health clubs last year.
   Age: 6-11                                                 6.7%
   Gender: Male; Age: 12-17                                  7.9%        CONSUMER PARTICIPATION
   Geographical location:                                    8.4%        For the past two decades, health club consumers have
   North Central region, non-metro area                                  used three primary pieces of fitness equipment: resistance
   Gender: Female; Age: 65+;                                 9.3%        machines, treadmills, and free weights. See Figure 20.
   Marital Status: Unmarried                                             Resistance machines and treadmills have been more popular
                                                                         for use at sports club facilities, while free weights and the
   Age: 12-17                                                9.5%        treadmill have been more widely used at home. A little over a
   Gender: Male; Age: 65+;                                   10.2%       decade ago, the elliptical trainer was introduced. The number
   Marital Status: Unmarried                                             of users of elliptical trainers grew sevenfold from 1997 to
                                                                         2007. Health club patrons consistently used cycling and
   Marital Status: Both Married;                             10.3%
                                                                         rowing equipment throughout the years, although in smaller
   Age: <30
                                                                         numbers in comparison to the top three.
   Age: 75+                                                  10.7%          Unlike fitness equipment usage, group exercise participation
                                                                         has varied within the same time frame. From 1987 to 1997,
                                                                         group exercise consumers largely participated in step and high-
Source: IHRSA/American Sports Data, The Health Club Trend Report 2007
                                                                         and low-impact aerobics. As step and high-impact aerobics
                                                                         participation decreased, consumers began participating more
LIFESTYLE SEGMENTS                                                       often in softer fitness programs inside and outside of fitness
Examining membership rates according to demographic                      clubs such as yoga, Pilates, low-impact aerobics, and walking.
groups, or lifestyle segments, reveals relationships between
membership and household income (HHI) and membership
and education level. See Tables 6 and 7.
   Noteworthy lifestyle segments include 35% of Americans
between the ages of 25 and 44 with annual incomes exceeding
$100,000 belong to a health club. Approximately one-third
of Americans with household incomes of $150,000 or more
belonged to a health club, and nearly one-third with advanced
degrees carried health club memberships. Approximately
30% of single, unmarried Americans with annual earnings
of $75,000 are health club members. Nearly three out of 10
Americans who reside in large metropolitan areas (with a
population of 2,000,000 or more) and earned at least
$100,000 last year were members of a health club. Below
are listed the top 10 lifestyle segments in terms of health
club membership. See Table 6.




                                                                                                      IHRSA Profiles of Success 2008 | 9
INDUSTRY AT A GLANCE |

                                      Figure 4: U.S. Health, Racquet, and Sportsclubs



                                                                                         29,069          29,357          29,636
                                                                          26,830

                                                              23,497




The health club
industry has remained
stable in number
of facilities and
                                                              2003         2004            2005            2006           2007
memberships.
  In 2007 the total number of         Source: InfoUSA, Inc.
  fitness centers in the U.S.         Note: Figures reflect the number of businesses listed in Yellow Page directories under industry SIC code 7991.
  increased by 279 to a total
  of 29,636 facilities.

  U.S. health club membership         Figure 5: U.S. Club Membership (millions)
  continued to grow since
  2003, albeit more slowly,
  reaching a record 42.7
  million Americans in 2006.                                                                                42.7           41.5
                                                                            41.3           41.3
                                                               39.4
  Over the past five years,
  total U.S. health club
  membership has increased
  by 5.3%.




                                                              2003         2004            2005            2006            2007



                                      Source: IHRSA/American Sports Data Health Club Trend Report
                                      Note: Survey results represent membership numbers for a broad range of facilities, including park & recreation
                                      centers, hospital fitness centers, YMCAs, college & university centers, and commercial clubs.




10 | IHRSA Profiles of Success 2008
INDUSTRY AT A GLANCE |

                            Table 8: U.S. Health Club Patronage (millions)

                                                                   2003           2004           2005            2006           2007
                               Health Club Members                 39.4           41.3            41.3           42.7           41.5
                               Non-member Patrons                   28            25.5            23.6           26.6           20.4
                               Total                               67.4           66.8            64.9           69.3           61.9


                            Source: IHRSA/American Sports Data Health Club Trend Report.
                            Note: Survey results represent membership numbers for a broad range of facilities, including park & recreation
                            centers, hospital fitness centers, YMCAs, college & university centers, and commercial clubs.


Health club utilization     Figure 6: Growth in the Number of “Core” Members
                            (Members who used the club 100+ days per year, in millions)
continues to signal
a healthy demand
for the industry and                                             17.4            17.6            17.4
its services.                                     15.7                                                          16.2

  A total of 20.4 million
  Americans who were
  non-members of clubs
  indicated that they
  visited a health club
  in 2007.

  The number of “core”
  health club users
  reached an all-time
  high of 17.6 in 2005.                          2003            2004            2005           2006            2007

  Americans continue        Source: IHRSA/American Sports Data Health Club Trend Report.
  to visit their health
  clubs an average of       Figure 7: Health Club Attendance
  90 days per year.         (Average number of days per year)


                                                                  91              92              90             90
                                                   90




                                                 2003            2004            2005           2006            2007

                            Source: IHRSA/American Sports Data Health Club Trend Report.


                                                                                                         IHRSA Profiles of Success 2008 | 11
INDUSTRY AT A GLANCE |

                                      Figure 8: U.S. Health Club Industry Revenue (billions)


                                                                                                           18.7
                                                                                                    17.6
                                                                                      15.9
                                                            14.1        14.8




Total U.S. health
club industry
revenues reflects
the industry’s steady
growth over the                                             2003       2004           2005          2006   2007

past decade.                          Source: IHRSA Estimates.

  The 10-year CAGR for
  industry revenues from
  1998-2007 was 14.3%.

  Revenue grew by 6.25%
  from 2006-2007.                     Figure 9: Commercial Club and Miscellaneous For-Profit Club
                                      Market Share: Percentage of total U.S. health club membership



                                                            13%
                                                                                          ! Commercial
                                                                                          ! Not-for-profit
                                                                                          ! Miscellaneous Commercial
                                              47%
                                                                 40%




                                      Source: IHRSA/American Sports Data Healh Club Trend Report.




12 | IHRSA Profiles of Success 2008
CLUB MEMBER DEMOGRAPHICS | by Gender

                        Figure 10: Club Membership


                                                                             ! Women
                                                                             ! Men

                                     46%              54%




American women
represent a majority    Source: IHRSA/American Sports Data Health Club Trend Report.

of all U.S. health
club members.
 The 5-year CAGR for
 women from 2003-2007
 was 1.45%.

 The 5-year Compound
                        Figure 11: Club Membership by Gender (millions)
 Annual Growth Rate
 (CAGR) for men from
 2003-2007 was 0.62%.                                                      23,566
                                                                                           22,660           22,501
                                      20,943            21,563
                                                  19,775                               20,025
                                                                                                      19,040
                               18,462                              17,770




                                     2003               2004              2005             2006             2007



                        Source: IHRSA/American Sports Data Health Club Trend Report.
                                                                                                            ! Women
                                                                                                            ! Men




                                                                                                IHRSA Profiles of Success 2008 | 13
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