“The [fitness] industry continues to grow during economic downturns.
Whereas during the economic downturns most retail and hospitality businesses experience contraction, the health club industry has, over the past 20 years (including three recessions), continued to grow…

It has become a convenience business. 
Because workout frequency is crucial to reaping the rewards of regular exercise, clubs need to be convenient.  This means that they need to be as close as possible either to where members work or to where they live.  An axiom of this business is “Closer is always better.”

It is difficult to overstate the importance of convenience. For most consumers, convenience trumps price. A health club member will pay $10 to $50 more per month to belong to a club that is convenient as opposed to one that may be less expensive, but also less convenient.

Because convenience is such a fundamental factor in club success, site selection is of paramount importance. Most successful clubs are found at the center of upscale marketplaces that have both residential and commercial components.

Convenience implies more than proximity.  It also entails accessibility.  A club can be-as the crow flies-incredibly close, yet, at the same time, inaccessible.  Many factors contribute to inaccessibility, including traffic patterns, traffic jams, signage problems, the lack of parking, safety and security issues, dangerous access or egress, etc.

The industry enjoys ‘annuity-like’ features. 
Most retail businesses begin the first day of the month with zero sales for that month.  This is not true of the health club industry.  On the first business day of each month, almost every club gets an electronic transfer of funds transfer payment into its bank account of somewhere between $5,000 and $400,000.

At almost all clubs, members authorize their club to extract their monthly dues payment from their bank account on the first business day of the month.  In most clubs even in difficult times, these funds transfers are relatively stable.  Most clubs under most circumstances get as many new members as they lose old members.

Few retail businesses have the luxury of posting such a significant portion of their monthly sales (70%-90%) on the first business day of the month.

The industry offers a distinctive value proposition.
Staying healthy and lean, and looking and feeling one’s best, as well as managing stress, etc. are values that Americans prize highly.  Not only does the health club industry directly address these high priority values, but also it does so—on a comparative basis—for relatively modest dollars. In essence, it costs less to be a member of most health clubs [for a month] than it does for a single meal for a couple at a restaurant.  It costs less than a one night’s stay at a hotel. On a per-visit-basis, a health club membership is a better buy than a night at the movies, an evening at a concert, a trip to a baseball game, a few hours at a spa, or even a trip to the hair stylist.

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