Sonoma County undergoing a health club boom
There is tremendous activity in the health club industry in the United States as buyouts, public offerings and multibillion-dollar investments rapidly change the $26 billion industry.
And the economic recovery from the recession has created additional momentum.
The ramifications are playing out locally where, according to Infogroup USA, a marketing firm and business data provider, there were 141 such facilities and related businesses registered in Sonoma County in the past year. They range from spartan chains such as Curves and CrossFit to ritzier places such as Montecito Heights Health Club, which features a pool, tennis courts and even a spa.
The flurry of activity can be seen at the Orangetheory Fitness studio at the Coddingtown Mall that opened in April. Customers work through intense interval strength and cardiovascular training for 60 minutes as they are hooked up with a monitor that precisely measures their heart rate and calorie burn. Two more locations are already planned for Rohnert Park and Petaluma.
St. Joseph Health acquired Active Sports Clubs Petaluma in January as part of its focus on offering more fitness and wellness services.
And, Anytime Fitness opens a facility this week at the new Epicenter complex in northwest Santa Rosa. Owner Brett Livingstone said he hopes his 9,800-square-foot facility can capitalize on the foot traffic of an anticipated 950,000 annual visitors who will trek through the entertainment and sports complex, which features three indoor soccer fields.
“This is an incredibly competitive area,” said Livingstone of the Santa Rosa market. Livingstone, who owns four other Anytime franchises in Larkfield, Petaluma, Rohnert Park and Berkeley, noted some big-box fitness chains have found it hard to find a spot around Santa Rosa. His investment at the Epicenter location will be about $850,000.
“Petaluma, I think, is a little more competitive,” he said. “Competition breeds some excellence. Location is important, definitely. You’ve got to operate correctly and you’ve got to provide what people want.”
The industry has seen an uptick in the aftermath of the recession, as about 19 percent of all Americans belong to some sort of facility, according to the International Health, Racquet and Sportsclub Association, the primary trade group for the sector. Likewise, the number of health clubs has risen nationally by 17 percent since 2011. It stood at 36,180 clubs in 2015.
But the challenge for owners is the high attrition rate, a major source of concern in maintaining a sustainable business. The IHRSA said the average club tenure for members is about five years; about ?24 percent keep their membership a year or less, and 51 percent are members from only two to five years.
“We put a lot of time and energy into our sales,” Livingstone said, noting his attrition rate on an annual basis is 35 percent, while the overall industry in near 50 percent.
The money coming from private equity, new franchisees and publicly traded companies has somewhat settled the industry, especially now, as much of the growth comes from outside the United States, said Jill Kinney, chairman at Active Wellness LLC, which manages the Petaluma health club that St. Joseph Health bought earlier this year.
“The industry is really maturing,” Kinney said.
She is a longtime veteran who can remember sparsely attended industry conferences in the 1980s. Kinney now sees an overall trend moving away from the hardcore fitness activities to wellness programs that promote a healthy lifestyle, which have a natural synergy with hospitals and medical centers. Such activities can range from weight management programs to aquatic classes for seniors to rehabilitation programs for those coming off physical therapy.
The new wellness focus intends to reach the remaining 70 to 80 percent of the population that doesn’t belong to a health club. The Petaluma club has seen its membership jump by 400 people in the last few months through improvements and additional programs and stands at about 6,000 members. Adult memberships are priced around $90 a month at the Petaluma facility.
“A lot of times they (customers) are feeling that they are not ready for that level of activity,” Kinney said. “There is a lot of intimidation.”
St. Joseph Health also has taken the lead in working with employers to help promote wellness among their workers, which represents another opportunity for growth because businesses have a financial motive for keeping their employees healthy.
In Newport Beach, it partnered with the Irvine Co. on a 17,000-square-foot facility that features a medical office, a fitness center and a boutique studio. In Petaluma, it works with 40 businesses that have membership affiliations, Kinney said.