Around the world, news headlines spotlight a spiralling cost of living crisis, with inflation rampant, the cost of energy and food rocketing, businesses closing in the face of unmanageable bills and consumer disposable income heavily squeezed.
With the war in Ukraine on its doorstep and a traditionally heavy reliance on Russian gas, Europe feels especially embattled; in the fitness sector, trade associations are firing warning signals about existential threats to business.
The challenges aren’t limited to Europe, however, although not every country is feeling the same pinch: we spoke to a health club operator in Saudi Arabia who told us the cost of living crisis was “not something they were experiencing”.
So, how is our sector faring in different parts of the globe? We speak to operators across Europe, Asia-Pacific, Africa and the Americas to understand the region-by-region challenges facing our sector at the moment, and the strategies that might be deployed to navigate 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.
By keeping things simple, Homola estimates that Terra Hale uses about 80 per cent less energy than the typical gym
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!
Plants are positioned around Terra Hale’s studios for oxygen
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.
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 Steven Ward, strategy & innovation director for GO fit in Spain and Portugal. Interview conducted 28 October 2022.
People are saying we live in uncertain times. I disagree. It’s certain that the volatility and complexity we’re experiencing will continue for the short to medium term.
At GO fit, we’re seeing continued demand for our product, with net growth every month for the past 20 months other than in the Omicron wave of December 2021. Key to this is our continued focus on delivering an overwhelming value proposition; we will always offer value that far exceeds our actual membership fees. Our focus on measurably impacting people’s lives is valued by customers to the point that we aren’t a luxury they can dispose of, nor a commodity they can replace with a cheaper option.
Yet for our sector as a whole, we’re now operating in a very different climate even from 12 months ago, and there is no easy solution to any of it.
If you look back through history, inflationary environments such as the one we’re in now typically end in recession, either of a technical nature or one that truly bites. We’ll see interest rates continue to rise until there’s a decline in economic activity, and this will hit many businesses in our sector hard – especially those that have scaled on what was once cheap debt, or grown through leveraged positions of their owners. We have yet to see what the impact of this will be, but it will undoubtedly also hit public sector construction and private sector borrowing.
GO fit members highly value the operator’s focus on measurably impacting people’s lives, says Ward
I do see strong recovery for our sector in the long term, but things will remain tough in the short to medium term as central banks work to bring the situation under control.
Much of the conversation right now is around energy, which has always been a top agenda item for the GO fit executive team: our brand values and commitment to sustainability mean that as an organisation, we want to be 100 per cent powered by green resources. We already have solar installations and other energy-generation investments in our facilities, but these will never provide all the energy we need year-round. So in 2019, GO fit entered into a 10-year fixed rate agreement with a leading green energy provider in Europe that covered the vast majority of our energy requirements.
It was a bold decision to make, because we were committing to above-market rates at the time. However, the company felt it was the right thing to do for the planet and the board backed the decision.
And now, although we never went into it for cost reasons, we’re facing this crisis in a very strong position; I strongly suspect that, had my colleagues not had this foresight and sustainability agenda, our energy costs could have doubled by now.
We are feeling some impact of the current crisis, as a small proportion of our energy requirements aren’t covered by our fixed arrangement. However, it’s a fraction of what it could have been. We also have a comprehensive energy strategy for this remaining element, looking at a whole range of initiatives to build resilience ahead of certain future energy shocks over the next couple of years.
“Our specialist team is in the market every day, looking at futures and fluctuations to ensure we procure energy at the best possible time”
We have a relentless focus on identifying the best moments to procure energy: our specialist team is in the market every day, looking at futures and fluctuations and making sure we’re negotiating at the best possible time. As we speak today, for example, the recent warm weather means ships are sitting outside ports unable to deliver their gas, because reserves are full. It’s pushed gas prices temporarily down, making now a great time to buy. That won’t still be the case next week. Sorry if you’re reading this some time after!
GO fit can adjust energy use in real time, based on things like footfall and the climate outdoors
We have an equally relentless focus on efficiency of energy usage across our business, with highly intelligent facilities run by highly experienced facility professionals. We have visibility and control over our whole estate in real time, so we can adjust energy usage in real time based on customer need and demand, footfall, the climate outdoors, the temperature in the club and so on. This has a significant impact on our overall consumption.
“Government subsidy interventions are removing the imperative to think responsibly about energy consumption”
This is what modern, world-class facility management looks like, but not everyone is doing it yet. It’s a cold thing to say, but government subsidy interventions in the face of this crisis – the figure currently stands at €500bn globally – are weakening the price signal to businesses and removing the imperative to think responsibly about energy consumption. Poorly managed organisations are being bailed out at the cost of well-managed organisations, rather than being forced to operate as sustainably as possible. It might be essential in the short term, but economically, this moral hazard is wrong. Every organisation must take responsibility for its sustainable use and future procurement of energy, and this crisis has brought that home.
Looking further ahead, all indications are that we will see a natural energy revolution across Europe in the medium term, with significant policy reforms that decouple the cost of electricity – and with it, the cost of green energy – from the cost of gas. We will also see major infrastructure investments in renewables. This will be instrumental in the move towards a self-sufficient, sustainable future that gives us more energy security and that’s simultaneously positive for businesses and the planet.
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