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 Simon Flint, CEO of Evolution Wellness in South-East Asia. Interview conducted 26 October 2022.
Energy is not currently our primary concern in the markets where we operate: Indonesia, Philippines, Thailand, Singapore and Malaysia. More significant at this stage is the fact we’re still dealing with the legacy of COVID.
Pleasingly, we’re on-track to reach our pre-pandemic bottom line in Indonesia by January 2023, but our other markets are lagging. Cash preservation and very careful deployment of capital remain our primary focus while membership numbers are recovering.
All that said, energy inflation is an increasingly important consideration, with costs starting to rise across all markets, most notably in Singapore.
“We conducted a pilot to test the impact of some energy initiatives and believe we can make annual savings of US$34,000 per club”
Pre-pandemic, we conducted a pilot in the Philippines, choosing a medium-sized club (1,500sq m) to test the impact of some energy initiatives. We averaged our findings out across club sizes – the different brands and business models in our group – and believe we can make annual savings of US$34,000 per club. When you consider that we have over 100 clubs in our estate, that’s clearly significant.
Breaking this figure down, installing energy-efficient lights and motion sensors can save us US$12,000 per club, with another US$10,000 of savings to be made in our air conditioning and mechanical ventilation. Water efficiencies drive a further US$3,000 of savings. We can save US$3,000 on the use of in-club TV systems. And other operational tweaks – putting saunas and steamrooms on timers, for example – can save on average US$6,000 a year.
Of course, all of this requires capital: it will cost around US$12,000 to upgrade the lighting in a medium-sized club, for example, meaning a year to see a return. But regardless of what we’re paying per unit of energy, regardless of energy inflation, these savings are there for the taking. We’ll start with Singapore and carefully time the roll-out of this work to other markets as we continue to manage our resources.
We also have to recognise that we aren’t the only ones managing our resources at the moment. Faced with inflationary pressures and rumours of an economic downturn, all compounded by COVID, consumers are currently being very careful where they spend their money. In the immediate term, it’s therefore vital that we offer high perceived value. That means maintaining our focus on engagement, return frequency and diversity of training opportunities, and we’re investing in our product as fast as we can in the current climate. That includes enhancing our PT offering with new tech support and bringing Vitruvian’s revolutionary strength and conditioning technology into our clubs, to redefine the way people think about this category.
We’ve also rolled out modular memberships, whereby members pay only for the products and services they want. Our research indicates that 63 per cent of new joiners on modular memberships would consider upgrading to a full membership in the future – most notably, when their finances allow.
So, I do feel positive as I look forward. I believe consumers are now making health and wellbeing a priority and I’m hopeful that, in time, this will allow us to raise prices in line with inflation – something price sensitivity in most markets has previously prevented us from doing.
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