Tag: Panellist

The lesser of two evils

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 Ben Lucas, founder and CEO of Flow Athletic in Australia. Interview conducted 27 October 2022.

 

We aren’t really experiencing an energy crisis in Australia at the moment. Our challenge is more around inflationary pressures off the back of two lockdowns. 

The pandemic took 35 per cent off our numbers – membership and turnover – and we’re now trying to regrow our business in an economic headwind. We’re doing well though. I’m feeling optimistic.

There are cost of living concerns in Australia and as a result we currently lose one to two members a week. However, we’re adding five or six a week; we operate at the premium end of the market, meaning most people still have disposable income to spend with us.

So, what are the cost of living concerns for consumers here? It’s mainly interest rates – meaning mortgages and rent – as well as petrol and food, the latter due to a series of natural disasters affecting production. We aren’t hearing people talking about electricity or gas prices at the moment.

A solar power system could generate 60% of Flow Athletic’s electricity needs, including air con and lighting

For our business, what’s going up are wages – I value our team and want to make sure they can afford to live in the current climate – and energy to a lesser degree. Fortunately, rent is unchanged; commercial sector rents aren’t going up in the same way as residential rents, because with a pending global recession, landlords would rather keep properties full.

“Electricity prices are due to go up, but compared to being locked down for 250 days, give me an extra A$16,000 of electricity fees any day”

Electricity prices are due to go up a predicted 20 per cent in 2023, and a further 10 per cent in 2024, which obviously is a challenge. But if our bill goes up from, say, A$30,000 to A$36,000 a year, will that spell the end of our business? Not really. It isn’t fantastic, but compared to being shut for 250 days… give me an extra A$16,000 of electricity fees any day. Framed in the context of the last two and a half years, today’s economic headwinds are the least of our challenges.

I do, however, believe the cost of electricity could double over the next five years, so we do need to be smart about it. As a premium operation, we wouldn’t want to cut energy usage anywhere in the club, so we’re looking to install a solar power system. Costing around A$35,000, this could generate around 60 per cent of our electricity needs – including our air con and lighting – and achieve payback in three years. 

Adapting to change

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 Timothy Felix, CEO of Active Fitness in Singapore. Interview conducted 31 October 2022.

 

There’s an adjustment period going on in Singapore at the moment. Now we’re out of the pandemic bubble and allowed to do what we want again, people’s disposable income – for a while heavily focused on health and wellness – is being spread more broadly as they seek to experience life again, and especially travel. Disposable income remains strong, in spite of inflation going through the roof, but our sector isn’t enjoying as much of it as it has over the last couple of years. 

Customers are also reluctant to sign up for long-term packages now, preferring to pay a premium for smaller packages that make it easier to travel and flex around having to return to the office. 

“Indoor cycling supply has grown to the point that it’s outstripping demand. That’s driving down prices just as inflation is soaring and operating costs rising”

Meanwhile, particularly in indoor cycling, supply has grown to the point that it’s outstripping demand. Our lockdowns weren’t as extended as in other markets – Singapore is small and the population obedient – and people were invested in their health, so many new brands emerged during that time. I would estimate that the number of clubs offering indoor cycling doubled during 2021.

That’s now driving down prices and forcing some closures. People here can afford to pay more, but over-supply is pushing things the other way just as inflation is soaring and operating costs rising. 

All of this is an interesting challenge and one we’re developing strategies to address – focusing on local, residential areas where we can build community engagement, for example.

Then in terms of business costs, electricity prices are up: they had doubled but are currently back down to about 1.5 times what they were. Our rented mall locations prevent us from installing anything like solar power, but we are educating our staff to keep energy usage as low as possible.

Active Fitness
To protect itself from a price war caused by over-supply, Active Fitness will focus on local, residential areas and build community engagement

We already have LED lighting and non-powered equipment, and as a boutique operation we can turn things off when there are no classes. But we have to deliver a certain level of experience, and air conditioning is a big part of that. We’ve turned the temperature up a couple of degrees in our reception areas, but we can’t allow our workout spaces to become stuffy. Rising electricity prices are simply a bullet we have to bite.

The greater challenge comes in the shape of manpower costs and rent, which are very high in Singapore. We’re identifying unnecessary personnel costs and restructuring accordingly, so we can offer better deals to those who are vital to our operation.

But I’m pragmatic about it all. I’ve run my own company for nine years and I know you can’t always fly high. A lot of people in fitness have only ever known it to be on an upswing, as it was for perhaps five years before COVID, but things can go downhill too, however strong your business and brand. Rather than looking for things to blame it on, you have to be ready to identify the issues and implement change.

A COVID hangover

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 Kenny Choong, co-founder of FLYPROJECT in Malaysia. Interview conducted 25 October 2022.

 

In Malaysia, energy costs aren’t a major issue: we’re a net producer of electricity and sell petrol to the world. Rent is the largest cost to our business, followed by wages – the latter a variable cost as instructors are paid per class. 

The country is experiencing inflation and our currency is depreciating, which obviously affects discretionary spending including gym fees. FLYPROJECT sits at the luxury end of the scale, though, with most of our customers earning above average salaries, so this impacts us less than other operators.

“The challenge across the fitness sector remains the aftermath of the pandemic. What’s affecting us most are the new hybrid working patterns.”

The challenge that’s common across the fitness sector – and it is specific to our sector, as other industries such as F&B are performing well – remains the aftermath of the pandemic.

We were in on/off lockdown for one out of two years, and while the bounceback after the first three-month lockdown was quick, recovery after that was slower as people saw the number of deaths rise and became more afraid. Since then, lifestyles have changed, outdoor exercise has become popular, people have found other ways to be active.

FLYCYCLE class
Rent is the largest cost in Malaysia, followed by wages, says Choong. Energy costs aren’t a major concern.

But what’s affecting us most of all are the new hybrid working patterns. In Kuala Lumpur, the traffic is really bad; people simply won’t travel to a gym near work if they aren’t in the office that day, and when so many businesses are operating a 50/50 hybrid model, this has a big impact on nearby gyms. We’re still only achieving 65 per cent of pre-pandemic attendance. Most operators in Malaysia are cashflow positive again, but few are back to where they were before the pandemic.

As I say, energy bills don’t have a huge impact on our operating costs, which is good because our shopping mall locations mean we have to leave the lights on even when we aren’t running classes. However, we are making economies elsewhere. For example, during lockdown we stopped providing towels for hygiene reasons and we still don’t offer them now. Customers have embraced the hygiene argument and they’re happy to bring their own, but it’s also a cost saving for us while revenues continue to lag post-pandemic.

Savings for the taking

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.

Evolution Wellness class
Consumers now prioritise health and wellbeing, which may make it possible to raise prices in line with inflation in the future, says Flint

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.

Building to save

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 Antonio Iozzo, founder and CEO of Body Action Gym in South Africa. Interview conducted 2 November 2022.

 

Ours is a new building that was designed to be as energy-efficient as possible. We were the first building in Africa to have a full FRIT dot façade: little white ceramic dots baked into the double glazing that take up about 30 per cent of the area of the glass. Light still comes through and you can see out, but it saves you around 35 per cent on your heating/cooling costs. Our whole building is fitted with this special glass.

Light in body action gym
Body Action Gym continues to invest in the latest equipment – a strong USP over budget-stretched local competitors

This was definitely not the cheap option – our façade cost 60 per cent more than normal glass – but it will pay back over the long term. It’s also what consumers are beginning to expect, not to mention the right thing to do. 

We’re also off the grid for our water consumption, with two boreholes on the property, and we’ve put as many solar panels on our roof as possible. But honestly, the electricity they generate is just a drop in the ocean of our building’s energy needs. 

Meanwhile, the national energy grid is in chaos. Since before the pandemic, we’ve had power cuts across the country of between three and eight hours a day – the result of a steady decline in the maintenance of electricity power stations over the last three decades. The government is now talking about appointing independent energy providers and letting individuals feed into the grid, but that’s a long way off. 

For now, if you don’t have a big generator, you’re in serious trouble: I’m currently spending around £20,000 (US$22,500) a month on diesel. And that’s on top of electricity, which has almost quadrupled in price with another 25 per cent rise on the cards. I spend around £50,000 (US$56,300) a month on electricity to power our building and we don’t even have a swimming pool in our gym. Clubs that do have pools have mostly stopped heating them now; members have to accept the water temperature as it is.

“Clubs with pools have mostly stopped heating them. Members have to accept the water temperature as it is.”

So it’s fairly doom and gloom in South Africa from an energy perspective. Yet as ridiculous as these costs are, we have to swallow them if we want to keep running our gym. I certainly can’t pass any of the increased costs on to our members, as the pressure on consumers’ disposable income – with inflation close to 20 per cent – means gym membership is already a luxury.

Body action gym facilities
The new building is the first in Africa to have a full FRIT dot façade

I just have to hope the Competition Commission finds in our favour in March and forces Discovery to extend its gym membership subsidy scheme to other health club brands beyond Virgin Active and Planet Fitness. We’re confident it will, but in the meantime I’ll keep subsidising things myself and focusing on growing our membership base through aggressive marketing. 

And it’s working, because while we continue to invest heavily in the latest and greatest equipment, many gyms here can’t even afford to maintain or repair their current equipment, with ‘out of order’ signs everywhere. Any additional investment secured by our competitors isn’t going to refurbishments or new kit. It’s just keeping their gyms open.

“The gym is subsidised by my other businesses. in the current climate, if it had to stand alone, it would not survive”

So how are we able to keep investing? One simple fact: the gym business isn’t our bread and butter. I run an insurance company here in South Africa, as well as a construction company, with everything in the same building. The gym is subsidised by my other businesses and always had a three-year plan to break even. In the current climate, if it had to stand alone, it would not survive.

Heading off-grid

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 Simi Williams, founder of Beyond Fitness in Nigeria. Interview conducted 25 October 2022.

 

We’re experiencing record inflation in Nigeria: double digits across the board, with food and power taking up a higher proportion of people’s monthly budgets. Our culture is to push on through – communities supporting each other rather than expecting relief from the government – yet there’s no getting around the pressure on disposable income right now. Everyone’s feeling the pinch and being very careful with energy usage and food wastage.

Our currency also continues to devalue against the dollar. This combination of inflation and depreciation means international costs and overheads – replacement equipment or lockers, for example, which are always priced in US$ – have tripled in the past year.

Meanwhile, flooding in various parts of the country, including large areas of farmland, is contributing to unemployment, transportation and logistics issues and high food prices, where inflation has reached 23 per cent or more.

“Nigeria has never generated enough electricity. People traditionally used diesel generators to make up the deficit, but diesel prices are up 70%”

So it’s the perfect storm right now, but then consider that Nigeria has never generated enough electricity to meet national requirements. We’ve only ever generated around 3.5GW, which is 10 per cent of what the country needs. People have traditionally used diesel generators to make up the 90 per cent deficit, but with the war in Ukraine, diesel prices are up 70 per cent in 2022 alone – something nobody could have expected or budgeted for. 

Many businesses in Nigeria are therefore looking to renewable energy to reduce their diesel use. Fortunately, when we built Beyond Fitness, we incorporated a solar inverter and battery system as a back-up. When everything is on in the club, the power load is 45kW. However, during our off-peak periods, we can reduce the power load from the building to 12kW, which is our peak solar capacity. This still powers all our critical equipment. 

Our fitness equipment isn’t powered – our bikes, strength room and barre room – so our energy usage is mainly down to cooling costs. For this reason, we’re now being particularly mindful of class times and utilisation rates. We previously had a mid-morning class and were looking to add a lunchtime one, but we can’t meet the cooling costs at these hotter times of day with solar power alone. It just isn’t possible to spec our system to do all the air conditioning. These class times therefore became non-viable, especially given they might only have been 40 per cent full. 

Beyond Fitness now schedules its classes in a way that minimises air con needs

Instead, we’ve worked hard to optimise very early morning and evening classes, getting utilisation rates as high as possible. These times suit our working professional community and I’m hugely grateful for the way they’ve embraced the change. They see Beyond as a place of solace in the face of general uncertainty, are willing to spend on the value we offer, and have supported each other to make the new class times a habit.

We’ve added outdoor classes too, and indoors only use air conditioning where and when necessary. In our changing rooms, for example, we turn it on just before the end of class and leave it on for about an hour after class. Our lighting, air con, hot water for showers… it’s all carefully scheduled around our class timetable and usage data, and this is saving us a lot of money. We’ve also changed team deployment to productively use the new down-time at the club.

Finally, we’re looking to increase our solar capacity. We’re restricted by how much we can put on our roof, but we are considering more solar panels and batteries to generate and store more energy. The more we can go off-grid, mitigating the rising cost of diesel by harvesting solar power, the better. 

Right service, right price

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 Jeb Balise, founder and CEO of Drop Fitness in the US. Interview conducted 10 October 2022.

 

Energy costs have risen in the US, but from own experience and conversations with other operators, not yet in a way that’s prohibitive to doing business. We can still manage for now, which also means there’s no government support at this stage.

Beyond this, I can only speak for Drop Fitness: our single-site operation that’s been open for four months and that operates a very distinct model. The way we respond to any challenges will inevitably be shaped by this.

Drop fitness reception
Might people turn off their energy at home and visit the club more often? asks Balise

We only have a small fitness floor alongside three boutique studios, so plugged-in CV equipment accounts for less than 20 per cent of our product. It means we aren’t severely impacted by this power requirement.

“If our team starts to struggle financially, we’ll need to look at how we take care of them so we retain our talent”

In fact, I’m just as mindful of our employees and the potential indirect costs of any future cost of living crisis. If our team starts to struggle financially – finding it harder to travel to work, among other things – we’ll need to look at how we take care of them so we retain our talent.

But this is all hypothetical for now, because as I say, we aren’t yet seeing prohibitively high costs. At Drop Fitness, our energy bills currently account for around 5 per cent of our total costs. That might get closer to 10 per cent depending on club utilisation levels.

We still have to be prepared for rising heating costs this winter, though, including looking carefully at how we distribute heat and energy around our club. We’ll also address obvious things like turning heat off when we’re closed overnight and carefully scheduling switch-on times so the club is welcoming as soon as we open the doors, but without wasting energy.

But there will only be so much we can do, because as fitness operators, there’s no practical way to simply switch everything off. This is what we do. The value we bring to our customers starts with the provision of equipment in an adequately heated, adequately lit environment 365 days a year. And who says people might not start coming more often, so they can turn off the power at home for a while? We’ll certainly keep an eye on club usage and energy prices to see what happens to our bills. 

Drop fitness boutique studio
Drop Fitness has three boutique studios and a gym floor in one location

But still, for now this isn’t one of my top five considerations; as a new business in a market where we aren’t yet unduly worried about energy costs, I’m much more focused on margin improvement, managing future capacity constraints and so on. It means I haven’t really given much thought to what our recession play might be. 

If it comes to it, I think the big question for our business will be: do we pass on rising costs to the customer or not? Will they understand, or will their own reduced disposable income in such a climate make a price hike something they can’t swallow? 

And our answer, within the model we operate, will be to eat in to our own margin for as long as we can. I believe competitive advantage will come from continuing to provide customers with the right service at the right price. 

Navigating the headwinds

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 Jordy Kool, chair of Urban Gym Group in the Netherlands. Interview conducted 2 November 2022.

 

Urban Gym Group is performing well. Profitability isn’t yet back to pre-COVID levels – not least because we’ve made a number of acquisitions and opened new clubs – but average club attendance is exceeding 2019 levels, driven in particular by our Trainmore brand.

There are a number of headwinds, but decisions we’ve made over the last couple of years are helping us navigate these.

Prices of equipment are up; one supplier has raised its prices by 16 per cent. Fortunately we saw COVID as a time to invest, including new equipment across our estate. In combination with a diversification of our supplier portfolio, we’ve avoided the worst of the price increases.

There’s huge pressure on salaries, too. Our staff make a difference in our business, so we’d already planned to pay them more to help with their own rising costs. However, this is a major consideration for all operators right now.

Trainmore fitness
The group’s strong performance is being driven by its Trainmore brand in particular

Rent is also up: in the Netherlands, landlords are allowed to increase rent in line with the consumer price index, which is currently 14 per cent. I’m expecting the government to get involved, so that may change, but meanwhile we’re in a good position: our strong footprint in Amsterdam and our continued growth makes it wise for landlords to support us.

Rising electricity and gas prices are having a huge impact on the sector, but we hedged our costs for the long term and aren’t feeling it yet: at the majority of our clubs, we’re still on the old prices until the end of 2023. 

“We’re doing what we can to lower our energy consumption, including speaking to landlords about co-funding solar panels”

It will come, though, so we’re doing what we can to lower our consumption now: building smarter, including LED lighting, and speaking to landlords about co-funding solar panels, as well as a range of other things. We’re also getting better at simply turning things off when not in use. 

We already removed sunbeds as not core to our healthy offering, and in some clubs removed saunas that weren’t used much to expand the gym. Both decisions, while not driven by energy costs, have positively impacted our energy use.

But some things are harder to control: air conditioning, for example, which members can sometimes even turn on themselves, and the length of people’s post-workout showers. And in the end, however much you try to cut consumption, you still have a service and a product to offer. I can only sympathise with those who have swimming pools to run. 

I’ve been speaking to operators whose electricity bills are five, six, seven times higher than they used to be. You’re never going to be able to compensate for that. Even two or three times will send some businesses into a loss. 

Fitness studio treadmill
Buying equipment during COVID means UGG has avoided the worst of the price rises

And all of this at a time when interest rates are rising and impacting the ability to raise debt; when customer acquisition costs are going up and lifetime value down as members pay less and don’t stay as long; when over-supply in the boutique segment means aggregators won’t be able to subsidise everyone; and when even high-end wellness operators, unless they have particularly strong margins and non-price sensitive members, will find it tough.

We aren’t exempt from the pressures. We’ve closed two of four standalone High Studios, for example, as they weren’t making a profit, and put the programming into GX studios at our other clubs instead. But we’re in a good position having raised new debt at good rates during COVID. We may not have the deepest pockets, but we  do at least have pockets. We can survive another crisis and make further acquisitions. And we do expect to make acquisitions. How can smaller operators survive in this climate? There’s only so far you can raise prices for the consumer, if at all. 

Plan for the future, now

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 Andreas Paulsen, CEO of EuropeActive. Interview conducted 18 October 2022.

 

Across Europe, we’re seeing governments collaborating and taking extraordinary steps to bring energy prices – particularly electricity and gas – under control. Political efforts are being coordinated through the EU to ensure gas reserves are full, for example, and significant political measures are being taken to bring more energy supply into the market and to temporarily cap energy company profits to quickly bring down consumer prices. 

Person texting
Clubs must communicate strategically with members as tough decisions are taken

As a result, we’re seeing gas prices begin to flatten and even fall. This is likely to continue in the coming months as the EU’s domestic production of gas and other types of energy is dramatically increased, reducing reliance on import from places like Russia. 

“If we bring energy under control, it is likely that the cost of living crisis can be brought under control generally”

In the current cost of energy crisis, inflation seems largely centred around energy and food supply, which in turn is directly linked to the situation in Ukraine; it is not general inflation. If we bring energy under control, it is likely that the cost of living crisis can be brought under control generally. 

With this in mind, we cross our fingers that EU and national measures take effect and start to improve the situation quickly. And, of course, we appeal to everyone to take societal responsibility as citizens, reducing daily energy consumption as much as possible.

For our sector, there are significant challenges; for many businesses, they are existential. Yet even amid these challenging circumstances, we must keep fighting and stay focused on our bright future; over the next couple of years, leadership will be defined by effectively addressing current circumstances, turning challenge into opportunity.

I believe one way for our sector to get value from the current situation is to use it to inform our long-term energy and environmental sustainability. We must look at ways to cut superfluous or unnecessary energy consumption, and crucially, we must do it in dialogue with club members, communicating strategically with them both now and moving forward. 

Women in fitness attire
Open, honest conversations with members will be key, making changes in dialogue with them, says Paulsen

Short term, as a reaction to the current situation, I’m sure most members will understand that tough decisions have to be made. Clubs with facilities like saunas, for example, will likely have to temporarily close them. Open, honest conversations with members will be necessary.

Longer term, it’s about building sustainability into our strategies, looking at things like insulation, smart electricity, heating and water systems. Put together, they can significantly reduce energy consumption and costs. They can also be part of our collective image-building as a sector for the future.

In Denmark, for example, people are being offered government-backed loans to gradually pay back any energy costs that exceed their Q4 2021 baseline. Similar measures are being offered elsewhere in Europe. This represents a valuable opportunity to build cost-reduction measures into our longer-term strategy – starting now – and factor repayments into our recovery plans.

I see a crucial role for industry associations, too. We must actively encourage sharing of best practice among our members and partner associations across Europe, and ensure politicians understand the negative impact on population health that will result from our sector not being able to deliver its services.

I see a very positive future for our sector as we position ourselves as need-to-have health rather than nice-to-have leisure and consumer demand for personalised health and wellbeing continues to grow. But there will be challenges on the way. Overcoming the present need to balance rising energy costs against squeezed disposable income among consumers is unquestionably one of them.

360° eco-friendliness

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.

Terra Hale fitness studio
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!

Terra Hale fitness studio
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.

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