Leading U.S. Health Clubs Report Third Quarter 2007 Growth

BOSTON-February 5, 2008 – A recently conducted survey of 18 leading U.S. health and sports club companies has found that commercial health club financial performance improved for the quarter ending September 30, 2007, relative to the same period last year. These 18 mid-size clubs, represent a total 194 facilities or an average of 11 clubs per company. The survey was conducted for the International Health, Racquet & Sportsclub Association (IHRSA) by Industry Insights, Inc.

The IHRSA index found companies collectively grew their total revenue an average of 18.1% to $16.6 million in revenue for the third quarter. The participating companies also reported improved same-store revenue for clubs that have been in operation for at least two years, by an average of 5.4% to $7.0 million.

On a per club analysis, a club grew their total revenue an average of 5.2% to $1.6 million. Nearly 70% of the total revenue was fueled by membership dues revenue, which totaled $1.1 million and grew 4.0% since the third quarter of 2006. While non-dues revenue, which totaled $0.54 million, reported a 7.8% growth over the same period last year.

“We are pleased to report that these leading health clubs consistently grew membership, and non-dues revenues, while holding gross margins at 29% for the third quarter, ” said Joe Moore, IHRSA’s President and CEO.

“This growth pattern has been observed during all three quarters in 2007 and we anticipate a positive outlook for the year end due to a historical increase in membership sales, which typically occurs late in the 4th quarter,” reported Katie Rollauer, IHRSA Senior Manager of Research.

The IHRSA index found that on a per club basis the average earnings before interest, taxes, depreciation, amortization and rent (EBITDAR) improved by 5.3% to $0.47 million. As a percentage of total revenue, EBITDAR, was 29% of revenue for the third quarter of 2007. Survey results on a per club basis for the quarter ending September 30, 2007 were:



3rd Quarter 2007 Mean Percent Change from Q3-2006 to Q3-2007

Total Revenue: $1.64 million 5.2%
Total Membership/dues Revenue: $1.09 million 4.0%
Total non-dues revenue: $0.54 million 7.8%
Same-store total revenue: $1.73 million 5.3%
Same-store membership/dues revenue: $1.14 million 4.4%
Same-store non-dues revenue: $0.59 million 6.9%
Total membership accounts: 3,073 -1.5%
Same-store total membership accounts: 3,067 0.4
EBITDAR $0.47 million 5.3%


Note: Data reflects information from 18 leading U.S. health and sport club companies, representing 194 facilities. Same-store revenue data reflects clubs that have been in operation for at least two years. Participating companies reported owning/managing an average of 11 facilities (same-store count average of 8 facilities).

EBITDAR: Earnings before interest, taxes, depreciation, amortization and rent.

The “% Change” reflects the percentage change from one quarter to the next in the group’s overall mean/average for each variable, and is essentially weighted by the size of companies responding to the survey. As such, the “% Change” presents an indication of the broader group’s performance. It is particularly important to recognize that the results are based upon a relatively small number of responses, thus one or two responses within any category can dramatically affect the reported findings.

For additional information on this survey, please contact IHRSA at pr@ihrsa.org or 800-228-4772.

The International Health, Racquet & Sportsclub Association (IHRSA) is a nonprofit association dedicated to the growth, protection, and promotion of the health club industry, and represents more than 8,800 clubs worldwide. IHRSA is an international leader in health club industry education and research.


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