During a recent visit to a Manhattan Equinox, a glimmer of hope materialized near the gym’s sinks. Bottles of mouthwash, one of many absent amenities as a result of the pandemic, magically reappeared.
Equinox, like most major gym chains, has been badly bruised by the pandemic. It was forced to completely close all locations in New York, a key market for the boutique fitness chain, from the middle of March through late August last year. Memberships were frozen at no cost. Today, capacity for fitness centers in New York remains capped at 33%. And this year, the industry missed out on the New Year’s resolution crowd’s business boom. As much as 20% of a gym’s annual revenue is booked in January.
Roughly 6,800 health clubs, 17% of the nation’s total, closed last year, according to data from trade group the International Health, Racquet & Sportsclub Association (IHRSA). An estimated $20.4 billion in revenue was lost as a result of the COVID-19 pandemic.
Despite all the woes, fitness operators are bullish about the future.
“The second half of this year is going to feel like January all over again. We have pent-up demand,” says Todd Magazine, CEO of Blink Fitness.
Blink, which operates 107 facilities across several states including California, New York, New Jersey, and Florida, says average capacity across the chain’s fleet is just 40%. One of the biggest opportunities ahead for Blink is that when restrictions ease, it can boost membership and usage again. Equipment that was pulled from the floor to enable social distancing can be used once more. Gym closures and bankruptcies also give Blink an opportunity to gain business.
Before the pandemic, Blink’s app was a premium service, but it opened up access to all members. It also launched a Facebook Live page featuring personal training. Solo virtual personal training is also offered by Blink; it is a tool the CEO uses himself.
Much has been made of the consumer shift to connected fitness. Peloton Interactive’s subscription base doubled in 2020 to over 1 million accounts, which utilized the equipment for 165 million workouts. In March, at-home fitness startup Tonal raised an additional $250 million in funding and is now valued at $1.6 billion. Apparel maker Lululemon placed a $500 million bet on the trend by scooping up Mirror. Today, one out of every five gym club members also subscribes to a premium online fitness service, IHRSA reports.
Brick-and-mortar gyms will need to flex new muscles to compete. They’ve added touchless check-in, capacity trackers, and virtual classes and personal training. Members have embraced these tech-enabled perks, so most will remain long after the pandemic subsides.
Fitness operators acknowledge that while Mirror and Tonal are certainly buzzy, they are also cost prohibitive for millions. “The vast majority of Americans still need and want to go to a gym to get fit,” says Magazine.
Jillian Carter, founder of Washington, D.C.-based SideBarre, is a bit more cautious. Carter started SideBarre in 2018, offering classes that cost less than half of the $40 industry average. With ballet-trained instructors and a mix of hip-hop, R&B, and Top 40 music, SideBarre’s goal is to create a boutique fitness experience that’s more accessible to Black women.
But SideBarre hasn’t held a physical, in-person class since March 2020. “We aren’t in a hurry,” says Carter. “Health is way more important than trying to keep our business afloat.” She points out that the demographic that SideBarre serves has faced worse health outcomes amid the pandemic, so she doesn’t want to jeopardize the health of her members.
And with D.C. Only allowing 25% capacity for studios, costs are prohibitive when a class that would typically fit 30 people now only has room for seven.
Like most, SideBarre pivoted to digital amid the pandemic and Carter thinks that trend is here to stay. The brand built a workout library that focuses on different parts of the body like arms, abs, and cardio, as well as suggested playlists to keep people motivated. On-demand classes are also part of SideBarre 360.
As a result, users have logged in from as far as South Africa and Panama. When SideBarre returns to in-person instruction, it plans to continue to live broadcast instructors. Monthly and annual streaming members, which are new revenue streams for SideBarre owing to the pandemic, help diversify the business.
“We have people all over now that we would not have been able to reach pre-COVID,” says Carter.
Others in the industry have touted the benefits of fitness in boosting the immune system, putting people in better shape to fight infections like COVID-19. “If anything, this has taught people the importance of health and wellness,” says 24 Hour Fitness CEO Tony Ueber.
24 Hour Fitness was one of the gym chains that filed for bankruptcy last year, emerging with 150 fewer clubs at the end of 2020. Ueber thinks fitness has become a more omnichannel experience, but physical gyms are the solid core.
“We have more equipment than anybody could ever have in their homes,” says Ueber, pointing out that his gyms, with an average 45,000 square feet of space, contain basketball courts, pools, and a variety of bulky fitness equipment. “I have a home gym in my garage. It is sufficient for certain things, but certainly not someplace I would want to work out every day,” says Ueber.
In the future, clubs will need to prioritize safety and cleaning protocols, says Ueber. 24 Hour Fitness, like most chains, promotes social distancing, has increased cleaning procedures throughout the day, and has closed some amenities that cannot be used under state guidelines. Masks are required at all clubs nationwide except in Texas where masks are not required. But even in that state, 24 Hour Fitness has carved out masks-only workout zones.
“We have now been conditioned to worry about everything we touch and the air we breathe,” says Dave Karraker, who cofounded MX3 Fitness in San Francisco with his husband, Glenn Shope. “The idea of stepping back into a packed, big-boxed gym, where maybe a thousand people touch the same thing in a day, that’s going to be intimidating. And that creates an opportunity for us.”
To better compete with market demands, MX3 Fitness has rolled out monthly memberships for the first time. And like many gyms, it has boosted capacity by offering outdoor workouts. MX3 Fitness says it will continue to do so in the months ahead for guests who are still too apprehensive about going inside.
And with millions of gymgoers furloughed from clubs for a year or longer, personal fitness sessions are expected to be a boon for the industry as Americans look to regain their form. One out of every 10 people who haven’t kept up their routine admit they stopped exercising altogether.
“Summer is only [a month] away,” says Karraker.
