The International Health, Racquet and Sportsclub Association (IHRSA) announced today the release of the IHRSA 2009 First Quarter Index, which demonstrates the financial performance of a sample of the commercial health club industry. The survey of 18 leading U.S. health and sports club companies, representing a total of 530 facilities, determined that commercial health club financial performance struggled in the first quarter of 2009 relative to the first quarter of 2008. In spite of overall wavering performance, select clubs experienced improved performance in the same time period. Participating clubs indicated growth from the fourth quarter of 2008 to the first quarter of 2009.
Overall, Quarterly Index participants reported decreases in total sales, membership revenue, and non-dues revenue from first quarter of 2008 to first quarter of 2009. Total sales decreased by 3.6 percent from $7.8 million in 2008 to $7.3 million in 2009. Membership and non-dues revenue also decreased by 1.0 percent and 8.1 percent, respectively. Total membership accounts increased by a modest 1.2 percent. Although respondents collectively struggled with first quarter performance,, some participants reported improvements. The majority of respondents (56 percent) reported increases over one percent in total membership accounts, while only 33 percent reported similar increases in total membership dues revenue.
“Non-dues revenue can be expected to fluctuate as consumers limit their discretionary spending,” said Katie Rollauer, IHRSA Senior Manager of Research “However, the low single digit decline in membership accounts and revenue, relative to other retail industries, demonstrates the resilient nature of the club industry during a recession.”
Participants reported a decline in EBITDAR. EBITDAR decreased by 5.0 percent from the first quarter of 2008 to the first quarter of 2009, amounting to 29 percent of total revenue; the lowest since fourth quarter of 2006. With a cash-strapped U.S. consumer populace at hand, clubs often resort to discounting membership and non-dues services, which in turn may contribute to the drop in EBITDAR. Additionally, decreased EBITDAR reflects the need for more efficient expense management.
“It is possible companies have started to tighten expenses, but benefits to the bottom line might not be observed until future quarters,” noted Rollauer.
While Quarterly Index participants, overall, reported decreased revenues and accounts from the first quarter 2008 to first quarter 2009, on a consecutive quarter-to-quarter basis, participants reported growth from fourth quarter 2008 to first quarter 2009. Total sales, membership dues, and non-dues revenue all increased; with non-dues sales up 16.6 percent from $5.8 million to $6.8 million. Total membership accounts also increased by 4.7 percent, and EBITDAR improved by 9.7 percent.
“Although strong first quarter sales and membership accounts are typical of the health club industry, positive quarter-to-quarter growth indicates the industry was able to maintain performance over a consecutive six month period in the midst of a challenging economy,” concluded Rollauer. (Please refer to the table at the end of the press release)
Note: Data reflects information for 18 leading U.S. health and sport club companies representing 530 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 29 facilities (same-store count average of 12 facilities). Data is intended to provide a snapshot of U.S. health club industry performance, however the results are based on a small sample of companies and care should be taken when making comparisons of these findings to the overall industry-at-large. Industry Insights, Inc conducted the survey for IHRSA.
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. The "Co. % Change" reflects the median/midpoint percentage change reported by the 18 individual companies. As such, the “Co. % Change” represents the “typical” company’s performance where all the participants are weighted equally, regardless of size.
The International Health, Racquet & Sportsclub Association (IHRSA) is a not-for-profit trade association representing health and fitness facilities, gyms, spas, sports clubs, and suppliers worldwide. The association’s membership includes over 9,750 clubs in 75 countries, along with over 740 industry suppliers.
 

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