The Health Club Industry - Poised For Growth IHRSA 2017 - Bryan O'Rourke

1. Poised For Expansion The Future Of The Fitness Industry 300% Growth In 10 Years ? @BryanKORourke, CSO, CEO, Principal Houston Golds Gym, FIT-C, Vedere Ventures bryankorourke.com

2. bryankorourke.com @bryankorourke

3. GREATEST TIME IN HISTORY TO BE IN OUR INDUSTRY

4. AND BUSINESS AS USUAL IS DEAD

5. HOW WILL YOU RESPOND ?

6. MY STORY STARTS IN 1983

7. 1993 I INNOVATED ACROSS INDUSTRIES

8. 1996 INTRODUCED AUTOMATED ESPRESSO

9. 1997 GOT INTO HEALTH CLUBS

10. 2005 GOT INTO GROUP FITNESS

11. STARTED INNOVATING AGAIN 2006 #TheCloud

12. AND AGAIN 2007 @bryankorourke @GaryVee

13. PAST 10 YEARS ENTERED AGE OF ACCELERATIONS

14. 2016

15. http://www.ﬁttechcouncil.org/podcast/ WE KEEP INNOVATING

16. GROWTH REQUIRES INNOVATION

17. 1 BILLION MEMBERS GROWTH REQUIRES DISRUPTION

18. SAPERE VEDERE DA VINCI “TO KNOW IS TO SEE”

19. RISING TIDES LIFT ALL BOATS

20. DISRUPTION IN THE ERA OF MASS ACCELERATION

21. DISRUPTION EXAMPLES : RESTAURANTS OFFER A DINNING EXPERIENCE

22. THIS OFFERS A DINING EXPERIENCE

23. BANKS OFFER FINANCIAL SERVICES

24. THIS AI OFFERS FINANCIAL SERVICES

25. CONCERTS OFFER MUSICAL ENTERTAINMENT

26. THIS APP DOES THE SAME

27. THIS CLINIC OFFERS MEDICAL CARE

28. THIS APP OFFERS MEDICAL CARE

29. HEALTH CLUBS OFFER HEALTH & FITNESS EXPERIENCES

30. DISRUPTION: THIS OFFERS HEALTH & FITNESS EXPERIENCES

31. DISRUPTION: THIS OFFERS HEALTH & FITNESS SERVICES

32. THIS OFFERS HEALTH & FITNESS EXPERIENCES

33. DISRUPTION: THIS OFFERS FITNESS EXPERIENCES

34. AND SO DOES THIS

35. INDUSTRY DEFINITIONS HAVE CHANGED THE LINES ARE BLURRED

36. WHAT ARE FITNESS EXPERIENCES BECOMING ?

37. HOW WILL THE INDUSTRY EVOLVE ?

38. WHAT WILL MEMBERS REALLY WANT ?

39. HEALTH CLUBS HELP PEOPLE GET HEALTHY & FIT.. AND

40. WE’VE ENTERED A NEW ERA

41. YOU MUST APPLY FRESH THINKING TO REACH MARKET POTENTIAL

42. PEOPLE TECHNOLOGY GLOBALISM ECONOMICS DISRUPTION BY CONVERGENCE OF TRENDS

43. PEOPLE’S BEHAVIORS HEALTH & FITNESS INDUSTRY CONVERGENCE DRIVERS

44. Old school deﬁnitions don’t apply - dizzying diversity

45. Bifurcation : mass afﬂuence driving niche luxury models and middle class driving utility businesses.

46. Urbanization : cities are driving global growth and represent the majority of health club operations.

47. 48

48. Power has shifted to ﬁtness consumers Exane : 10% luxury is digital now 40% by 2020

49. 3 CONSUMER TRENDS

50. GREATER UTILITY AND CONVENIENCE & RELEVANCE FOR USERS PERSONALIZATION ACKNOWLEDGEMENT AND RECOGNITION EMBRACING A MISSION ENGAGEMENT FLAUNT CULTURE NOT JUST FITNESS BENEFICIAL INTELLIGENCE NEW WAYS OF DELIVERY THAT INCREASE USE AND RELEVANCE SERVICE REDEFINITION OMNI-PRESENCE TRENDS + VISION = REINVENTING MODELS 3 KEY CONSUMER TRENDS PERSPECTIVE SHIFT STATUS

51. Personalization: greater utility, convenience & relevance

52. BENEFICIAL INTELLIGENCE Enhancing User Experience Through Built In Intelligence

53. OMNIPRESENCE New Channels, Nuanced With Context In The Right Place At The Right Time

54. Personalization is hard

55. Engagement: acknowledgement recognition mission

56. STATUS: Experiences Via Design, Gamifying, UX, Community

57. FLAUNT CULTURE Allow Users To Remove Barriers And Celebrate And Flaunt An Authentic Transparent Experience

58. Service redeﬁnition : delivering new and different

59. PERSPECTIVE SHIFT: Reposition Renew, and Refresh Service Offerings In New Ways

60. NOT JUST FITNESS: Lifestyle, Mindset, Nutrition, Holistic, Longevity

61. GREATER UTILITY AND CONVENIENCE & RELEVANCE FOR USERS PERSONALIZATION ACKNOWLEDGEMENT AND RECOGNITION EMBRACING A MISSION ENGAGEMENT FLAUNT CULTURE NOT JUST FITNESS BENEFICIAL INTELLIGENCE NEW WAYS OF DELIVERY THAT INCREASE USE AND RELEVANCE SERVICE REDEFINITION OMNI-PRESENCE TRENDS + VISION = REINVENTING MODELS 3 KEY CONSUMER TRENDS PERSPECTIVE SHIFT STATUS

62. CONSUMERS TECHNOLOGY GLOBALISM ECONOMICS 4 HEALTH CLUB INDUSTRY CONVERGENCE DRIVERS

63. HEALTH CLUB INDUSTRY CONVERGENCE DRIVERS TECHNOLOGY

64. P H I L O S O P H Y O F E . O . W I L S O N W E H AV E PA L E O L I T H I C E M O T I O N S , M E D I E VA L I N S T I T U T I O N S A N D G O D - L I K E T E C H N O L O G Y 65

65. @Bryankorourke @Kevin2Kelly FREE COPY OF THE BOOK

66. The greatest products of the next 20 years have not been created yet.

67. Kevin Kelly’s View Of What Will Happen With Technology 12 Inevitable Forces 68 01 Becoming 02 Cognifying 03 Flowing 04 Screening 05 Accessing 06 Sharing Move from ﬁxed products to constant upgraded services and subscriptions. Make everything smarter via cheap AI from the cloud. Unstoppable streaming. You are certainly now in the data business. Turning all surfaces into screen experiences. Access to services at all times move away from owning assets. Mass-scale collaboration. Key innovations built on sharing. BE CO FL SC AC SH

68. SCREEN

69. SCREEN

70. AC & CO

71. 12 Inevitable Forces 72 07 Filtering 08 Remixing 09 Interacting 10 Tracking 11 Questioning 12 Beginning Harnessing intense personalization to anticipate desires. Unbundling products and basic parts and recombining them in all possible ways. Immersing ourselves inside computers to maximize engagement. Total surveillance for consumer and citizens beneﬁt. Promoting good questions is far more valuable than good answers. A system connecting all humans and machines in a global mix. Kevin Kelly’s View Of What Will Happen With Technology FI RE IN TR QU BG

72. CYBER PHYSICAL SYSTEM : THE HOLOS

73. CONSUMERS TECHNOLOGY GLOBALISM ECONOMICS 4 HEALTH CLUB INDUSTRY CONVERGENCE DRIVERS

74. CONVERGENCE DRIVERS ECONOMICS

75. CONVERGENCE RESULTS IN DIVERGENT MODELS

76. New Delivery Systems

77. Proﬁt Margin Dupont Formula : Return On Equity 78 EBITDA SALES ASSETS EQUITY SALES ASSETS Asset Turnover Equity Multiplier X X

78. Proﬁt Margin Dupont: Return On Assets Where the Growth Is 79 EBITDA SALES $3M AVG SALES $3M AVG Asset Turnover X =53% 100% 53%

79. Proﬁt Margin 80 EBITDA SALES ASSETS $1.6M AVG SALES $1.6M AVG Asset Turnover X =34% 100% 34% Dupont: Return On Assets Where the Growth Is

80. 8 Distinct Fitness Delivery Channels Health Club Models 82 High End Full Service Middle Market Low Price HV Boutique Full Service, Full Amenities, Higher Prices, Digital Integration Financially Challenged, Low Pricing Power, Legacy Burden Hi-Growth Space, Low-Cost, Low- Service, Upcoming Digital, Lower Markets Program Focused, Cross Over Lifestyle, Multiple Monetization, Omni-Channel

81. Health Club Models 83 Lifestyle Community Pure Digital Medically Integrated Alternative Models Outdoors, Indoors, Lifestyle. Connection, Data Driven, Streaming Content, Anywhere Anytime,Home Market and More Outcomes Based, Integrated, Population Health Corporate, Multi- Family, Alternative Models 8 Distinct Fitness Delivery Channels

82. Business Models Will Merge Different Aspects Of Each Of These With ALL INCLUDING DIGITAL COMPONENTS Merging Of Oﬀerings - Key Digital 84 High End Full Service Community Digital Medically Integrated Middle Market Low Price High Value Boutique Alternative

83. OLD MODEL OF VALUE CUSTOMERS TRANSACTIONS / $ IE: Valuable Companies

84. NEW MODEL OF VALUE RECEPTORS COGNITION IE: New Valuable Companies

85. CHALLENGE IS NOT THE TECH ITS PEOPLE’S MINDSET

86. Good News : A Growing Market: sick care is not sustainable and public primary prevention is the answer. Technology will help. #PassPhit

87. Personalized Primary Prevention Is Here - Your DNA

88. S CURVE REINVENTION THE PATH FORWARD

89. HERE WE ARE : CONSOLIDATION AND REENGINEERING - S CURVE 91 Bricks & Mortar Biz ModelsKey Driver Is Proﬁtability DIGITAL OMNICHANNEL MEDICAL BOUTIQUE LIFESTYLE COMMUNITY

90. HEALTH & FITNESS INDUSTRY CONVERGENCE DRIVERS GLOBALISM

91. 100,000 Yrs. Ago, 6 Different Human Species Inhabited Earth - Cooperation Key

92. How we operate and invest must be mindful of sustainability

93. We must cooperate globally to impact policies that address the huge risk and opportunity of global health

94. We must globally share our insights and cultural diversity to drive innovation and success

95. HOW WILL YOU RESPOND ?

96. OBJECTIVE QUESTIONS

97. DESIGN ENHANCED PROFIT UX OMNIPRESENCE SERVICE SCOPE CLUB OPERATORS FOCUS

98. TOOLS & RESOURCES @IHRSA @FITTECHCOUNCIL @BRYANKOROURKE

99. S CURVE REINVENTION

100. FORWARD LOOKING PLAN

101. Poised for growth Disruption Will Make Our Industry Better

102. SAPERE VEDERE DA VINCI

103. PEOPLE TECHNOLOGY GLOBALISM ECONOMICS 4 HEALTH & FITNESS INDUSTRY CONVERGENCE DRIVERS

104. The greatest products of the next 20 years have not been created yet. Kevin Kelly

105. HEALTH & FITNESS INDUSTRY CONVERGENCE DRIVERS GLOBALISM

106. bryankorourke.com @bryankorourke