Presentation by Ray Algar, Oxygen Consulting and Melissa Rodriguez, Research Manager, International Health, Racquet, and Sportsclub Association (IHRSA) IHRSA European Conference, Milan, Italy, October 2011

1. Ray Algar & Melissa Rodriguez

2. oxygen-consulting/think-tank

3. Discuss why and how the low-cost gym
sector is growing internationally

4. Neutral perspective

5. 50% lower
than
country average
price
Scope to Heavy
operate 24 technology
hours and web use
DEFINITION
LOW
COST GYM
Ability to operate Predominantly a
with a single gym-only
person proposition

6. Digital
infrastructure
Low
attendance Simplicity
MARKET
DRIVERS
Changing Affordability
consumer Consumer
sentiment
towards
clubs

7. What do UK consumers think of the
low-cost gym experience?

8. FitSpace The Gym
members Group
ex-members

9. Text
FitSpace
Members

10. 20%
80%
First gym Previous gym experience

11. How much do you agree with
the following statements?
0 = Strongly 5 = Strongly
disagree agree

12. How much do you agree with the following statements?
3.3
3.5
Average Response
3.9
3.9
4.1
Know first name of staff team Has all facilities I need
Receive emails Staff available to provide free advice
Staff approachable

13. How much do you agree with the following statements?
3.9 4.1 4.3 4.5
4.1
4
Average Response
4.2
4.2
4.5
Delivers on website promise Friendly atmosphere
Always feel safe Helping me to become healthier
Excellent value for money

14. How likely are you to recommend this gym?
0 = Not all all 10 = Definitely
likely recommend

15. How likely are you recommend FitSpace?
7.6 7.8 8 8.2
7.7
7.8
Average Response
7.9
8.1
8.2
Males Members with experience of other gyms
All members Members for whom FitSpace is first gym
Females

16. Net Promoter Score
0-6 7-8 9-10
Detractor Passive Promoter

17. Example - 1,000 member club
200 400 400
Detractors Passives Promoters
40% - 20% = 20

18. Net Promoter Score
0 10 20 30 40
19
22
NPS SCORE
28
37
37
Age group - 25-34 Males All members Females
Age segment - 16-24

19. UK 2010 Net Promoter Score study
0 12.5 25 37.5 50
22
19
41
Net promoter score Detractors Promoters
Source: NPS Leisure, Health & Fitness Sector, Leisure-net, The Retention People 2010

20. Still a member in six months time?
7.6 7.85 8.1
7.7
7.8
Average Response 7.9
7.9
8.1
Males Members with previous gym experience
Member for more than one year All members
FitSpace is first gym Females

21. Out of industry Net Promoter Scores
0 40 80
72
35
NPS
33
15
14
Apple - computers Subaru - cars Jumbo - supermarkets
Citybank - banks Sky - internet

22. Text
The Gym
Group
ex-members

23. 17%
Males - 60%
83%
First gym Previous gym experience

24. How much do you agree with the
following statements?
0 = strongly
5 = strongly
disagree
agree

25. How much do you agree with the following statements?
3.4
3.5
3.7
3.7
Staff available to provide free advice All the facilities I needed
Friendly atmopshere Helped me become healthier person

26. How much do you agree with the following statements?
4
4
4.1
Always felt safe Email with advice
Provided everything promised on website

27. How likely are you to recommend this gym?
0 = Not all 10 = Definitely
all likely recommend

28. How likely are you recommend The Gym?
7 8 9
7.4
7.5
Average Response 7.5
7.6
8.5
Members with previous club experience All members Males Females
The Gym was first gym member joined

29. Net Promoter Score
0 10 20 30 40
4
20
NPS SCORE
21
22
36
Age group - 35-44 Males All ex members Females
Age segment - 16-24

30. Where are members now?
31%
Male 66%
69%
Joined a different gym Not joined another gym

31. How long a member?
More than one year
7%
Unsure
5% 0-3 months
27%
7-12 months
26%
4-6 months
35%

32. 26% of this group had
experience of other gyms
0-3 months
27%

33. Shall we try OK, let’s go try
another gym?
...36% of this group
went on to join another gym

34. How likely to recommend to a friend - by club
Birmingham 7.9
8.5
Brighton 7.4
7.4
Liverpool 7.4
7.4
Males Females

35. “No frills, low-cost gym.
Especially important for
us students!”
Female member
The Gym, Birmingham
10/10

36. “The friendly atmosphere,
knowing you are safe and
not being judged by staff”
Female member
The Gym, Birmingham
10/10

37. “Cleanliness and amount of
equipment available”
Female member
The Gym, Birmingham
10/10

38. “There was a lack of staff. I
searched for 15 minutes before
finding staff. I cancelled after
going just once”
Male member
The Gym, Liverpool
2/10

39. “Provide more supervison
from staff”
Female member
The Gym, Brighton
6/10

40. “I would have liked a private
changing cubicle”
Male member
The Gym, Birmingham
5/10

41. Leading international low-cost gym brands - clubs
At September 2011
17
19
23
38
52
Kingdom of sports Fitinn Smart Fit Fit for free
Fitness24Seven

42. Leading international low-cost gym brands - clubs
At September 2011
54
70
80
141
447
Basic Fit Easy Fitness Clever Fit McFit Planet Fitness

43. Planet Fitness - club growth
387
309
22.5%
compound
258
annual growth
rate
2010 2009 2008

44. €70,000-
€184,000
existing
gym
€184,000-
1,393 - €575,000
2,223 sq.m new
Planet Fitness gym
Club
Membership Franchise
from business
€4.75/month model

52. How members rate Planet Fitness on Yelp
19 16 12 20 6
1 star 2 stars 3 stars 4 stars 5 stars

53. “I love Planet Fitness. Why?
Because I will never find another
gym in NYC this cheap.
Seriously, I spend more on peanut
butter each month!”
Male member
Planet Fitness, New York

54. “This gym is WAY too
overcrowded and there is not
enough equipment to use so I
decided to buy and bring
some of my own”
Female member
Planet Fitness, New York

55. Planet Fitness - EBITDA margin (3 clubs)
39%
54%
42%
Club - 25th Percentile Club - 50th Percentile (median)
Club - 75th Percentile

56. 123,332 likes

57. 276 ‘likes’
per club

58. 5,854 followers

59. 5,854 followers

61. Global 500 Franchise List
Planet Fitness
Year
Rank
2011 81
2010 157
2009 116

62. “To become the world’s largest
fitness club company”
Michael Grondahl, CEO

63. Are low-cost gyms good
?
for the industry?

64. A compelling story
for consumers

65. Journalists are excited
by them

66. They are challenging clubs
to examine their
member proposition

67. “It has focussed me on our
specific proposition - Why become
a member of Holmes Place?”
Neil Burton, CEO Holmes Place Central/Eastern Europe

68. Some key questions
?

69. Do you see a low-cost
or a more
‘operationally intimate’
?
future for your business?

70. What is the underlying purpose
driving your business?
?

71. What do you want your business
to stand for?
?

72. What type of business are you
passionate about developing?
?

73. What will be your legacy to
this industry?
?

74. Steve Jobs
1955 - 2011

75. oxygen-consulting/think-tank