Executive leaders share the lessons they learned in 2022 and fitness industry predictions for 2023.
Carol Nalevanko, the president of Village Health Clubs & Spas
What lessons did you learn in 2022 as a health club operator?
I learned four major lessons in 2022:
- Stay true to your business model. Don’t overreact and stay the course.
- Communicate often with both members and staff. Share good and bad news with your employees. They want to know how the business is doing, and if you expect them to contribute, you should share with them how things are going.
- It’s very important to show appreciation to your current members and not just do special offers and promotions to get new members. Also, it’s important to give your general managers a budget to use for special outings, prizes, etc. for your staff to show how important they are to the company.
- Employee training is very important and not a budget that should be cut, even in tough economic times.
What trends do you expect will be paramount in 2023 for the industry?
- Finding quality staff will remain one of the major challenges of our industry. It will cost us a significant amount of money to attract and retain excellent employees.
- Personal trainers and Pilates instructors will remain hard to find. Many of these people trained our members at their homes during the pandemic when the clubs were shut down, and they continue to do so. We may have to change the personal training model and pay out larger commissions.
- Tennis and golf will remain strong in 2023. Pickleball will continue to grow.
- Recovery equipment, services and offerings will be important but hard to make any true profits due to high labor costs and expensive equipment purchases needed to implement recovery programming.
What’s the best piece of advice you could give to other operators in the year ahead?
Stop discounting your product. The general public is now more aware than ever of the importance of good health and fitness, both mentally and physically, and are willing to pay for it.
Chris Craytor, the CEO of ACAC Fitness & Wellness Centers and Welld Health
What lessons did you learn in 2022 as a health club operator?
The industry has continued to surprise those who incorrectly predicted its demise two years ago. We learned in-person events have returned in full force, which have always been great opportunities for learning and building personal connections.
What trends do you expect will be paramount in 2023 for the industry?
Pickleball growth continues to explode and club owners everywhere are working to capture participants in this fast-growing sport.
We will continue to examine how best to equip our fitness floors and exercise studios to deliver the products and services our members want. The continued momentum behind strength training for all should remain for some time.
What’s the best piece of advice you could give to other operators in the year ahead?
As we look forward into an uncertain economy, operators will have to carefully balance rising costs and price increases while maintaining revenue growth and operating margin. Focus on the relationships with your team and members. Retaining both employees and members will help club owners better manage an economic downturn.
Karen Raisch-Siegel, the executive director of LifeWorks of Southwest General
What lessons did you learn in 2022 as a health club operator?
I think I keep relearning this lesson, but when it comes to staff changes, just do it. When I think about it, not one time did I ever say, “Oh, I am so glad I waited to do this.” Never. Usually after I’ve made a significant change, whether it’s changing a position, eliminating a position or managing someone out, it’s always, “I should have done this sooner. I knew I needed to do this sooner.” I think that’s one thing COVID-19 has really helped with. For us here, the pandemic helped clean house a bit.
It’s the people element and that’s what makes it hard. But then again, on the people side, it’s doing it the right way and having those conversations that are never good. Earlier in my career I used to go into a mode where you become like a robot, because it’s hurtful. It’s affecting someone’s life, and it’s never easy. So, it’s easier to be a robot so it doesn’t affect you as much, but then that’s not the right way to do it for the person. It’s not going to be good, but at least be honest and vulnerable with them, and have a person-to-person talk.
What trends do you expect will be paramount in 2023 for the industry?
Group exercise classes and the length of time of classes. For us with an instructor shortage, you just don’t have the classic aerobics instructor that all of us came up on. It seems like the newer group of exercise instructors are more that HIIT, Tabata, bootcamp coaching style versus doing the class with the participants. I think group exercise and the market are big things we’re watching. It’s changing more in 2022, but I think it’s going to affect us in 2023.
Additionally, I’m watching at-home options and if they will continue. For some people it works well, but others are starting to realize that’s not the golden ticket. I do question whether that’s going to be in the market and what kind of trend that’s going to be for our business.
What’s the best piece of advice you could give to other operators in the year ahead?
The biggest thing we can do as leaders is work on becoming a leader. If you are a leader, then you know you’re always constantly working on it. Ask yourself, are you a leader? Or are you just a manager? During these times when it does get a little challenging, it’s our team that always carries us through. They want a leader they can follow. And if you’re a leader they can follow, they’ll come up with the ideas to help you grow. Everyone wants to be a part of something that makes a difference. Reconnect with what you’re doing, why you’re doing it and have fun.
Jim Worthington, the owner of Newtown Athletic Club
What lessons did you learn in 2022 as a health club operator?
Some lessons I learned include:
First you need to be a HVLP model or a high-end, full-service lifestyle facility to be successful in today’s fitness industry. Low pricing with clean, well-equipped facilities will be attractive to the masses who want to exercise but are not able, ready or willing to spend the money or time to make a bigger commitment. Lifestyle facilities — many which are still not back to their 2019 membership numbers — benefit from diversified revenue sources that have in many cases actually exceeded 2019 numbers.
As revenues increase, do not get lured back to 2019 payroll percentages. During COVID-19 we were all forced to operate leaner. It’s important to stay vigilant knowing labor costs per employee will be higher due to labor shortages, but overstaffing must be avoided.
Do not be fearful of price increases across the board whether it be membership dues, personal training rates, food and beverage, etc. With operating expense increases running rampant, you must increase your pricing accordingly and significantly.
What trends do you expect will be paramount in 2023 for the industry?
Trends I am looking for in large multi-purpose lifestyle clubs as well as mid-level facilities will be the continued diversification of revenue streams. Adding spa, salon or wellness medical services such as skin care and Botox, recovery — even utilizing your existing space for events, parties, meetings, etc. — are just several of the many trends that will be introduced and become commonplace over the next few years. For those who have the ability to expand their campuses, preschools, field houses or even apartments on campus will emerge successfully.
What’s the best piece of advice you could give to other operators in the year ahead?
Do not operate in fear. You are in business to both improve people’s lives but also to make a profit. If you deliver the first, you deserve the second. Raise your prices but when doing so be perfectly candid. Do a Facebook Live, let your members know our industry has been impacted greater than any other business and it has had the least amount of government support. Explain how labor shortages have increased labor costs. To provide the same level of quality and service members have been accustomed to requires all pricing to be increased. Full transparency with real examples will justify your need to do so, and even though some members will grumble, the vast majority will be supportive. Remember they are all seeing this in their own lives and homes
