Two years ago, when we ran a feature about investor relations, the overall picture wasn’t very uplifting (see HCM June 12, p30). The UK was in the midst of a recession, the fitness sector was receiving negative press about contracts, Fitness First had run into financial difficulties and local authorities were implementing budget cuts.
But as the recession bit, there wasn’t in fact the mass cancellation of memberships that had been predicted, which earned the sector some credibility.
In addition, as predicted in 2012, the low-cost chains emerged strongly. While mid-market clubs ran into well-reported problems, the budget chains worked hard to create a niche for themselves, based not least on listening to consumers’ desire for value and distaste for contracts.
And now, after a long and miserable recession, the outlook is more positive. The economy is doing better, with house prices rising again, along with consumer confidence. There’s a buzz in the fitness sector too: Fitness First has come through its restructuring, new clubs are being built, and while the low-cost sector has driven the growth of the industry, premium microgyms are also popping up all over London.
Added to this, we’re seeing some old faces – such as Allan Fisher, David Turner and Mike Balfour, who all founded chains in the past – back in the industry.
Against this backdrop, a number of operators have attracted new investors, among them David Lloyd Leisure, The Gym Group and Xercise4Less. Meanwhile payasugym has also received an initial £250,000 funding from Albion Ventures.
So what does this mean? Are the bad times behind us? Is the current buzz sustainable? And are investors starting to take another look at the health and fitness sector?
In fact Nicholas Batram, travel and leisure analyst at Peel Hunt, says the sector is not particularly on the City’s radar at the moment, because there aren’t any listed companies. So how do we gain the attention of potential investors? We ask the experts....