Fitness First changes top management team

We're hearing news today that Fitness First, the world's biggest health and fitness operator has carried out extensive changes to its top management team in response to pressures on its UK and Australian businesses.

Effective immediately, Colin Waggett and Duncan Tatton-Brown are to step down from their roles as CEO and CFO, to be replaced with turnaround expert Chris Stone as CEO and Jan Kengelbach of BC Partners as interim CFO and interim MD for the UK business. Andrew Newington has been appointed Chair and will oversee the changes. 

John Gamble is also leaving the business.

Other key appointments include Donald Featherstone of AlixPartners, who will work as Chief Restructuring Officer. There will be no changes to the business in Asia.

Chris Stone was previously with Northgate IS, where he engineered a turnaround in the business from an £85m loss to a position where it was a global market leader with revenues of £850M and profits of £150M.

We'll post more news as we hear it.

If you're wondering why I'm posting this news here rather than on our own Leisure Media websites - I regret to report that after 17 years online without a hitch, our sites have been attacked by hackers and our tech team is currently working to restore them - a process that could take most of the day.

Liz Terry

Editor and MD

The Leisure Media Company

+44 1462 431385

lizterry@leisuremedia.com

I wouldn't visit a spa to get a good massage

If want a technical massage, very complex soft tissue work or other specific bodywork, I have to confess, I’d be unlikely to visit a spa.

Most of the treatments I have which make a fundamental difference to my body are carried out in dingy treatment rooms with hard beds and strip lighting: one therapist I visit works in a space which is little more than a cupboard.

Yet these specialists – practising in the field of complementary medicine – are world-class and normally booked solid for weeks or even months ahead.

My spa experiences are generally the opposite – fabulous facilities, and service, but when it comes to therapeutic value or the level of advice on offer, they often fall short.

Occasionally it comes together in a beautiful spa with a great therapist to create an outstanding experience, but this is unusual – I’d say 15 per cent of the time. Of the rest, the best you can say is they’re satisfactory and (hopefully) don’t do any damage.

Unfortunately, the recession has created a situation where it’s increasingly difficult for spas to offer this compelling combination. This is partly because many operators have responded to falling revenues by hiring more part-time therapists who have less time for training and partly because training budgets have been cut back.

There’s also been an understandable drive to commercialise and streamline the experience, meaning treatments are often standardised, rather than personalised to the individual.

But the main reason is that we’re still failing to engage with therapists working at the more curative/medical end of the spectrum where these higher skill levels are often found.

The industry needs to drive volume to keep up with its own ambitious growth targets, because visits-per-spa have been falling steadily since the late 90s as the number of spas has grown. In the US, for example, visits per spa per year stood at over 16,000 in 1999, but are now below 7,000 (see p34).

Unless we can make a spa visit an essential part of people’s body maintenance rather than a discretionary extra, we won’t achieve the volumes necessary to fill the spas that are being built. People are prepared to pay regularly for great treatments which improve their quality of life, health and wellbeing, they’re not prepared to pay for fluff and at the moment, unfortunately, that’s often what you get when you visit a spa.

There’s a danger that the balance sheet is driving the industry – there’s just too much emphasis on the bricks and mortar and not enough on the treatments and quality of experience. We need to refocus on offering personalised, effective, therapeutic services if we’re going to build up the valuable regular custom which will really underpin enduring success.

Investing in India

News that MGM is in talks to build a $100m, 70-acre theme park in India, in partnership with Mumbai-based Lavasa Corporation, will further confirm India’s status as one of the next emerging markets for the global attractions industry.

The new attraction will open in 2014 and is the second for the city: a Spaceworld theme park is already under construction down the road – in partnership with Belgium-based Spaceworld International – with an opening scheduled for 2012.

Opportunities in India are attracting the attention of international investors and operators, where even a decade ago such a thing would have been unthinkable, because in spite of ongoing issues with wobbly infrastructure, the middle class in India has grown to the extent that it’s seen as offering a serious business opportunity.

This group already represents 30 per cent of the 1.2bn population and McKinsey forecasts that India’s middle class will reach the half billion mark over the next 20 years, saying this ‘unique period in India’s evolution’ will see total consumption in the country quadrupling, making India the fifth largest consumer market in the world by 2025.

For many years, large-scale theme park developments couldn’t be built, because government taxes on imported steel made the market for the infrastructure unviable – vendors of rollercoasters just couldn’t compete, for example. As a result, India’s attractions were typically local, low-rise in style and with a focus on themeing and soft landscaping. However, changes in government policy have eased these restrictions and the market has been opening up to change.

Although these new parks are being built primarily for the local market, India is also growing rapidly as a tourist destination; 5.37 million foreign tourists visited the country in 2008, up 57 per cent from 1996. It also remains an increasingly attractive destination for business travellers and affluent Indian expatriates.

As a result, future opportuities for the sector will include attracting inbound tourists, so the adoption of international brands such as MGM will be important drivers of business and we’re likely to see more of these kind of deals being done.

India already allows foreign-owned brokers to trade directly on the country’s exchanges, and a government panel has recommended the finance ministry make it easier for foreign retail investors – in particular, wealthy Indians settled overseas – to buy shares on Indian exchanges. Foreign investors will benefit from this change as they will directly participate in India’s growth, making investment an even more attractive proposition.

Driven to change

If you look back four years, the consensus across the health club industry was that it was time for a change – things had got a little boring. Operators were set in their ways and analysts talked about the need to break the mould, create new business models and challenge the status quo, but nothing changed in spite of this recognition.

Fast forward to 2011 and things couldn’t be more different - it’s taken the biggest financial shake-up in our lifetime, but there are signs the industry’s starting to innovate. The pace of change is picking up too, with a slew of new announcements giving indications of how things are likely to shape up as the year unfolds.

The first trend seems to be towards diversification into new sectors, as operators in public and private sectors look for growth by attacking new markets. Leisure Connection, for example – originally a contract leisure management company – has announced plans to move into hotel gym management and will run the health and fitness facilities for Park Inn Hotels. Meanwhile, in the trusts market, Kirklees Active Leisure has announced it will launch into the low-cost gym sector by opening two budget clubs in Yorkshire this year.

Local authorities are following GLL and Pendle’s lead and launching spas – the latest being a Schletterer-designed, Décleor day spa at St Neots leisure centre in Cambridgeshire and a new spa at Hyndburn Leisure Trust’s Mercer Hall Leisure Centre.

If you’d asked a local government leisure professional who Décleor were a couple of years ago, they wouldn’t have had a clue, whereas now it seems spas are the new focus for both refurbished and new-build local authority and trust-managed facilities.

Other recently-announced initiatives include DC Leisure’s tie up with Magnus Scheving’s LazyTown TV brand to launch children’s LazyTown Sports Clubs as part of DC’s programme to boost children’s fitness at its centres and .

Franchising looks set to be big news this year, especially in the budget sector, where énergie will push forward following its aquisition of nuyuu. Other entrants include truGym which has announced it plans to grow through the franchise model and New Evolution Ventures’ Crunch franchise, which is planning a global franchise roll-out and looks likely to come to the UK at some point. In a related deal, Topnotch Health Clubs has just announced an agreement which will enable it to use the Fitness4Less name to roll out budget health clubs, with ambitious growth plans in 2011.

Medical fitness looks set to be big this year, with more links to physiotherpy and specialist health services being announced. This will be backed up by the FIA’s new Joint Consultative Forum which brings the FIA together with a number of royal medical colleges and faculties with the aim of increasing the number of exercise referrals and drawing up new standards.

Add to this the launch of easyGym, the massive growth of social media and the impact this will have on the industry and the likelihood of the UK getting its first Madonna Hard Candy health club and 2011 is already shaping up to be a pretty interesting year.