A recently released analysis of US credit card data suggests that people are currently spending two-thirds of what they spent on fitness memberships prior to the pandemic. While consumer spending on fitness memberships has risen since January 2021, it peaked in May and is now declining slightly. The data, from Bank of America, analyzed both credit and debit card spending. BoA’s analysis closely matches a similar analysis recently completed by Goldman Sachs.
In addition, the percentage of people with fitness equipment at home rose by nearly 20% during the pandemic. Sales of connected fitness equipment (like Peloton and Tonal) increased dramatically during the pandemic. Peloton reported last year that its sales increased by 172%. Further, their sales have remained strong in 2021. The company reported its Q3 sales (2021) grew by 141%. This seems to suggest that a large number of people plan to conduct their workouts at home for the foreseeable future.
Spending on fitness memberships cratered in 2020 due to the pandemic. Americans spent $8.2B on fitness center services in 2020, down from $34.2B in 2019. That’s a decline of 76%. If 2021 spending rebounds to two-thirds of what it was prior to the pandemic, that would be an industry average of $22.9B.
Two-thirds of the Fitness Center membership isn’t enough
For WCC, the two-thirds metric poses a major problem. Just prior to the onset of the pandemic, WCC’s former CFO said that the College’s Health and Fitness Center had a paid membership of about 7,000. He also said that membership level was the minimum necessary to pay the bonds and maintenance on the building.
Well, every year from now until 2027, the bond debt on the HFC will go up. Even if the maintenance remains level (it will not), with a post-pandemic membership level of 4,700, the cost of a membership will need to rise substantially, if the building is going to (wink wink) “pay for itself.”
Holding the maintenance spending on the HFC level for the next seven years is not sustainable. A fitness center is a high maintenance venue. When the owner doesn’t perform maintenance as needed, members vote with their feet. Nothing will destabilize the membership faster than cutting the maintenance budget.
Except maybe raising the membership rates to cover the operating losses.
When the WCC administration laid off the IT staff, they said it was because the College wasn’t in the IT business. When they closed the Children’s Center, it was because the College wasn’t in the daycare business.
At what point will this Administration conclude that it’s not in the fitness center business either? How many millions more in losses will the taxpayers need to front before someone admits that this might have been a mistake?
What is the new business plan for the Fitness Center? More importantly, what is the exit strategy?
Photo Credit: Jasperdo , via Flickr
