Weak economy presses gyms

They hope that people's desire for fitness will be stronger than their instinct for thrift

People think about two things every January: fitness and money.

This year, worried that concerns about money will outweigh resolutions to get fit, gyms are using special deals to shore up business in what has become an increasingly competitive market.

* Through January, Life Time Fitness in Cary is waiving its enrollment fee, which is usually about $130.

* Triangle YMCA branches are cutting the fee to join in half. It normally ranges from $95 to $250 for a family.

* And O2 Fitness branches are waiving their enrollment fees of up to $149 and offering new members January and February membership free.

Gyms typically run promotions at the beginning of the year, but in 2009, the stakes are higher.

"Everybody in our business is really trying to put everyone else out of business," said Kevin Hedley, chief operating officer of Raleigh-based O2 Fitness. "They're trying to drive the price as low as possible, but at the same time, it won't allow anyone to be successful in the long term."

Health clubs have always been a volatile business with consolidation and sudden closures typical. But succeeding has become more challenging during the past few years as competition has increased. New companies such as Lifestyle Family Fitness and Life Time Fitness have opened gyms here, often featuring state-of-the-art amenities such as swimming pools, saunas and rock-climbing walls. To keep up, existing businesses such as O2 Fitness and the YMCA expanded, upgraded facilities and added branches.

"It was just growth, growth, growth for so long," Hedley said.

Gym and health club membership jumped from 20 million in 1990 to 43 million now. With Americans increasingly concerned about obesity and placing more of an emphasis on fitness, many gym operators thought membership would continue to grow steadily. But the growth rate has started declining, from 4.2 percent in 2006 to 1.9 percent in 2007, according to the International Health, Racquet and Sportsclub Association.

"We projected that memberships would go up to 50 million by 2010, and they've slowed in the last few years," said Mike May, spokesman for the Sporting Goods Manufacturers Association. "But people have been building thinking that we'd make it. That way, when the members show up, you're there. You've responded in advance. ... [Now] it would be great if we could get to 45 million by 2010."

Target for budget cuts

For some people, gym membership is a luxury that can be cut when household budgets need to be trimmed.

At Life Time Fitness, the number of customers canceling memberships is up in the single-digit percentages -- after three quarters of growth -- said spokesman Jason Thunstrom.

"People run into economic headwinds and challenges," he said.

With membership growth shrinking and consumer spending expected to be slow at least for the start of 2009, gyms are rethinking their plans.

Life Time Fitness, which is based in Minnesota and opened its only Triangle location in Cary in 2007, has already cut its nationwide expansion plans for 2009 from 11 new facilities to six.

Since building and opening each gym costs Life Time about $35 million, Life Time is careful to customize each one, Thunstrom said.

"Our facility in Allen, Texas has five gymnasiums," he said. "We learned that basketball leagues were pretty darn popular in Allen. ... In some places we put tennis, in some places we put squash. It's far from the basic two-story or three-story prototype. If there ever was a time to make sure the investment you're making is for maximum impact, this would be it."

Life Time also is partnering with other companies to provide discounts to members. For example, Life Time members can receive 9 percent to 13 percent off their AT&T, Sprint and T-Mobile cell phone bills.

Thunstrom said such offers can retain members who feel they're getting more value for their membership dollars.

"I can deepen the relationship I have with an existing member, which means perhaps I'm lengthening the duration of that member's membership," he said. "And that's great for us."

Convenience counts

Still, for some people, the price isn't the most important factor.

Richard and Victoria Colarusso signed up at the Apex YMCA branch on Tuesday because it's close to their Holly Springs home.

The couple moved from New York state a year ago and said they just hadn't gotten around to joining a gym. They didn't know the YMCA was running a special until they went to sign up.

Even if you are more concerned with your health than the price of membership, you should still ask for a discount, suggested May of the Sporting Goods Manufacturers Association.

Health clubs are "willing to cut some people some slack," he said. "If you don't ask, then you never know. You'd be surprised what you'll get if you ask for it."