The Future of Gyms in a Post Covid World
2020 was a bloodbath for both major health club chains and small boutique gyms alike. Closures brought on by Covid-19 forced millions of Americans into their homes and out of the weight room.
Major chains such as 24 Hour Fitness, Gold’s Gym, YogaWorks, Flywheel Sports and Cyc Fitness have all had to declare bankruptcy as their customers were either banned from entering their gyms or didn’t feel safe even when they could.
However, there is a light at the end of the tunnel.
With vaccine distribution ramping up and Americans potentially being able to return to indoor gathering spaces in 2021, could gyms be on the verge of a comeback?
Athletech News spoke with an analyst at Merrill Lynch, who asked to remain anonymous because they weren’t authorized to speak to reporters, and they had an optimistic view on the future of gyms and health clubs.
“The biggest advantage they have is low startup costs, especially outside of major metropolitan areas where rents are cheaper. Its not that expensive to secure a space and fill it full of equipment.”
The analyst went on to say that health clubs are attractive tenants in large retail complexes because of the foot traffic they generate and that makes it possible for them to negotiate favorable leases when they open a new gym.
But even if it is easy to open their doors again, gyms in the future will have to contend with consumers whose habits have changed during their long year at home. While gym memberships plummeted during quarantine, home fitness companies saw their sales grow by 170% in 2020.
Peloton, makers of the high-priced exercise bike, doubled their sales in 2020 to $1.8 billion and they’ve added over 300,000 members to their web subscription service.
So will consumers be eager to return to gyms once they invested so much money into working out at home?
Nicole Pajer, a writer based in Los Angeles, told Athletech News how the quarantine has changed her work out plans.
“During the pandemic, we canceled our gym memberships and transformed half of our garage into a gym. We purchased a Peloton and ordered a TRX, as well as got a weight rack, a weight bench, and a pull-up bar.”
Even with the end of Covid in sight, Pajer wasn’t optimistic about rejoining her gym.
“It’s likely that we won’t be going back to a gym membership anytime soon. When it’s safe to work out in public again, I may purchase some Pilates classes at the studio I used to go to but other than that, I have almost all of the equipment I need at home and am taking streaming classes online.”
And while many former gym goers doubtlessly share her feelings, our Analyst remained undeterred in their positive assessment of the market, making the point that it was only a select segment of the population that could afford to pay over two grand for a Peloton, as well as the monthly fees for classes.
“You’re not competing against the guy who is paying $12.99 to go to 24 Hour fitness. Even at the higher price point, I think you’re going to see a lot of folks going ‘I can only sit on this bike and spin for so many hours a month before I start going insane.”
The market research firm Technavio released a report that was bullish on the future of gyms and health clubs. Their projections show that the fitness market will grow by $20.31 billion in the next three years and will be driven by major health club chains such as Equinox, Golds Gym, Planet Fitness and others.
Indeed some of the gyms that had to declare bankruptcy have already restructured and seem poised to grow once the pandemic ends. Both Golds Gym and 24 Hour Fitness have emerged from their chapter 11 bankruptcy filings with new lines of credit.
24 Hour Fitness CEO Tony Ueber stated, “24 Hour Fitness is now well-positioned and well-capitalized to become the leading fitness provider, serving club members and guests across nearly 300 clubs nationwide at a time when a supportive and motivating gym community has never been more important.”
2020 was a devastating year for many service-based businesses and health clubs in particular. However, as more Americans are vaccinated and Covid-related restrictions are eased in some parts of the country the fitness industry seems poised for a major comeback in 2021.