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Gyms Cut Rates for new Members

Gyms Cut Rates for new Members
Christina Ross

By Doug Desjardins

Gym memberships argyme typically the last thing to go in a tough economy but the never-ending recession has created tough times even for fitness chains. That’s why fitness centers and gyms are cutting rates to get their business back into gear.

According to the International Health, Racquet and Sportsclub Association (IHRSA), fitness chains on average sign about 12 percent of their new members for the year in January by cashing in on one of the most common New Year’s resolutions: to lose weight and get healthy. It’s definitely an important time of the year,” said IHRSA spokeswoman Rosemary Lavery.

And, given the state of the economy, it’s more important than ever. According to a survey by the American Heart Association, 25 percent of respondents said they had cancelled gym memberships in the past year as a way to save money. And that trend showed in an IHRSA survey that reported 49 percent of gyms and fitness centers have lowered membership fees as a way to keep current members in the fold and attract new ones.

Among the gyms offering introductory rates are 24 Hour Fitness, which is waiving its initiation fee in January and offering a free 7-day pass, and upstart Planet Fitness, which is offering a $1 initiation fee for January and a $10 monthly membership fee. And many YMCA’s around the country are waiving their normal joiner’s fees - $125 for families and $75 for individuals – to lure new members.

The trend of offering lower fees and introductory deals is something that started in 2008 when the economy began to decline. According to the IHRSA, gym memberships grew by 10 percent in 2008 but revenues jumped only 4 percent for the year. The numbers for 2009 are not in yet but are likely to show a decline, something that’s rare in an industry that’s long been considered recession-proof.

“Obviously, the recession has affected every aspect of the business,” said Lavery. “There have definitely been clubs that have done well and others that haven’t.”

One fitness chain that falls into the latter category is Bally’s Total Fitness, which emerged from its second bankruptcy filing in three years in September 2009 after closing hundreds of locations. The chain was having financial problems before the start of the recession and the economic downturn has added to them.

Major chains are also facing more competition from less expensive franchise operations. Two of the newest chains, Anytime Fitness and Snap Fitness, were among the top 10 fastest-growing franchises in the U.S. in 2009 – according to Entrepreneur Magazine – and take a no-frills approach to attract cash-strapped consumers. The gyms operate 24 hours a day, have small staffs and provide key cards for members so that they can come and go as they please. And, most importantly, they charge membership fees as low as $15 per month.

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