10 Exciting New Revenue Streams for Health Clubs

“Ancillary revenue.” It’s not a particularly exciting term, but if you’re a health club owner, just the thought of it can raise your heart rate well beyond your training zone.

And for good reason:

“Generally speaking, ancillary services account for a quarter of a club’s total revenues,” said Melissa Rodriguez, IHRSA’s senior research manager. “So operators need to be creative in terms of coming up with new nondues revenue services, and getting members—and nonmembers—to make use of them.”

It’s not a new notion for IHRSA clubs, and, especially in recent years, a fair number have been using them quite successfully. “Many have managed to boost their profitability to pre-recession levels—or even higher—by tapping nondues revenue sources.”

What have they been up to? Club Business International checked in with a host of operators, consultants, and industry suppliers to find out.

NO. 1: A Boutique Within a Club

For an extra $40 a month, a member of GymIt, a high-volume/low-price (HV/LP) brand with two locations in the Boston area, can train like a professional boxer inside a state-of-the-art BOXFIIT modular classroom.

The studio and associated programming are the creation of EveryBodyFights (EBF), a high-end boxing business cofounded by George Foreman III, son of the two-time world heavy-weight boxing champion.

The turnkey EBF studio comes equipped with bags and special lighting and décor, and the classes incorporate patented BOXFIIT techniques developed by Foreman. Clubs pay a monthly licensing fee for EBF, and instructors are BOXFIIT-certified. Certification costs $400, and includes continuing education credits and access to a library of more than 50 hours of video demonstrating 100 custom workouts and 200 boxing moves.

“The BOXFIIT curriculum was designed for members of both genders and of all ages and fitness levels,” said Ben Eld, EBF’s marketing manager. The program, he says, tends to attract individuals 22 to 38 years old, who earn $75,000 to $250,000 a year, and 60% of them are women.

Matthew Harrington, the president of GymIt, explained, “We wanted a way to differentiate ourselves from other low-cost clubs, and to offer a boutique fitness experience at a much more affordable price.”

GymIt offers approximately 30 EBF sessions per week. Members and nonmembers can take classes for $20 each or $140 for 10; members also can pay $40 for an unlimited monthly pass. “We reached 200 members on the monthly add-on pretty quickly following the launch,” said Harrington, “so we’ve seen a pretty significant increase in our nondues revenue.”

NO. 2: Obstacle Course in the Sky

The Dedham Health & Athletic Complex (DHAC), in Dedham, MA, has embarked on a program to provide a very special fitness experience for its younger members.

Recently, the club installed a 32-foot-tall, Level 1 Sky Trail Navigator structure on its property.

The unique unit, which is basically a high-rise obstacle course, was manufactured by Ropes Courses, Inc., of Allegan, MI, which offers a large suite of similar courses. Each one is a breathtaking maze of poles, balance beams, rope bridges, platforms, and, in some cases, zip lines. Users, who are referred to as “adventurers,” are outfitted with a full-body harness and redundant sling lines so they can maneuver the course safely.

“We always try to be different,” said Lloyd Gainsboro, the director of DHAC. “We’re probably one of the first health clubs to have this sort of ropes course, and we made sure to install it in time for our summer clubs and tennis camps, which are important sources of ancillary revenue for us.” DHAC also plans to rent out the ropes course for birthday parties and special events.

NO. 3: New from VivaFit—Personal20

Pedro and Constance Ruiz, the cofounders of VivaFit, a global women-only fitness franchise based in Portugal, have devised a new way for clubs to add to their ancillary revenue.

Working with Alexandre Lourenço, the cofounder of Body Concept, also a Portugal-based franchise, they’ve introduced Personal20, a licensed program that’s based on electric muscle stimulation (EMS). The approach makes use of wearable EMS technology, which causes deep muscle fibers to contract some 36,000 times per minute; the process is monitored by a skilled personal trainer.

The 20-minute workout, it’s claimed, delivers the same benefits as a traditional 90-minute exercise session.

“Our vision is to offer a premium, branded boutique experience that combines wellness and fitness. It represents a great micro-business opportunity for club owners,” Constance said.

NO. 4: Nondues Advertising Revenue

Increasing one’s nondues revenues doesn’t necessarily mean investing in new programs or equipment. Some profitable opportunities don’t require any “heavy lifting” at all, and may, in fact, have little to do with fitness.

Industry veteran Rick Caro, the principal in Management Vision, Inc., an industry consultancy based in New York City, reports that a growing number of clubs are selling ad space inside their facilities.

“I recently visited a club in Virginia that sells banners—like the ones you find in school auditoriums that highlight winning seasons—to local businesses for $1,000 each,” he said.

At the Weymouth Club, in Weymouth, MA, companies can purchase airtime on television monitors located in the club’s main fitness area.

“They get a dedicated TV that continuously scrolls a PowerPoint presentation about their company. Their corporate logo appears beneath the screen” said Executive Director Jeffery Linn. “We generate about $70,000 in revenue a year from these broadcast spots and our Business Alliance marketing program.”

NO. 5: Enlisting Corporate Allies

The Weymouth Club Business Alliance is a group of firms that participate with the club in a variety of collaborative marketing efforts.

“Alliance members can, for instance, have a promotional table at a club event, such as an open house or pool party; get space in our email blasts; post their logo on our website; or be spotlighted for a month on our homepage,” said Linn.

Some members of the group offer discounts to Weymouth Club members.

Each month, the club hosts a networking event exclusively for its Alliance partners.

“It’s a chance for current and prospective members to get to know our club, and to meet other business owners in the community,” said Linn.

The most recent gathering was a poolside luncheon featuring a local photographer as the guest speaker.

NO. 6: Dinner to Go

In Washington, D.C., VIDA Fitness has partnered with a local business, Power Supply, a subscription-based meal-delivery service, to provide its members with nutritious, on-the-go meals.

A Power Supply–branded refrigerator is positioned in the lobby of each of the chain’s six locations; members place their orders one week in advance; and then, on the appointed day, pick up their meal after a workout. Among the many tempting entrees: spring harvest chicken salad with a tarragon cucumber vinaigrette, and spaghetti squash with Andouille sausage.

“It’s a great fit for our members,” said Tara Sampson, the general manager of VIDA. “Most of them are driven, type-A professionals who care a lot about their health, so they purchase the meals for convenience, or performance, or both.”

VIDA receives a percentage of the revenue from the orders placed onsite.

“I’m not paying for the fridge, the ingredients, or the payroll. I’m just providing a stage for a company that I believe is aligned with our brand to provide a valuable service to our members,” said Sampson. “Anything we make from it is pure profit.”

NO. 7: Fitness on the Road

Michele Melkerson-Granryd, the general manager of BB Fitness Studios, in Austin, TX, agrees that, if they’re going to sell, retail products must address a specific need.

“When it comes to apparel or gear, our members aren’t all that interested in things such as T-shirts. However, a number of them had asked me for some ideas for workouts they could do with light equipment when they were traveling,” she said. “So we put our logo on a string bag, filled it with small, packable items and two workouts, and these little exercise-on-the-go packages of ours have sold well.

“Our goal, now, is to eventually transform this product into online programs for our members.”

NO. 8: ‘House Party’ Exposure

BB Fitness Studios also is launching a unique “house party” concept that, while it currently doesn’t generate income for the club, increases its presence and profile in the community, and raises funds for a variety of charities.

Melkerson-Granryd describes the events as “small, intimate gatherings at a member’s home, during which someone from the club teaches a class on, for example, yoga or cooking.”

Guests are asked to make a donation to the host’s charity of choice, but, in the future, the club might assess a fee for what could be thought of as “small-group, at-home” training.

“What we’re really looking for right now is more exposure,” she said. “Our location is limited in terms of what we can do with signage, so we have to be creative to ensure that potential customers know we’re here. We wanted to do something charitable for the community that also provided a unique experience for the host and the guests.

“These ‘house parties’ are something unexpected that keeps us top-of-mind.”

NO. 9: Immersive Introductions

Public awareness and long-term revenue enhancement are among the goals of the members of Genavix, a club network based in Manchester, NH.

Participating facilities open their doors to nonmembers for an immersive, 90-day health promotion initiative focused on fitness, nutrition, and stress management. At the Weymouth Club, the program, branded Commit to Get Fit, is priced at $649 for Massachusetts residents. Over the 90-day period, participants are exposed to and experience every aspect of the club, and many see significant results.

“In general,” said Michael Benton, the CEO of Genavix, “the average person loses 15 pounds, trims three inches from their waist, lowers their cholesterol by 17 points, their blood pressure by 11, and their BMI by 7.7% ... More importantly, they become a part of the fabric of that club, and develop relationships they want to maintain.”

The program, he reports, is so successful that 91% of the participants wind up purchasing a membership. They’re also more likely to purchase personal training.

NO. 10: High-tech Assessments

A new technology, the Fit3D ProScanner, is also doing its part to increase personal training sales.

This scanner captures a 3D, 360° image of the human body, taking more than 400 measurements that can be used to track fitness progress— in just 40 seconds.

The product is flipping the script for personal training sales, said Greg Moore, the founder and CEO of Fit3D.

“Rather than a trainer taking a potential client’s measurements and then discussing what those numbers mean, the person is shown an avatar of themselves—curves, con- tours, and all. It’s a powerful image that evokes an emotional response, and prompts a person to be candid about why they’re there. It promotes an easy conversation and effective planning.”

Esteban Lutz, the owner of Kore 7 Fitness, in Sunbury, OH, said his use of the scanner produced 50% of a triple-digit increase in personal training sales.

And Allen Glass, the membership director for the Key Health Institute, in Edmond, OK, which owns two ProScanners, said, “When you show people that kind of information, they become enamored with it. Some of our members have had more than 80 scans done over the past two years.”