European Health & Fitness Market Report 2018 - Deloitte

EuropeanHealth & Fitness MarketReport 2018

European Health & Fitness Market Report 2018Introduction04The European Fitness Market at a Glance06Executive Summary08Top 30 Operators – Rankings12Top 30 Operators – Profiles21Other Operators – Short Profiles54Recent Mergers & Acquisitions58Perspectives on the Market71Keith Burnet72Glenn Earlam76Thierry Marquer80Chuck Runyon84Gabriel Sáez88Rainer Schaller & Ralph Scholz92Functional Fitness96The View from Brussels102Snapshot of the Equipment Industry105Top Markets – Overview114Top Markets – Profiles129Appendix168About EuropeActive169EuropeActive Event Calendar170About Deloitte Sports Business 7503

The European FitnessMarket at a GlanceNumber offitness clubmembersMembershipgrowth 4.0%60.0 million14.1millionPenetration rate307.6% (total)9.1% (15 )06Members oftop 30 operatorsMarket share oftop 30 operators bymembership23.5%

European Health & Fitness Market Report 2018M&A dealsGlobal net salesof leadingequipmentmanufacturersClubs59,055EUR 2.9 billion20Average grossmembership fee per month TotalrevenuesEUR 26.6 billionEUR 39.307

Market growth is again primarilydriven by a 3.2% increase inthe number of clubs acrossall countries, supported byan increase in the averagemembership per club ( 0.7%),leading to a total increase inmembers of 4.0% to 60.0 million.08

European Health & Fitness Market Report 2018Executive SummaryIn this fifth edition, the 2018 EuropeActiveEuropean Health & Fitness Market Reportpresents the most comprehensive analysisof the European health and fitness industry to date. The report contains currentinformation on the major European fitnessmarkets and club operators, recent mergerand acquisition activities, a snapshot of theleading equipment manufacturers, a chapter on the functional fitness trend as well asinterviews with leading fitness executives.In terms of revenue, the European healthand fitness market grew by 1.9% to EUR 26.6million in 2017. In addition to the 28 EuropeanUnion member countries, this figure alsoincludes Norway, Russia, Switzerland, Turkeyand Ukraine. The revenue development was,however, negatively affected by exchangerate effects in Turkey (-18.9%), the UK(-6.8%), Ukraine (-3.9%), Switzerland (-1.9%),Sweden (-1.7%), and Norway (-0.3%), whichwas partly offset by positive currency developments in Russia ( 11.8%), Poland ( 2.6%),and Denmark ( 0.1%). At constant currencyexchange rates, the year-on-year growthrate amounts to 3.8%.Market growth is again primarily driven by a3.2% increase in the number of clubs acrossall countries, supported by an increase inthe average membership per club ( 0.7%),leading to a total increase in members of4.0% to 60.0 million. This is partly offset bya negative development of average monthlymembership fees, which decreased by-0.1% at constant currency, following thecontinued expansion of low-cost operators.As shown in the chapter on the leadingoperators, the top 10 European fitness operators, as measured by revenue, achievedtotal revenues of EUR 3.1 billion in 2017.While their market share increased from11.4% to 11.7%, the European fitness marketnonetheless remains relatively fragmented.With respect to membership, the 30 largestoperators increased their combined marketshare by 1.0 percentage points to 23.5% andtheir membership by 1.2 million ( 9.5%) to14.1 million from 2016 to 2017.This development was predominantly drivenby low-cost operators Basic-Fit ( 310,000members), The Gym Group ( 159,000),McFIT Group ( 110,000), FitX ( 108,000)and Pure Gym ( 103,000), which rankedas the five fastest-growing companies interms of absolute membership. While theGerman operator McFIT Group (1.73 millionmembers), Netherlands-based Basic-Fit(1.52 million) and British market leader PureGym (923,000) solidified their positions asthe top 3 European operators in terms ofmembership, The Gym Group (607,000) andFitX (550,000) made significant leaps to fifthand eighth in the overall ranking.Membership growth of 94,000 was reportedby British premium operator David LloydLeisure (DLL). In contrast to the aforementioned low-cost chains, this growth is largely09

inorganic following the acquisition of 14clubs in the UK from rival Virgin Active inJune 2017. In addition, DLL further expanded its international presence in 2017 withthe opening of a second Spanish club inMadrid in February as well as the acquisitionof the Malaspina Sporting Club in Milan. As aresult, DLL not only defended its sixth spotin the membership ranking with 580,000members, but also overtook Virgin Activeto become the European market leader interms of revenue (EUR 483 million).Ranking second is the Switzerland-basedMigros Group (EUR 388 million), whichacquired Silhouette Wellness (22 clubs) in2017 and operated 311 clubs with 466,000members at year-end. After the sale of 14clubs in the UK and the divestment of itsIberian business, Virgin Active ranks thirdwith estimated revenues of EUR 356 million,followed by Scandinavian market leaderHealth & Fitness Nordic (EUR 349 million)and McFIT Group (EUR 347 million). The top10 by revenue now contains five low-costoperators, namely McFIT Group, Basic-Fit,Pure Gym, Fitness World and clever fit.In 2017, health and fitness club operatorsremained highly attractive to investors fromboth inside and outside the industry. Aspresented in the merger and acquisitionssection, there were 20 major M&A transactions in 2017, which represents the highestnumber ever reported in all five annualeditions of this report.10In addition to its focus on club operators,this report also provides a snapshot of theglobal equipment industry, highlighting theposition and development of leading fitnessequipment suppliers. 2017 was another yearof strong growth for the global commercialfitness equipment industry, increasing to anestimated market size of EUR 2.88 billion.28.8% thereof is estimated to relate to theEuropean market. The selected leadingmanufacturers, which account for 78% ofthe total commercial equipment market,achieved growth of 2.7% in 2017.This report also provides profiles of thelargest national fitness markets in Europe.Together, the 19 countries analysed (Ukrainewas added for the first time in this report)have 57.6 million members (96.0% of the European market), revenues of EUR 25.9 billion(97.2%) and 53,892 clubs (91.3%).With a total market volume of aboutEUR 26.6 billion, Europe continues to bethe largest fitness market in the world. Bycomparison, the United States recordedrevenues of EUR 24.9 billion (USD 27.6 billion) in 2016 according to the IHRSA GlobalReport 2017 despite a significantly higherpenetration rate of about 17.5% in the USmarket, which underlines a further growthpotential of the European health and fitnessmarket. At the same time, the total marketvolume exceeds that of the European footballmarket, which amounted to EUR 24.6 billionin the 2015/16 season.

European Health & Fitness Market Report 2018As shown in Figure 1, Germany (EUR 5.2billion market size) and the United Kingdom(EUR 5.1 billion) are the two largest nationalfitness markets in Europe, with Germanytaking first place for the first time in 2017.However, this was due to the depreciation ofthe GBP relative to the EUR: the UK marketgrew by 6.8% at constant currency in 2017compared to a 3.0% growth in the Germanfitness industry. When combined withFrance (EUR 2.5 billion), Italy (EUR 2.2 billion)and Spain (EUR 2.2 billion), the five leadingcountries account for 65% of the total European health and fitness market.Fig. 1 – Top 10 European fitness markets by revenue in million EUR andshare of the European market (2017)6,00065% of total European 00In terms of membership, Germany remainsthe largest market in Europe with a totalof 10.6 million members ( 5.3%), followedby the UK (9.7 million), France (5.7 million),Italy (5.3 million) and Spain (5.2 million).As shown in Figure 2, the three largestmarkets also displayed above-averagemembership growth rates in 2017, mainlydriven by the continued expansion of lowcost operators in all three 8483%3%3%3%PLCHSERU0DEUKFRITESNL23 othersSources: EuropeActive, DeloitteAt the same time, considerable differencesbetween the individual markets remain.Markets such as Sweden (21.4% penetration rate) and the Netherlands (17.0%)represent medium-sized countries withhigh membership figures relative to thepopulation, largely due to the high proportion of physically active people, relativelyhigh urbanisation rates and the presenceof large fitness operators in these countries.At the same time, markets such as Turkeyand Russia still display considerable marketpotential with penetration rates of 2.4%and 2.0% respectively.Fig. 2 – Total membership, membership growth and penetration rateof top 10 European fitness markets (2017)This report is the most comprehensivepiece of research on the European healthand fitness market to date, but it is still onlya step towards more transparency andknowledge in this industry. Obtaining reliabledata on the development of individualnational markets and leading fitness operators of the European health and fitnessindustry remains challenging.0%0%Membership growth7%Germany6%5%4%Russia3%UKFranceAverage growth oftop 10 sItaly8%10%12%14%16%18%20%Penetration rate (% of total population)Note: Bubble size represents total membership as of 2017Sources: EuropeActive, Deloitte11

GermanyMarket insightsAfter a historical year 2016 surpassing10 million members and EUR 5 billion inrevenues, the German fitness marketcontinued its growth in 2017, increasing itsmembership to 10.61 million and its totalrevenues to EUR 5.2 billion. Thus, 12.9% ofthe total population are members at one ofthe 8,988 private fitness clubs. It should benoted that the underlying “Eckdatenstudie”published by the DSSV, DHfPG and Deloittedoes not include non-profit sports clubs(“Vereine”), as these offer a wide range ofsports in addition to the commercial fitnessand sports providers and are thereforegenerally less relevant to the total marketpicture compared to other countries suchas the United Kingdom.Overall, the ten leading regular operatorshave a market share of 12% in terms ofclubs and 33% in terms of members. Whilemicro club franchise operator Mrs.Sporty(361) remains ahead in terms of club numbers, the low-cost operators McFIT Group(1.17 million members), clever fit (577,000),FitX (550,000), EASYFITNESS (220,000)and FIT/ONE (ca. 100,000) were the fastest- growing companies in absolute terms with320,000 additional members ( 13.9%) andaccount for almost one fourth of the totalmembership base. Relevant players fromthe premium and upper mid-market segments include Switzerland-based Migros,which purchased franchise system INJOYin 2016 in addition to its premium brandELEMENTS, as well as Kieser Training andFitness First. The standard VAT rate is 19%with no discount on fitness services.National associationDSSVArbeitgeberverband deutscherFitness- und GesundheitsanlagenFig. 47 – Leading regular operators by number of clubs 37321clever fit* 8189-14150McFIT GroupMigros (INJOY &ELEMENTS)*113Kieser Training* 9105EASYFITNESS*-776Fitness First61 12Pfitzenmeier 4Ai FitnessFitX 34327Jumpers25Fig. 48 – Leading micro club operators by number of clubs-24361Mrs.Sporty* 21234Bodystreet*Birgit Schwarzehttp://www.dssv.de/140* fully or partly a franchise operation