An Analysis of the U.S. Health Club Industry in 2004 and the Role of Bally Total Fitness Essay example

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Pages: 13

An Analysis of the U.S. Health Club Industry in 2004 and the Role of Bally Total Fitness

Executive Summary Introduction
The rise of the U.S. health club industry can be traced back to the 1980s and 1990s when the majority of health clubs emerged. By 2004, this $14 billion industry claimed 41 million members. Although the health club industry operated in a perfectly competitive market, several prominent key players gained large market share, including Bally Total Fitness and 24 hour Fitness. This perfect competition encouraged entry of smaller emerging firms into the industry. In 2004, the health club industry consisted of 26,000 clubs in the U.S. Of this growing market,
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Most importantly, the industry provided a platform for prevention of diseases and health conditions associated with obesity, such as cardiovascular disease and stroke.2. The cost to deliver these values varies depending on the capacity of the individual firms. For a 40,000-50,000 sq. foot facility, fixed costs may comprise up to $1.5 million, while small operator start-ups (including equipment rentals) may only cost $25,000-$35,000. A small number of well-known health fitness equipment producers dominated the industry. Nautilus, a key player in the industry, sold fitness products to health clubs through a sales force and dealer network and to consumers through direct marketing and retail channels. Its commercial-strength product lines were sold under the brands Nautilus, Schwinn and StairMaster. Each piece of commercial Nautilus equipment priced between $5,000 and $7,000 before volume discounting and focused on particular strength-building exercise. However, new operators could also tap into an active market for used fitness equipment. Most clubs included a number of services and facilities for a basic subscription charge but offered additional services for a fee. The non-dues fees generated from these activities made up 28% of total health club revenues in 2004. In a survey conducted to identify the five most profitable add-on programs, 50.5% of clubs listed personal training. Massage therapy,