Health and fitness slowdown

Are gyms feeling the burn yet? A prolonged consumer downturn would be seriously bad news for the sector. During the last UK slump, for example, spending on recreation and sporting services fell for 12 consecutive quarters from 1991 to 1993, according to the Office for National Statistics.

Granted, this time round there's a much bigger user base for gyms, both public and private. But the health and fitness sector already started looking sickly lately. Growth in new members has stumbled since the late 1990s, when low barriers to entry encouraged chains to roll out huge networks.

Annual attrition rates are running at between 35 and 50 per cent, according to Deloitte. Fees, which were hiked aggressively as membership became a must-have accessory for the middle classes, have tracked below inflation for the past two and a half years. And operators still depend on that core income: despite pushes into personal training, tanning and beauty treatments, monthly dues still account for around four-fifths of revenues. Add in high fixed-cost bases and softening property values, and it is no wonder that For-Sale signs are popping up on these predominantly private equity-owned businesses.

The outlook is not entirely grim. Health and fitness is still a young industry with low absolute penetration rates in more mature markets - just 7.3 per cent in the UK, around half the US level, for example - and plenty of potential in developing countries like India and Russia. Brands at the top end should be more resilient than those further down, which rely on churning their customer base. And there are pockets of creative marketing: Gold's Gym in the US was offering free sessions across its network on Friday to work off Thanksgiving excesses.

But even among premium chains, flag-wavers are beseeching governments to find ways to get more people on the pec-decks and treadmills. Calls for state aid are a sure sign of a sector running low on ideas.

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