Building strong bodies is a strong business - health clubs - Cover Story

That building going up in the vacant lot across the street may be a health club. They're sprouting all over the place.

New Mexicans, perhaps taking the lead from their Iron Man governor, Gary Johnson, who may well be the nation's fittest politician, are huffing and puffing at nifty new facilities throughout the state. And this, of course, is making the fitness business a growth industry.

These days, if you're not a member of a health club or haven't got a mini-gym in your spare room, you may be in the minority. According to research conducted by American Sports Data, the top five reasons for initially joining a health club are to improve and maintain health, to improve muscle tone, to look better, to lose and maintain weight, and for cardiovascular conditioning. Whatever the reason, health clubs, exercise equipment and related services are big business.

Scott Garrett, general partner of Albuquerque's New Mexico Sports and Wellness, a five facility multi-sport club, has been a part of Albuquerque's health club industry since 1982. He says the health club fad of the late '70s and early '80s has waned. Growth in the industry comes from people wanting to enhance their health and change their lifestyles. Previously, industry growth came mainly from those wanting to lose weight or gain muscles.

Glen Horner, who opened Gold's Gym, a fitness-only club, in Albuquerque in 1989, concurs. "The American lifestyle is sedentary," he says, "so the demand for health clubs and exercise will always increase. Exercise is not a fad."

In the early 1980s when health clubs, Nautilus equipment, aerobic classes and leg warmers burst onto the scene, annual memberships were available for $99 and lifetime memberships were readily available. Club owners hoped, according to NMSW's Garrett, that customers would pay the upfront, lifetime fee and never return. Today, most clubs are on a monthly fee basis where the client's economic reward comes from receiving good services. Members keep coming back.

Memberships statewide for a single person cost from $20 to $70 per month, with initial startup fees up to $275 and annual fees up to $100 (though all clubs do not charge initiation fees or annual dues).

While dues structures have changed over the last couple of decades, so have the means to health and fitness. Once popular high-impact aerobics classes have given to no-impact workouts - yoga, aerobics, swimming and weight training.

Gold's Gym provides "fit-ball" classes - a low-impact aerobic class executed with a durable and slightly larger beach ball. "It's one of the latest national trends," says Horner.

Spinning is popular right now, says NMSW's Garrett. "It's an aerobic class, led by an instructor and everyone is on a stationary bicycle." Also popular are elliptical treadmills and sports. Garrett predicts squash will be the next hot sport, although proper squash courts are few and far between.

Personal trainers and aerobics instructors are better trained than they were 20 years ago. Most health clubs won't hire fitness personnel unless they are certified or close to obtaining certification from one of many recognized certifying agencies. Aerobics and Fitness Association of America (AFAA), American College of Sports Medicine (ACSM) and American Council on Exercise (ACE) are three popular organizations.

When it comes to opening a health club, everyone agrees - it's an expensive venture, and one to be entered into after doing considerable research.

Melissa Cauthen is sales manager at Albuquerque's Fitness Superstore (formerly Exercise Equipment of New Mexico until a store was opened in El Paso), an 18-year-old exercise equipment store. The store's customers include Defined Fitness, Health Clubs of America, Santa Fe Spa, El Gancho (also in Santa Fe) and home gym enthusiasts. Cauthen says "a lot of people come into the store looking to start a health club of their own - they like to work out, they like sports. It seems very natural to them. But, they're usually turned from the idea pretty fast." Aside from leasing space in a strip mall or commercial center, which can run anywhere from $4 to $14 a square foot, or buying land and building a facility, there's an investment in both equipment and people to be made.

About $15,000 will stock a small personal training facility used by trainers and their clients, she says, but with a large facility "we're talking $250,000-300,000 - at least - for equipment only." No pool. No spa. No sauna. The capital investment doesn't end once a club opens. Gold's Gym's Horner says he spends $50,000-60,000 annually on new equipment and another $30,000 on maintenance.

Wages at a health club range from minimum wage for service desk personnel, to $15-20 per class for aerobics instructors and $8-15 per hour for personal trainers. Gold's Gym in Albuquerque employs 45 full and part time employees for 3,500 members; NMSW employs 250 full and part time employees for almost 10,000 memberships (there may be more than one person per membership).

New Mexico's fitness industry is probably one of the most amicable among its members than any other industry. Everyone claims to have his or her own unique niche and fully fills that niche's needs.

For example, Sports and Wellness caters to corporations (50 percent of NMSW's memberships are corporate), families and adults in the 35 and older age groups who want the wrights, aerobics classes, as well as swimming pools and tennis, basketball and volleyball courts. "Seniors are a new market that we're tapping," says Garrett. They care about their bodies, too. Serious fitness-mind-ed people who want a gym-type workout - wrights, aerobics, cardiovascular machines - go to Gold's, Homer says. It's not a skin and bones operation, but it doesn't have facilities for sports.

Among the health clubs there is no ill will or bad-mouthing and no membership price wars - those are gone with the days of Jane Fonda workout videos, says Shawn Gale, manager at the San Mateo/McLeod Defined Fitness in Albuquerque. Defined falls into a market somewhere between Gold's and NMSW - more family-oriented than Gold's, less sports-oriented that NMSW.

Garrett does rite one aspect of what he considers unfair competition in the industry - non-profits. "When tax-exempt organizations like the YMCA or a church open fitness facilities and provide below-market rates to their clients, entrepreneurs are discouraged. These facilities are, more often than not, less efficient and provide poor or no service," says Garrett. He says private clubs can't compete with those low prices when they are in business to provide superior facilities, services and staff. Nonprofits would argue that providing a more affordable service is in keeping with their missions.

Is there room in the market for more players? It would seem so. NMSW's Garrett has two more dubs in mind to open in the Albuquerque area. Defined has a Rio Rancho club in the works and a new Gold's Gym franchise in Rio Rancho just opened in April.

Mindy Caplan, a 40-year-old Albuquerque-based personal trainer, agrees that competition isn't very tight - yet. Caplan has been in the exercise business for 12 years. Formerly she worked as a personal trainer at a local health dub but now provides personal training to clients in their homes. Very few trainers are involved in personal home training, she says, which suggests another business opportunity.

RELATED ARTICLE: Setting up your own "gym"

So, you want to get a little exercise in the comfort of your own home? Fitness Superstore's Melissa Cauthen suggests doing some research. Good information is available from stores like her own, personal trainers and health clubs.

Cauthen cites two pieces of equipment that have experienced recent popularity - the treadmill and recumbent bike. Treadmills have been around forever, but have been perfected over recent years - reducing stress on joints and becoming more user friendly - and their prices have remained relatively steady.

Do you want to be able to run on an incline? Have the equipment determine your target heart rate, take and monitor it while exercising? How fast do you want to be able to run? Depending on the bells and whistles, a treadmill can run anywhere from $700 to $4,300.

Recumbent biking, cycling while seated in a reclined position with legs pedaling in front of you, provides a workout similar to cycling - a no-impact cardiovascular workout - but eliminates saddle sores associated with traditional cycling seats. Again, depending on the equipment's amenities - computer programming capabilities, heart rate monitor, etc. - a recumbent bike costs $350 to $2,000.

Kathryn Matousek

Kathryn Matousek is assistant editor of the New Mexico Business Journal and, yes, she works out, too.

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