Herman Rutgers The current and future Landscape of Fitness

Key Developments in the Health & Fitness Market; The Good, the Bad and the Ugly…. Facts, figures, observations & thoughts

Herman Rutgers FIBO African Summit 2018 Roadmap

• Fitness market • Personal Training • Pricing • Trends • Boutiques • Q&A Meet Joe

2016 Deloitte Lessons from Joe

Ask questions; what does the customer want Adjust your service-offering on that ( music, airco ) Ensure a “Wow”-effect ( newspapers, drinks ) “Manage expectations” ( traffic ) People make the difference ( same car “hardware” / different “software” )

7 World Health & Fitness Market 2017

Revenues; $ 87,2 Billion (+ 5 %)

Members; 174 Million (+ 7 %)

Clubs 201.000 (+ 0 %)

Fitness is the #1 “sport” worldwide

• IHRSA Global Report 2018 – May 2018

8

Top 10 Global Markets (revenue, 2017)

1. USA 30,0 $BN 2. Germany 5,6 3. UK 5,5 4. 3,9 5. 3,9 6. 2,8 7. France 2,7 8. 2,6 9. 2,5 10. 2,4

Top 10 markets account for 71% of global revenues ( 70% Mbrs)! South African Market ( IHRSA Global report 2018)

• 1 $ billion in revenues ( +6 %) • 900 clubs • 1.8 million members ( +7%) Fitness Penetration (% total population 2017)

Sweden

United States

Netherlands

Denmark

Australia

United Kingdom

Germany

Spain

Italy

France

South Africa

China

2018 Deloitte 12 0% 5% 10% 15% 20% 25% Top 10 Global Operator Brands Fitness brands are mostly national / regional!

1. Planet Fitness (USA) 10,6 MM Mbrs 1. Planet Fitness 2,3 $ Bn 2. 24 Hour Fitness (USA) 3,5 2. Life Time (USA) 1,6 3. Anytime Fitness (Global) 3,2 3. Anytime Fitness 1,5 4. Gold’s Gym Int. (Global) 3,0 4. 24 Hour Fitness (USA) 1,4 5. McFit Group (EUR) 1,7 5. Virgin Active ( EUR/SA) 0,8 6. Goodlife (Canada) 1,6 6. OrangeTheory (Global) 0,7 7. Basic-Fit (EUR) 1,5 7. David Lloyd (EUR) 0,5 8. Bio-Ritmo/Smartfit (LA) 1,5 8. Central Sports (JPN) 0,4 9. Fitness Time (S-Arabia) 1,1 9. Migros Group (EUR) 0,4 10. Virgin Active (EUR/SA) 1,1 10. Renaissance (JPN) 0,4 USA: Franchisor vs. Corporate

Full Service Boutique

Corporate Franchise

14

Monthly Fee Paid by U.S. Club Members in 2017 % Members

40%

29%

13%

7% 6% 5%

Budget < $25 a month Economy $25 to $49 a month Mid-Market $50 to $74 a Premium $75 to $99 a month Premium Plus $100 to $149 a Luxury > $150 a month month month Pricing

Club Market Monthly Price Range Examples of European and U.S. Club Operators by Segment Segment

Budget < $25 Planet Fitness, U.S. Basic Fit, Europe McFit, Europe The Gym Group, Pure Gym, U.K.

Economy $25 to $49 24 Hour Fitness, U.S. Anytime Fitness, Europe DW Fitness First, U.K. Fitness DK, Denmark

Mid-Market $50 to $75 Fitness Formula, U.S. Gym Box, U.K. David Lloyd Leisure, Europe SATS, Scandinavia

Premium $75 to $99 Lifetime Fitness, U.S. Virgin Active, S.A / Europe DIR, Health City,

Premium Plus $100 to $149 Village Sports Clubs, U.S. Body & Soul, Munich Holmes Place, Europe World Class, Moscow

Luxury > $150 Bay Clubs, U.S. Equinox, U.K. Aspria, Europe Third Space, U.K. BOUTIQUES 100.000+ locations in US

“THE NEW FASHION” - NYT

• Massive growth • Generates higher return due to higher pricing and lower overhead expense • 80% women • More flexible real estate AFS Releases 4th Annual Fitness Studio Operating & Financial Benchmarking Research Report Key Findings: Average Revenue Up 36%; Retention a Record 81%

OAKLAND, CA, August 1, 2018 – The Association of Fitness Studios (AFS) announced today the release of its 4th annual financial research study on the fitness studio market.

European Studio concepts based on PT / Small Group Training 6 Key Reasons for popularity Boutiques

• Bifurcating market (self service / full service )

• Discerning customer (complete customer journey)

• Specialised and purposeful environment (do one thing – excellently)

• Business model architecture (location, ambiance, top staff, pay&play)

• Enabling technology ( booking, paying, engagement, etc. on smartphone)

• Entrepreneurship (millenials, franchise) The European Health & Fitness Market Report 2018 Markets Germany and the UK are the two largest markets in Europe

Top 10 European health and fitness markets by revenue, 2017 € in bn; Change in revenue at constant currency

83% of total European market 17% 6

5.2 5.1 5 4.5

4

3 2.5 2.2 2.2 2 1.3

1 0.9 0.9 0.9 0.8

0 DE UK FR IT ES NL PL CH SE RU 23 others

Constant currency growth rates: + 3.0% + 6.8% + 2.0% + 1.3% + 2.9% + 1.6% + 0.9% + 4.9% + 3.4% n/a

2018 Deloitte 25 Ecosystem fitness sector 2018

Non- Online gyms stationary Fitness aggregators

Fitness apps Novelty races Stationary

Boutique & micro clubs

Outdoor fitness Wearable devices

2018 Deloitte 26

Outlook Projecting annual membership growth of 3.7%, European market is on pace to reach or surpass 80 million members by 2025

Projected membership development of the European fitness market, 2017-25 # in m

Projection +4.0% 90 +3.7% 81.9 +4.0%

60.0 60 57.7

80.0

30 57.7 60.0

0 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

2018 Deloitte 28 Outlook

The Health and Fitness market in 2018 and beyond

Global Fitness market on pace for 250 million members in 2025

Budget segment and boutiques are the main drivers behind market growth

Increasing market consolidation

Emergence of non-stationary and hybrid fitness models

Health & fitness as a megatrend

2018 Deloitte 29 Investors love fitness!

Indexed stock price development of selected companies 250%

200%

150% Brexit 23 June 16

100% IPO Technogym 3 May 16 50%

0%

-50% IPO Basic-Fit IPO Actic Group AB 10 June 16 7 April 17 -100% Nov15 Mar16 Jul16 Nov16 Mar17 Jul17 Nov17 Mar18 Jul18

The Gym Group Basic-Fit Actic Group Planet Fitness Benefit Systems Technogym

Note: Benefit Systems IPO was on 21.04.11 and Planet Fitness IPO was on 06.08.2015. For illustration purposes, indexed stock prices are only presented from November 2015 Source: Yahoo Finance, The Wall Street Journal

30 Why investors love the fitness business

• Supports global healthy lifestyle trend • Large and growing market • Proven track record of key players • Predictable cashflow • Increasing awareness of exercise benefits / healthy lifestyle • Fragmented supply side; Opportunities for consolidation • Opportunities for international / global growth • Opportunities for non-dues revenues • Innovation & Technology enabling efficiency & (new) customer engagement Desbonnets Gym in Paris - 1811

1. HIIT ( High Intensity Interval Training) 2. ( Small) Group training 3. Wearable tech 4. Bodyweight training WORLDWIDE 5. Strength training SURVEY OF 6. Educated, certified, and experienced 2018 FITNESS fitness professionals 7. Yoga TRENDS - 8. Personal Training ACSM 9. Fitness Programs for older adults 10. Functional fitness 1 Resiliency training will gain traction.

2 Stem cells will go mainstream.

3 Health business will create a focus on preventing disease.

THE 2019 FITNESS 4 Next-gen technologies will help us understand our bodies FORECAST better. 5 Tracking will be put to more meaningful use.

Equinox Health Advisory Board 6 We'll learn to fight Alzheimer's earlier.

7 We'll take air pollution seriously.

8 It'll be the year of the 'every woman' Non-Fitness Businesses Affecting Fitness: • Health ( Government, Insurance, Medical ) • Nike, Under Armour, etc. TRENDS • Smart-tech – wearables, data-tracking, software • All things on-demand • Convenience is the new currency – fitness snacking • Ecosphere of care – wellness, schedule, medical interactions – one integrated platform • 24/7 on-demand lifestyle modification, nutritional support • Line extensions to generate income without additional overhead TRENDS • Home is the new studio ( Peloton- $ 550MM funding, IPO plans) • Fitbit, Apple Watch, Samsung Gear Fit, Xiaomi • Cloud connected Fitbit, Gymkit, Wellness Cloud, HALO, Preva, etc. • AI, AR, VR In addition to Tech; Attention for staff; High Tech > High Touch! Key take aways industry The Ugly

• Competition on Price • Short termerism / Too much focus on financial results • “Fishing in the same pond” – lack of creating new targetgroups • Attrition – on average clubs loose 50% of members after 1 year The Bad;

• Not enough focus on what the customer wants • Service quality ( if asked, we do not listen or deliver…) • Staff churn; not enough investment ( Life Long Learning / Career) • Lack of Life Long Learning ( Professional Development) The Good;

• Mega trends support overall continued growth • Opportunities for new targetgroups • Governments, medical world and healthinsurance support sector • Increased professionalism • Technological Innovation

The Future is Bright; Cheers to doubling African fitness market by 2025 !

Thank you for your attention

[email protected] Back up slides Hypothesis;

6 Months on a deserted Island, no mobile no internet…

Once per month a postcard with one piece of information…

What figure/information would you like to get? KPI / Key Performance Indicators

Profit (net profit, EBIT or EBITDA) Cash Flow Turnover Number of new members Net members gain Expenses / Costs Margin Retention Staff churn Etc.

Absolute or difference vs budget / last year 2018 Deloitte 54 55 © 2018 · Dr Pamela Peeke’s 3 M’s Principle

Mind Mouth Muscle

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