The Rise of the Activity Sector An analysis of the growth in the physical activity sector and its future potential A Priority Sector for UK Plc The Rise of the Activity Sector About ukactive Contents About ukactive ukactive is the UK’s leading not-for-profit fitness providers. We facilitate big impact For more information visit About ukactive 3 body for physical activity with a mission to partnerships across the public and private www.ukactive.com or contact us on: improve the health of the nation through sector, supporting partners in delivering T: 020 7400 8600 4 getting more people, more active, more their goals around physical activity. Foreword – a perspective on growth and a bright future E: [email protected] often. We exist to serve anyone with a role The ukactive Research Institute is a to play in achieving that goal. Executive summary 6 supplier of research and insight services We collaborate with over 4,000 members for the physical activity sector. These Introduction 8 and stakeholders across the UK, including services include evidencing the impact operators of fitness facilities of all sizes of products, programmes or services, as well as local authority leisure centres, generating insights into consumer Global fitness markets 12 leisure trusts, equipment suppliers, behaviour and understanding the charities, vocational trainers, sports commercial performance of physical UK market activity timeline 14 providers, lifestyle companies and outdoor activity-related businesses. Valuation of the UK private and public health and fitness sector 16 What is driving the growth in value? 18 Defining the physical activity sector: opportunities beyond health and fitness 20 Case studies 21 Fostering innovation: ActiveLab by ukactive 37 Looking forward 38 Glossary 39 Methodology 40 End notes 42 Acknowledgement We would like to thank the ukactive Nuffield Health, Oxygen Freejumping, members, stakeholders and partners Places for People Leisure, Precor, who have contributed to this report, PureGym, Sport England, Technogym, in part by providing highly The Gym Group, Water Babies and commercially sensitive financial and Xercise4Less. brand sponsorship information. This report has been researched in We would also like to thank Nick Bishop partnership with leading international (Managing Director, Morgan Stanley, advisory and accountancy firm Mazars, Head of Leisure, EMEA), Alliance Leisure, and Nielsen Sports (formerly Repucom), Anytime Fitness, David Lloyd Leisure, an expert provider of analytics and énergie Group, Greenwich Leisure Limited, insights within the sports industry. 2 3 e Rise of the Activity Sector Foreword New profitable business models are emerging to drive Foreword active lifestyles A perspective on growth and a bright future. rom our highly differing vantage driving force within the sector. points, we have both seen the Its health-based proposition opens doors Fphysical activity landscape change for continued acquisition into new areas, significantly over the past decade. with the capital to support it. Alongside the rise in the number of gym Advances in technology provide the operators, we have witnessed an increase sector with further growth potential, in market diversity, with the introduction from facilitating the development of of low-cost gym operators and boutique increasingly sophisticated and easy-to- fitness studios providing consumers with use equipment, programmes, merchandise greater choice than ever before. and services, to mobile applications, e most significant development wearable trackers and online booking remains the expansion and increasing systems. New profitable business models competitiveness of the low-cost gym are emerging to drive active lifestyles sector, clearly evidenced by e Gym with little connection to facility operators, Nick Bishop Group’s strong IPO in November 2015, creating a driving dynamic for innovation. Managing Director, Morgan Stanley, valued at over £250 million. It has been Businesses today must respond to Head of Leisure, EMEA announced that PureGym, the UK’s changing consumer habits. Flexible, biggest gym operator, plans to do the low-cost gym memberships serviced same. Sustained growth of the low-cost almost entirely online give consumers sector, with challenger brands such as the freedom to exercise and have time Xercise4Less, seems to indicate that and disposable income to spend on a further mergers and acquisitions could be variety of additional leisure pursuits or on the horizon as companies continue to secondary spend opportunities such as compete for site space while trying to gain personal training or boutique classes. the benefits of scale. For some operators, Conversely, the more expensive, high-end taking over established clubs is a route to experience satisfies consumers’ demand expansion, especially given concerns over for a more all-encompassing health high street planning regulations and the and wellbeing service. Meanwhile, the difficulties of obtaining planning consent increasing popularity of outdoor exercise for new-build sites. e campaigning work sees initiatives such as Parkrun and British of ukactive to reclaim and repurpose sites Military Fitness provide consumers with a on the high street may open new locations wide choice of ways to get fit and active. for new concepts and formats, providing an Steven Ward exciting opportunity for growth. e sustained rise in the number of gym memberships year on year1 indicates Executive Director, ukactive ere are still opportunities at the premium that consumer interest in the sector end of the spectrum to provide a high-end, remains strong. e sector has grown its family, full-scale service such as penetration of the UK adult population David Lloyd Leisure and Nuffield Health. holding a fitness membership every Virgin Active, by announcing the sale of 35 year since 2008, despite predictions of of its UK fitness clubs to Nuffield Health in difficulties resulting from the recession. June 2016, indicates its intention to do just is proves the sector is resilient and that, focusing on its premium ‘Collection’ increasingly ingrained as a positive habit and family clubs. Under their current in the lives of UK consumers. We believe owners, both Virgin Active and David that this, together with the numerous Lloyd Leisure have benefited from major investments made in the sector both investment programmes into their estates, globally and nationally, alongside the with a commensurate growth in earnings. growing evidence of the benefit activity Backed by its ability to continually reinvest has to health, should give confidence to its earnings, Nuffield Health remains a those investing in the sector. 4 5 e Rise of the Activity Sector Executive summary Executive £6.6bn summary estimated 2015 fitness sector valuation is report identifies the financial contribution of the physical activity £7.7bn sector to the UK’s economy. estimated 2016 fitness sector forecast he health and fitness sector is part a more diverse range of organisations that General Practitioners has made physical legacy operators and arrangements have of the wider physical activity sector. count getting the nation moving as one of “Greater flexibility in activity one of its top priorities as an finally been dealt with, creating a bright Tis report identifies and examines their core objectives. institution. Fitness is no longer a matter of future in which investment opportunities the financial contribution of both to the leisure; it is central to health, stimulating abound. is is particularly evident in However, with their hundreds of millions of payment options, such UK’s economy. its value to society as a result. the supporting infrastructure base of customer visits per year, the bedrock of the as short-term and suppliers driving much of the innovation in Supported by Mazars, a leading success of the physical activity movement Societal trends have brought active the sector. We feature in this report newly international advisory and accountancy remains the health club and leisure centre lifestyles more prominence, with social no-contract models, has emerging models commercialising the fun organisation specialising in valuations, operators. e valuation cited in this report media platforms such as Instagram, of fitness and companies blazing a trail of and sponsorship experts Nielsen Sports, is based solely on private and public health widened the appeal of gym Facebook and Twitter bringing greater international expansion from the UK. we have valued the UK’s private and public and fitness operators. A private operator is connection between those passionate memberships by reducing e case studies represent the tip of the health and fitness sector higher than a commercially owned health and fitness about fitness and the wider general public. iceberg of opportunity that can be found previous valuations* at an estimated £6.6 site that is available to the public on an the cost barrier and is has influenced a younger generation within the ukactive network. billion in 2015, and we have forecast annual, monthly or “pay-as-you-go” meeting the needs of time- of consumers to emerge more health- a valuation of £7.7 billion for 2016**. membership. Public sector-led facilities conscious than their predecessors, ukactive’s mission is to improve the health is is the result of continued membership are delivered either by local authorities pressured consumers.” creating ample room for growth in the of the nation by getting more people, more growth, especially in the low-cost or are outsourced by local authorities