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Gyms in Dubai are 'overcharging' customers with an 'outdated' pricing model that makes it difficult to stay fit, according to the founder and CEO of affordable fitness chain GymNation.
Speaking to Arabian Business, Loren Holland says a large portion of Dubai's population can't afford a gym membership because fitness centers charge customers upfront.
Together with co-founder Frank Afeaki, Holland set up GymNation in Dubai in 2018 to offer consumers a low-cost option, with memberships starting at AED99. The duo had previously helped build affordable gym chains Crunch Fitness and Xcercise4Less in Australia and the UK respectively.
"Even rent in most markets is paid monthly, and Dubai is moving towards that direction. I pay my rent monthly now. That model of charging people upfront seems to be out of date; that’s what makes it unaffordable - not necessarily the price. This market makes it difficult for anybody to stay fit and active because you’re priced out of the market," Holland tells Arabian Business.
Gym memberships in Dubai are the second highest in the world in terms of price, according to a study by Deutsche Bank. But Holland calls GymNation "the Netflix of gyms" thanks to its pay-as-you-go business model.
"When we set up GymNation 2 years ago, it was to tackle the pain that gym memberships [in Dubai] were the second highest in the world, and a big part of the population was priced out of market. They might want to be fit and active, but can’t afford a gym membership. I fell into that category. I wasn't willing to pay AED1,000 for a membership," he says.
Covid-19 has particularly emphasised the need for more affordable gyms in the city as many experience salary cuts and job losses as a result of the pandemic.
"Especially now with coronavirus, people were made redundant, lost their income or their discretionary spending has been squeezed, so having an affordable option is driving our business more than ever. We’ve already started to see consolidation in the market, with several operators not reopening post the coronavirus," Holland says.
It's worked out well for GymNation, which has sold over 2,100 memberships since reopening at the end of May after closing down in line with government directives in March to tackle the spread of the coronavirus. While its low membership prices require it to have more members to sustain its finances compared to smaller gyms, its massive size - it boasts the largest spin studio in Dubai - can welcome as many as 1,500 customers.
"We need more members [to sustain the business] but we have gyms that are normally 2-3 times the [normal] size, and now more than ever, having that increased size is more beneficial because it allows you to practice more social distancing. We were able to social distance our spin bikes and ended up with 35 bikes.
"Most gyms have 25 bikes but end up with only 10 because they have a smaller space. Other operators have huge problems because they can’t accommodate other members. Last week, we were getting 1,000 people a day. Pre-covid, we could do 1,500. So we're still trading below what we were before the virus, but this is fantastic. It's beyond expectations," he says, adding that the post-Covid-19 effect has been "a bit of a New Year effect".
"We’ve seen reasonably strong sales. Since we reopened, we sold over 2,100 memberships. The common message that people got from the Covid-19 pandemic is that they shouldn’t take their health for granted. They've also been confined to their own homes and now they can't wait to get healthy again. It’s a bit of a New Year effect, to be honest," he says.
In the past two weeks at least five Dubai gyms announced they are permanently ceasing operations as a result of Covid-19. They include CrossFit GoldBox Dubai, Flywheel Dubai, Cult.fit, Engine Health and Fitness and TribeFit Dubai Marina, some of which have blamed limited support for SMEs for their inability to survive the pandemic.
Land of the landlords?
Landlords have been particularly stubborn in helping gyms, according to Marcus Smith, best known as the man who ran 30 marathons in 30 days before setting up his own gym in Dubai, InnerFight.
"The landlords are not being helpful at all. They’re not giving any support. There are certain mandates that have gone out for certain freezones but we don’t fall under any of them. So our landlord doesn’t have to do anything and therefore hasn’t done anything to make it easier for us. We still have to pay the rent we’re paying on the timelines we have to pay it on. It’s been tough because we expect business is going to be down," he says.
InnerFight is in the process of setting up a larger space in Dubai Studio City, having previously been located in a warehouse in Al Quoz.
"I’ve experienced support on the residential side, like my house. The landlord gave me some relief for 2 or 3 months. But rent I’m paying in the new facility, there is no support at all. And we’ve asked for reduction, deferment of payment or an easier payment plan, and so far we haven’t been given any support. That’s what’s hurting small businesses the most. If you support us for 6 months, that for a small business can keep everyone alive.
"That’s how I pitched it to our landlord. I said we have a rental agreement for 5 years. This is just the first year. It’s a fraction that we’re asking you to support us with and it will make a huge difference to us. The harsh reality is we have a lot of costs. I employ 22 people. It’s not huge but our revenue dropped by about 70% overnight and it’s really difficult. A lot of gyms have closed. It’s been really hard. We’ve had to pay money into the business to keep it alive but we’ve done that because we believe we have a strong brand," he says.
InnerFight will open its new location in July, but has been offering online solutions to members, including daily check-ins from coaches and weekly metrics.