How this savvy club chain defied the pandemic to turbocharge its expansion
Tell us about your gyms?
Frank Afeaki (FA): The first thing people notice about us is the price: our pre-sale offer starts at AED99 (US$27) a month, whereas the average cost of a gym membership in the UAE is around four times that. In the early days, a lot of people thought we were scam artists because they couldn’t believe you could get a gym membership for that amount – it sounded too good to be true.
People come to our gyms for the price, but they stay for the quality. Our clubs are typically 40,000sq ft+ with 8,000+ members, so these volumes mean we’re able to provide world-class gym facilities at a very affordable price.
The gym floor features around 500+ pieces of Matrix Fitness free weight, machine, and cardio equipment, with three or four group exercise studios in each gym hosting 200+ free fitness classes per week. All our gyms are open 24/7 and feature separate ladies-only facilities and classes – both very important given Middle Eastern cultures. We’ve also built large functional fitness and combat areas, while most locations now contain our BLITZ boutique studio, giving members the option of heart-rate monitored HIIT classes for an added premium.
Low cost clubs aren’t renowned for their group fitness offerings, yet you seem to have a very different approach?
FA: Group fitness is massive for us – it’s the beating heart of our clubs. Many clubs in the UAE have a bodybuilding focus that can be quite intimidating, but we position ourselves as ‘The People’s Gym’ and make everyone feel welcome. This inclusivity – combined with our affordable pricing – means 30 to 40 percent of our members are first-time gym-goers. And as we all know, group fitness is a great way to introduce people into the club environment and help them quickly feel part of a community.
We offer the full range of live Les Mills programs (with virtual classes around the clock) and this is all included within the cost of a standard GymNation membership.
Our group exercise director, Aldrin Dela Vega, has done an incredible job of building an unmatched class timetable, taught by the very best instructors available within the UAE, who all have very loyal followings, both online and in the live classes. That’s one of the key reasons why peak classes are always packed and the average class occupancy is well over 80 percent – not bad for studios that can fit 70+ people!
How were you impacted by COVID?
LH: Like most fitness operators around the world, we took a hit during the early stages of the pandemic. UAE fitness facilities were forced to close for nearly two months, so this immediately impacted our revenue, as memberships weren’t billed while we were closed.
Additionally, the UAE is a very transient country, with many expats living here. Given the significant job losses throughout the period, particularly in the airline and hospitality industries, some people were left with no option other than to leave the UAE, which had a short-term impact on the overall market size and our membership numbers.
We were very grateful for the support from Les Mills: the 60-day free access to LES MILLS On Demand (LMOD) was brilliant for keeping our members active and engaged during the lockdown period. A lot of our competitors were offering online classes, but using poor content and doing Facebook and Instagram live videos from their bedrooms, so being able to provide our members with a world-class content solution, featuring programs and coaches that fully complemented our brand and the classes we offer in-club, really helped us to differentiate and underline the quality of the member experience we provide.
So how did you manage to kickstart the launch of five new clubs during such a tricky period?
At that point, we sat down with our investors to reassess. We concluded that people were going to place greater emphasis on their health and fitness as a result of COVID, while the economic impacts would make affordability a key consideration. We believed our business could withstand this challenging period, so we decided to stick with our growth plans and invest through the cycle.
Another key factor was that we were one of the only multi-site operators to keep our sales and marketing activity running right through the lockdown period. This meant we were able to sell 2,000+ memberships across our three existing sites during lockdown with a ‘buy now, pay when we’re open’ offer, while members could use LMOD until we reopened.
This comfortably offset our member cancellations from job losses and expats leaving the UAE. At the same time, we set to work on the pre-sale activity for our upcoming sites, and this is an area where we’re particularly strong.
What’s the secret to your pre-sale success?
Ant Martland (AM): Combining our marketing expertise with examples of best practice from other sectors has helped us to hone a system that sees our gyms start day one with a strong member base.
For our site in Khalidyah Mall, Abu Dhabi, we sold 2,200 memberships in the first 24 hours of pre-sale and opened the club with 8,000 members. We’ll release a limited number of memberships at AED99 (US$27), and then keep increasing the price as we get closer to opening. We’ve built a strong brand, so there’s now large demand for us in each location before we announce a gym, which again is great for lead generation and membership sales.
How have the clubs performed since reopening after lockdown?
AM: Since reopening our sites in June, we’ve seen a massive rush from members eager to get back into the clubs and we’re pretty much back to pre-COVID attendance and membership levels now. What’s different is that footfall is now spread more evenly across the day – probably because people have more flexibility where they’re working from home more – so it helps make peak hours slightly less busy, while ensuring the club stays lively all day long.
The sheer size of our gyms and studios means we can socially distance and still stay pretty close to full capacity without having to remove any of our equipment. We’ve had more than 40 on-the-spot checks from the government (which is standard out here) and passed every one, so the preventative measures we have put in place together with the local authorities are working.
Group fitness and the power of our club communities have really shone through and we think this will be a key component in the wider industry’s recovery. Having been locked up and isolated for so long, people can’t wait to get back to the thrill of a buzzing live class and we’ve got members queueing at the studio door early to secure their space. People are desperate to get back to working out in groups and the past few months have been the best new sales period we’ve ever had.
Has the boom in digital fitness affected your members’ workout habits?
AM: We’re definitely seeing greater demand for digital solutions to support our members’ in-club workouts and we’re building up a great extra revenue stream through LMOD Affiliate, but this definitely hasn’t been to the detriment of our live offering. Digital workouts are a convenient back-up to keep members in the habit of exercising – particularly as people in the Middle East spend so much time traveling – but they’re never going to beat the buzz of a packed out BODYPUMP class with lights, music, and a rockstar Instructor.
As an industry, we’ve got threats from the likes of Peloton and Mirror coming into the market, but digital fitness also presents opportunities for clubs to reach wider audiences and use platforms like LMOD to bring the club experience into people’s living rooms. If we can make it easy and convenient for them to start their fitness journey and grow the market, then it’s just a case of nurturing them towards the thrill of live workouts in-club.
You added five new sites to the GymNation estate in 2020, what can we expect in 2021?
LH: In early 2021, our focus will be on ensuring the successful opening of our Silicon Oasis and Downtown Dubai locations. That will take us to eight gyms within the UAE, with a membership base of 50,000+. Reaching this within three years of opening our first location is a major milestone and it will make us the number one gym provider in the UAE market, but we very much see it as a stepping stone to bigger and better things.
We then go into the rest of the year with a view to open up 4-5 more UAE locations, followed by our first international location in Q2 2021.
The gym penetration rate in the Middle East is only about 5-6 percent, and there’s huge scope to increase this. We believe our affordable and inclusive offering can break down traditional barriers and help more people to become fitter and healthier. It really is a win-win and we’re well-placed to continue growing and offering residents in this region access to world-class facilities at affordable prices.