UAE Fitness Summit - 27th May 2021

Speakers:

 

Dan Duran: Vice-President of International and Group Partnerships, International Sports Sciences Association

 

George Flooks: CEO Fitness First Middle East and Africa

 

Loren Holland: CEO GymNation

 

Glen Stollery: CEO, Les Mills India, Middle East and Africa

 

Hayley Cottan: Head of Commercial, AKI Fitness

 

Stewart Miller: CEO, The Platform Dubai

 

Dan Duran: I want to welcome you all, to the fitness leader’s business breakfast organized by Dubai Active Industry. Where are those folks? Put your hands up. This is day two for me and they've done a wonderful job. My name is Dan again and I am here from Idaho in the United States, we sit just a little bit over and up from California.

Everybody knows where California is. And I'm here representing the International Sports Sciences Association. Try to say that five times fast, easier to say ISSA. We're a 33-year-old company, first certification in the industry, over 400,000 graduates, 174 countries, one of them being the UAE, and I'm proud to be representing ISS Academy Arabia.

 

Where's Ahmed, I saw you. There he is. Alright, he's the reason I'm here. Thank you Ahmed. So, let's move on to the important people. And the important concept here.

It's been a tough 18 months for everybody. Certainly, in the fitness industry, whether you own a club, manage a club, work in a club, or any other industry for that matter. Can I get an amen on that? That's an English expression. So, hopefully it made sense. I mean, who would have thought two years ago that there would be designer face coverings, right? With bling on them and stuff like that, if we could have seen that one coming.

We'd hope and all signs are pointing that we're going to see a really strong recovery from this pandemic. And certainly, all signs are pointing to a recovery here in the UAE, I can certainly speak for the United States we are booming right now.

 

Things are really taking off. And it's good to see that and it's good to see all of us together in one room again after that not happening for a long time. One of the things we learned during that period, more than ever, is the importance of collaboration and community. We're all here for one mission. And that is to build a healthier world. I like to say to save lives.

And collaboration is going to be the key and has been the key to get through these 18 months and will continue to be a key for us to evolve stronger than ever. The guys at Dubai Active want to help foster that sense of community. And that's why we're hosting this opportunity to speak with experts and experts in the audience as well. And here we are breaking ground, doing new things.

Now, as you probably know, the next edition of the Dubai Active in Dubai Muscle Show is taking place on the 28th and 30th of October of this year at the World Trade Center. The organizers also have smaller events like this one, and would welcome you to be here again, find some of the Dubai active folks. Ask them about it, check your email, check your spam, you'll hear about it.

 

Throughout the morning's panel, there are going to be opportunities for you to ask questions as well of the panel members. And I would encourage you to contribute because there are a lot of experts in this room. One of my favorite sayings that somebody taught me a long time ago is if you're the smartest guy in the room, you're in the wrong room. So, I'm in the right room. And it's an honor to be here. But that said, I want to introduce our panelists.

So, I'm going to go from left to right here. And yes, I have to read because I just met all of these. Well, with the exception of Hayley, I just met all of these folks recently. So, Glenn Stollery from Les Mills, India, Middle East and Africa. Next to him is George Flooks, CEO of Fitness First, Middle East, then we have Hayley Cottan Head of Commercial at AKI Fitness, and then we have Loren Holland CEO of GymNation.

And last but not least, we have Stewart Miller down on the and CEO of the platform studios. So, let's welcome them all for being here today.

 

So, the plan here is to run until about 10:15, maybe 10:30, one thing that I've learned, I think you all already know is things just don't start on time here. So. we're always flexible. So, we want to make sure that if there are any unanswered questions that we get to those because the most important people are the people in this room, those of you seated out there.

So, with that, I want to kick it off with some questions that collaboratively we're come up with it that we believe are going to be the most common questions asked right now as we emerge from the pandemic.

 

So, the first one is going to be for Glen. Glen, how has COVID-19 affected your business model moving forward? And what kind of digitization and tech elements have you been implementing and will continue to implement post COVID?

  

GLEN STOLLERY: Yeah, it's a good question. So, we support clubs with predominantly live group fitness solutions. So, you can imagine 12 months ago, our business was pretty much decimated with 21,000 clubs globally and 90% of them were closed. In fact, the only ones that were open were in China, ironically. So, we kind of had to pivot pretty quickly, we, fortunately, had a platform that we set up about five years ago called Les Mills On Demand.

 

And that is a video on demand platform direct to consumers. So, the first thing we did is we rolled that out to all of our clubs and said, look, you can have this free of charge, you can roll it out to your members to support them while they're stuck at home.

And George and Loren, delivered that to the members, as well as a whole bunch of other clubs. They did a really good job and it was just a way to keep the members engaged while we were all in lockdown. And then we brought in another number of other innovations, live streaming, which is something we use all original music in our classes.

 

So, you can imagine with music licensing, if you've ever uploaded anything to social media, or YouTube, music licensing is a bit of a minefield. So, getting live streaming rights, we did that pretty quickly online training, and then content. So, that was the latest initiative, which allows clubs to have classes on their app without kind of sending the members of their ecosystem. So, that was some of the innovations we did pretty quickly.

 

I think to answer the second part of the question around moving forward, we really do see the future as being hybridization. So, pre-COVID, Club Intel reported only 25% of clubs globally had some kind of workout at home solution for the members.

Now it's up to 72%. So, there's been a really big ramp-up in that space. I would say that a lot of the offerings are kind of minimum viable product, we still see a lot of clubs with people streaming from, you know, apartments and cats and dishes. So, we still got a long way to go. And I think that's where we've really doubled down on that space, so we can support clubs.

And then I guess the other thing is, is the 365,000 fitness apps out there right now, and they're all kind of vying for a share of your members' dollar. So, you really have to, if you're not in that space, you really have to have something in that space that it has to be good. And especially with Apple, Amazon, they're all coming into that space as well.

And whilst they've got deep pockets, they don't have the community, they don't have, you know, the bricks and mortar clubs that you have. And basically, they aren't able to build that full online and offline experience. So, really see that just being the future.

 

DAN DURAN: Follow-up question for you, Glen, you mentioned 72% now are streaming. Where do you see that if you had a crystal ball, two years from now, let's assume things return to whatever they want to call "the new normal," Where do you see that going?

 

GLEN STOLLERY: Yes, we do a consumer survey every two years. The last one we did was 2019, which was pre pandemic, and 85% of gym members were training at home pre-COVID. So, it was already an established behavior. I don't think it's going away. It's a bit like now, working from home has kind of become normal. And I think the future will be, as I said it will be a hybrid. So, it was already an established behavior pre-COVID. I don't think it's going to go away.

 

DAN DURAN: Excellent. Excellent. Any of the other panel members have anything to add to that?

 

STEWART MILLER: Hello, I would just like to add to Glen was saying about the adoption. We were fortunate that it accelerated the interaction with our customers because what we did at a very early stage was when we reopened the studios in June, we started filming live classes with a live audience. Glen was saying a lot of our members were working out at home on different apps, but we wanted to keep them in our ecosystem. So, we put cameras in the rooms, we had both locations in 2019, which had an onsite edit suite already designed for it because we were anticipating this happening from the digitization part. But with the COVID the members accepted that there were cameras on now. So, some of the classes that are filmed they were more used to having a camera on, it's a slightly different experience, but at least the members at home have the opportunity to be part of it as well. So-.

 

GEORGE FLOOKS:  Thank you. At Fitness First it was a great opportunity although you might............

 

DAN DURAN: Can't hear. 

 

LOREN HOLLAND: I'll jump in while....

 

DAN DURAN: Loren, anything to add?

 

LOREN HOLLAND: I think the whole Les Mills On Demand platform was great. I mean for us; we just didn't have the budget to pivot quite like Stewart did.

And so, we decided rather than putting some content out there, which probably wasn't going to be the best quality, we partnered very quickly going into the pandemic and into the lockdown with Les Mills On Demand. And the results were just fantastic. I think we had over a sort of 60-day period, about 15,000 downloads, we opened that portal up to both our members and our non-members.

So, it enabled us to keep our members active, keep them engaged in fitness, which meant that when the business reopens, when lockdown ended, they were straight back into the facilities. But then importantly as well, it actually enabled us to engage with new members who hadn't been physically active, weren't members of GymNation, they actually started their whole fitness journey during the pandemic. So, that's the power of the sort of online platforms in particularly the likes of Les Mills on demand, which, you know, I personally I think is just fantastic.

I mean, it's filmed in the lakes of New Zealand, or mountains, and then exactly what Stewart's doing. I mean, I like the pleasure of going down and seeing your facility and what you've done with the filming studios. And it has absolutely reaffirmed my decision that we're not going to go down that route, because we won't be able to compete with the quality of content. 

 

DAN DURAN: Excellent. George.

 

GEORGE FLOOKS:  Thanks, Dan. From our perspective, when going into COVID, there's many different ways that you could have looked at your business. The first thing we had to do was we had to say, well, what happens if this happens again in two years’ time? Where's the business going to be? So, before we looked at the whole digitization process, we said we had to cash proof our business.

 

No members, no activity, no cash coming into your business, you find yourself in a pretty precarious position. So, by cash proofing your business, we set ourselves up for if something had to happen again, be it COVID, or another situation that happened in the next 18- or two-year’s time, can the business survive?

And more importantly, can we pay continue to pay salaries to our staff. So, that was the first step we took, and in there with a lot of things on the operational side to manage the spine of our business and make sure that we had significant reductions when the business came back, which would really set us up for the future.

 

The second part, by cash proofing your business, how do you take advantage of what Les Mills has taught us with the digitization and the online platforms. So, there was an opportunity to have a look at it. And thanks to Les Mills, everyone's jumped on that.

It's you said 73%. I believe it's just going to become part of the normal that every gym membership chain will do some form of subscription offer to their members online streaming, whether they take it from Les Mills, or whether they do it themselves.

We went the same route, engage with our customer’s up front. We're down instructors doing classes on a staircase in the back of a living room, it was really, really raw content. But it was hugely popular.

It was raw, it was a little bit coarse at times, but it was off the charts popular. Glenn will know the types of views that we were getting. And at the end of the exercise, we said, wow, this is-, we didn't actually realize how good and what real rock stars we did have in the business.

So, we learned something from that. And that allowed us now, we're digitizing our business by the first of September. In fact, we've gone the whole route, your access card will be your mobile phone.

From the starting point we going right up front. We say we're digitizing everything, your access card will be your mobile phone, there'll be PT online, you can buy all types of packages, you can buy one session, two sessions, running sessions, 10 session 15 session. It's all going to be on a digital app for us. Then we've got-, we're launching Fitness First On Air.

And we've already had a library of around 350 videos that we'll be launching, all this will happen by first of September. And then we're launching our own e-commerce platform. Because we know MeFitPro made a lot of money during lockdown, because they were the only ones who had equipment in a storeroom that people were looking for. We also tried to get clever and sell bicycles from the gym floor. And all of that was pretty complicated.

But anyway, these were all opportunities that you looked at, to say hold on a second. These are revenue streams that can cash proof your business into the future if you digitize your business properly. So, the e-commerce platform comes with the whole process on the first of September.

And ecommerce's nearly equipment has anything to do with wellness. So, I think it's a 360 approach that we took and it set us up really nicely for the future. And if you have another situation that you weren't anticipating our business will be well positioned to take advantage of what the future looks like.

 

DAN DURAN: Thank you Excellent. Thanks, George. Next question here, actually, I'm going to direct this at Hayley. And Hayley, can you tell us how the balance-? How's the balance between commercial and home sales been affected? And what have you seen? What have the trends been? 

 

HAYLEY COTTAN: Yeah, so definitely during the peak of COVID, last year, there's no doubt that we saw a huge spike in consumer sales. We did our own market study, looking at 2019 versus 2020. And when you look at it was quite interesting to see that the market, the home market grew by over 140%, versus the commercial market, we saw declines in different segments of around 30 to 40%, if you look at, you know, the hospitality segment, the health club segment.

 

Going into 2021, it's already starting to look a lot different. Thankfully, we are seeing a recovery in the commercial space. And interestingly enough, there is a taper off now of the commercials-, of the consumer sales, although they are still higher than they were. COVID, in my view, definitely opened up the way or accelerated for the direct-to-consumer model.

You know, as you know, Glenn was saying before, and you only have to look at some of the brands and products that are coming out now, you know, you look at the likes of just to name a few Pelotons, tonal, Les Mills, you know, their model that they've adopted. And I think what they've done really well, and how they've captured that market is through engagement, as George mentioned earlier, you know.

 

That's what's going to sustain their business rather than just seeing a peak in sales, just because, you know, just because of club closures, that's sustaining their business moving forwards. And I think that's a lot to take away.

And we're already hearing that in the commercial sector people are-, the commercial sector is now adopting that model, and looking at how do you engage with your members both inside and outside of the gym, whether that be through partnering up with platforms, or whether it be launching your own app, or whether that be through AI technology that's just coming through now.

So, engagement, I think is key on all aspects, whether that be consumer or through the commercial model. Another trend that we are definitely seeing is that the perception of fitness. I will say is changing. Whereas before you know it was all about your nutrition and workouts. Now everybody's kind of looking at what is the total well-being you know?

How are we looking at our whole well-being? People are tracking now your recovery you know, your sleep, your performance, and this is also opened up a whole new market now for other products to come through and capitalize on that. You look at the you know, there's a lot of you know, passive therapy guns out there now.

 

There's more heartrate trackers, there's more fitness trackers like worked-, like how many people have work already in the room. So, and these types of products are really looking at, you know, your work, your full well-being, I think that can also be adapted into the commercial market as well. Is that how are we offering that to the members, whether that be through content on well-being, or whether it be creating spaces for recovery in gyms as well.

So, just to sum up, I think that the three main areas, I think there's definitely going to be a continued trend on digital and online programming. There will also be you know; wearable technology will continue to grow in all different aspects. And I think there's always going to be a space for HIIT or group training, but it may just look slightly different. You know, they look like, you know, online or within the gym when the space allows. 

 

DAN DURAN: Thank you. Thank you. And that the sum up answered my follow-up. So, well done. We want to take a moment here. Where's the roaming mic? Do we have a roving mic out there somewhere? Yeah. Any questions from the audience? This is a great opportunity to fire something off. We would encourage some engagement Come on now. There's got to be something out there.

 

GLEN STOLLERY: Fitness people aren't shy. 

 

DAN DURAN: Yeah, or something to add. Something to add that you've experienced. Okay, here we go. Thank you.

 

AUDIENCE MEMBER 1: Hello, everyone. Thank you for your inputs. My question is about changing from at the studio or at the gym classes versus digital. How did that affect your income?

 

DAN DURAN: Didn't you hear the question? I believe the question was how it affected your income, that transition. 

 

STEWART MILLER: You're talking about when we reopen or when we closed.

 

AUDIENCE MEMBER 1: Yes, by changing to digital classes. I'd like to know how you saw the income increase.

 

STEWART MILLER: So, we were forced into the situation in March, and our team stepped up. And like George says at the very beginning, we were filming with phones and in the room, we then very quickly improved the product to the point that we were earning revenue online, we didn't offer it for free, because we were trying to keep the business open, keep the trainers employed, keep our team together. Because they're all visitors from around the world.

 

So, we didn't want to lose them. We didn't know how long this was going to be. So, in the process, the members started to enjoy it as well, they really started to engage. And they started to realize that a couple of times a week, working out on a mobile device was fantastic. And it's supplemented that workouts. So, when we reopen, we were concerned about that, obviously. We were filming 20 fitness classes a day when we were closed. And when we opened, we pushed water down to 10 classes.

But at the same time the members were in the room. So, we were challenged with a very different business model to what we had before.

But they were covered and given us that ability that they had no choice, it was either five people in the room, or zero. Because of the regulations with-, that were put on us. So, as things started to ease and we start to get used to the process, we started to do some classes that were filmed and some classes that weren't filmed. And the digitization process gave us all the digitization of the content, and the business gave us the opportunity to stay more engaged with our gym members.

 

And the majority of them, like I had mentioned before had been working out on an app, but they've been paying somebody else. So, now it gave us the opportunity to attract them to our platform, and they got to work out with their favorite coaches.

Granted, majority of our members are within this region and they know the business, we don't have big budgets to market globally. So, we focus on the customers we have. And some members have-, they have rejoined under their normal memberships and our training you know, four, five times a week, and some members are still doing that and training at home at the same time.

And some of our gym memberships include online offerings, we're not sure that if we turned off those offerings, if those members were going to-, are going to cancel the gym memberships, but at the moment, we have been fortunate to have a blend, which we believe is the future for our business.

You know, we've been saying Glenn for a long time, but actually, it's an ecosystem. And I think George and Glenn brought that up that that's the reality, you have to have, we believe that we have to have a bit of both. And you have to be able to offer the client. Clients want to belong to something and they want to be a part of a community. And I think the digital does that as well.

So, Peloton, I think they've shown us all and Echelon are two brands that have shown us globally that they are leading that way. And if you can learn from that space as well, I think it'll help every health club to either use Les Mills or as Fitness First are also doing, by producing your own content. But definitely try and stay engaged and top of mind in your customers head all the time.

 

GEORGE FLOOKS:  If I understood your question, it was how did it affect your revenue? The online digital process. It supplements your revenue. So, it's a bit like Netflix and going to the movies. Even though everyone's got Netflix at home, you still go to the movies.

So, it's a supplement. And if you look in where earlier when I said, how do you cash proof your business, you got to find these mechanisms where people will play in both markets, you don't lose the customer. Because now he's just joined a subscription online model, you just have to ensure that your pricing is exceptionally competitive.

And it's an alternative option when they can't come to the gym near me or when there's another lockdown or when the rules change by the government.

If you have a very strong platform as we do when it comes to group exercise. Our group exercises is off the charts successful. Then you will find your customers stays but plays on both sides. They take the subscription model; they enjoy it when they want to because they get to enjoy their favorite instructor because ultimately that's where the connection lies. But it also supplements your revenue stream. But they never stop their membership. The membership continues to run.

So, it's actually it's you maximizing your opportunity plus you enhancing the opportunities for the customers because you're giving them additional alternatives as opposed to just coming to the club. So, it's a real supplementation to the existing product. 

 

DAN DURAN: Excellent. Thank you, George. Any other questions? We have some more. All right. I'll let you pick. Ok, ladies first.

 

AUDIENCE MEMBER 2: Thanks so much for your insights everybody. My question is around the end-users and the data that you're all getting from them. So, is there like a clear preference from end-users, people who are actually doing the workouts from home online? In terms of the type of classes that are most popular? Is it something that you're willing to share with us today? Is it yoga? Is it CrossFit? You know, is there something-, is there a clear pattern that you're seeing, and that you will be sort of like going forward with in 2021 and beyond?

 

GEORGE FLOOKS:  Thank you. What's popular in the gym, is popular in the home. So, because its instructor driven, so if your favorite instructor is Tiago and his doing Sh'bam, alright? And you will stay with Tiago doing Sh'bam at home.  The likelihood that you will shift is very unlikely in that process. So, your top three, top four, top five fitness classes in the gym timetable will be the same programs that we see people participating in their homes.

 

GLEN STOLLERY: I was actually about to say exactly the same thing. So, it's almost 100% consistent, the most popular programs in clubs are the most popular programs online. So, we test new program iterations and, you know, test new genres. And sometimes we use that insight to go back to clubs and say, hey, look, we're seeing really big take up of a specific dance program that you don't have. But without-, almost without exception, it's always programs that are most popular on the club. And to George's point, it's a supplement. It's not a replacement. 

 

DAN DURAN: I think there was another one. Yeah.

 

AUDIENCE MEMBER 4: My question is for George. You guys have obviously a lot of revenue that comes from membership, from classes and all this, but you also have revenues coming from personal training business. I'm a Dubai personal trainer myself and I struggled during COVID period, it was hard to shift the business model. So, I want to understand how did that part of the business carry on? And furthermore, what happened after COVID? Are people still training online? Or are they fully back to the gyms?

 

GEORGE FLOOKS:  So, I'll start with the second part of your question first. Once you've got you know your relationship with your personal trainer is a key relationship. Once the clubs have opened up, the customer comes back to the club. Provided you've created the space that they feel is safe, and I'm wearing a band that says I'm vaccinated, we got all our personal trainers in our clubs that are wearing these bands.

 

So, we're creating a space. And we are shifting a mindset from a customer to say Fitness First, it's a safe place. You know you do your sessions online at home through zoom, that serves a purpose in a certain time in a certain space. But ultimately people want that, they want that interaction in the club. There's more toys to play with, there's more space, you've got more variety that you can push your customers through.

But it's important that they will come back once they believe they're in a safe space. And you've created that for them. The majority come back to come back to clubs. The first part of your question is we just went with it. We created it.

We went online in on as many different platforms as we could. And the PT business was very, very successful. Because it's all about engagement. People wanted to connect now, there's been many brands. There have been some brands I know in Europe, that for example, continued to debit their customers. And today those businesses are falling apart because the customers don't trust them and the customers have left.

 

So, pretty simple. You're taking money from someone for a service they've purchased that you cannot provide. It doesn't stack up. But the businesses that did that are really, really suffering today and pretty much in the European market.

So, once you created that connection for us, it was a free service, it was all about stay connected to the customer. If you stay connected, and you create a safe environment for them in the appropriate time, they will come back to you, absolutely guaranteed. And that's what we see. Now I'm sure those questions will come up a little bit later.

So, it was two sides stay connected, any way possible through all the platforms available, create an environment full of trust, we've created this. So, it's very visual, people can see that I've been vaccinated, they know they can come into my space, it just gives them confidence. And once you've created that space, the customers will come back and your PT business will go back to where it was previously.

We've seen some record numbers in PT performance, where you know, Fitness First has got some record numbers, we're talking 500,000 in PT in one club. So, record numbers have come back to the business. 

 

DAN DURAN: Excellent. Thank you very much. It's like wow, we have a lot of questions. I don't even know where to go. I'll let the gentleman with the microphone. Here we go. Lady with the microphone.

 

AUDIENCE MEMBER 5: Hello, I'm a personal trainer as well as him. So, I wanted to ask a question a little bit different. I used to work for Virgin before the pandemic, And I know that in Italy from 600 trainers, half of them quit the contract. Do you have the same issue? And if the answer is yes, how did you solve it? The reason why I quit because of course during the pandemic, I didn't have the same income I usually had. So, I just moved and make my own studio. And half of my colleagues did the same. So, this will be a big problem. For example, in this example, Italy.

 

GEORGE FLOOKS:  I guess that question is for me. 

 

AUDIENCE MEMBER 5: Yeah. 

 

GEORGE FLOOKS:  So, yeah, we, you know, we run with a massive PT business. And we have an employed model. And this employed model is a freelance model. We continue to pay all our PTs when they weren't conducting sessions. So, that's the choices PTs have to make.

If you go freelance, you take the good with the bad. When the times come, you're on your own. You're entrepreneurial, you create your own business and off you go with it. In our situation, we showed a lot of loyalty to our personal trainers, they were employed, we look after them. So, we saw no drop-off whatsoever. Whatsoever, there was no drop off.

 

In fact, the PTs more and more, we get exceptional amount of CVs that keep coming to us. You know, people are sending me private stuff on LinkedIn and on Instagram saying, please, here's my CV, can I join Fitness First? Because our model is completely different. We're an employee model, we look after our staff, our personal trainers, we make sure that they've got the income to survive. When the business opens up, we give them all the tools or the mechanisms like this, which is there to encourage the customer to come back to the PT.

So, I believe our model which we, you know, we've worked on both sides of the fence when it comes to freelance model and an employee model. We're definitely with the employee model, and we believe it is best for our customers and our staff.

 

LOREN HOLLAND: I think the difference to this market versus Italy as well is we were less affected. So, the lockdown here, the period where gyms were closed was around 70-72 days, I think in Italy, it was a lot longer. So, you know the PTs probably suffered less. But like George says, I mean, we've just seen the PT industry across the whole market is booming.

Immediately after lockdown my model slightly different to George's in that we don't directly employ ourselves, we partnered with a third-party PT provider called Enhance Fitness. Coming straight out of lockdown we saw the demands and the huge demand for gym memberships and PT. And we embarked on recruiting over 100 PTs immediately after locked down. And there were a lot in the market. There were a lot that had been affected who were very eager to get back to work and have subsequently thrived.

 

DAN DURAN: Excellent. Thank you. And while you have your microphone ready to go there Loren and I have a follow up for you. We've kind of talked all around it. But in your business, what has the scale of decline ban if any, in terms of actual gym memberships? And where do you see it? Where did it go and where do you see it going moving forward?

 

LOREN HOLLAND: Yeah, so I guess last year for it, I mean, for everyone, it was just a roller coaster of a year immediately coming out of lockdown. So, you know we suffered like anybody with huge declines in memberships. There were people who'd left the country.

It's one of the features of this market that it's so transients but to be honest that was quite short term. And I think I'm probably speaking for everyone here, all the gym operators in there we also put short term but then the preceding three months following the reopening of gyms, it was probably some of the best three months that we ever experienced.

 

So, we were in quite a unique position in the last year and actually saw this grow from where we started the year with one GymNation and 10,000 members and finished the year with seven gyms and 40,000 members and still kind of can't quite figure out how that happened, given everything that went on. But I think part of it was after locked down and finished, people just realized look we are no longer going to take our health and fitness for granted.

 

So, one of the big features that we saw was that we got a database of leads people that inquired about gym membership, and for whatever reason they hadn't purchased. Those people were coming back to us in droves, basically saying, look, I'm no longer taking it for granted.

I'm willing to join. So, all of our gyms suffered a big decline in the sort of first few weeks, but then that was more than made up for. And then we made the sort of quite brave decision as well to sort of just push our chips and we kind of expected that there'd be a boom in the market.

So, we approached our investors and said, look, we want to commit to opening four gyms immediately after lockdown. So, we through embarked on a massive capex program. And we'd ultimately that's where we sort of saw the membership base drive to 40,000 by the end of the year.

And the thing when you know that I guess that's a feature of this market, but when you look at the UK at the moment, which has just reopened and that's sort of where I'm originally from so I always have a bit of an eye on that market. But some of the key operators their people like the Gym Group, some of the statistics around their membership growth post the reopening follow with the end of their lockdowns just been phenomenal.

 

DAN DURAN: Thank you. I think we need to put Glen in the hot seat again. Yeah, you know, put Glen in the hot seat. So, with such a global reach with Les Mills, have you learned anything from other international markets that can help the UAE market with getting members back into gyms?

 

GLEN STOLLERY: Yeah, so I mentioned before we do quite regularly do global consumer surveys, which surveys everyone just people on the street. And then we survey our Les Mills on demand members very regularly.

The last survey we did for them, which was in March, 93% of them said they wanted to go back to training in clubs. But 25% said they weren't quite confident to do it yet. So, that kind of speaks to what Loren was saying is very, very market-dependent. And, you know, Planet just reported 600,000 membership growth in the US. So, we are seeing those numbers move in the right direction.

 

But that 25% is quite a big number. And it is obviously a Global Insight. 97% of those who did an exercise class at the club, reported there were more loyal to the club, and they will join that club when they came back. And I think that's kind of a key point. That 25%, they want to come back, they're just not quite ready. And when they do if you're offering something in the online space, they will come back to you. And I think that's probably, you know, our key message in a nutshell from the research we've done. 

 

DAN DURAN: Excellent. Thank you, Hayley?

 

HAYLEY COTTAN: The problem that is that, you know, with the growth of the direct consumer model now with products, yes, they aren't disrupting the market. But I think in the long term, it will only benefit the market and the health clubs. Because it is about getting more people active. And now that more people are exposed to health and fitness, even if they're more comfortable in their own environments, ultimately gets upstaged when they reach a certain level of fitness.

They're going to look to them want to join a gym. So, if anything, I think that in the long term, it will help gyms to acquire new members.

 

DAN DURAN: I love it. So, the old I need to get in shape before I join a gym or I need to get in shape before I hire a trainer. We're going to see that happen. Excellent. 

 

LOREN HOLLAND: I think quite interestingly as well. I mean, we're a tiny market here. But one of the fortunate aspects we had was that we came out of lockdown quite quickly and we didn't have a second and third lockdown.

So, our gyms have been open for quite a long period of time. So, I've had operators from Europe, people I know from the past reaching out to me, and I think George you've probably had people from Europe and even the States and Australia reaching out saying look, how's it gone? What have you learned, because they've not had the same track record of experience post lockdown that we've necessarily had?

 

DAN DURAN: So, we're not learning from other markets. They are learning from you.

 

LOREN HOLLAND:  I mean, even China was one of the first out. So, I spoke to a couple operators in China about what their experience was. But then, you know, we've got now people in Europe reaching out to us. 

 

DAN DURAN: Excellent. 

 

GEORGE FLOOKS:  Then the interesting thing is, and I've spoken on many panels including The Fit Summit and across the globe. And we are ahead, you know, we've been trading uninterrupted now for 10, 11 months, which is pretty unique globally.

So, there are a lot of other territories that are looking for advice from us. One thing we've noticed here is that the corporate market is not something too many people talk about. And more and more companies are starting to say, I really need my staff to be healthy. So, we have a very, very huge corporate base at Fitness First, more than 25% of our membership base comes from corporates and organizations.

And we've seen the take-up and the enthusiasm from corporates to start wanting to design different options so that they encourage their staff just to be healthier. And if they're healthier in the office, everyone is happier, because we know one person gets infected, and it knocks out the whole office for 14 days, et cetera. And it's pretty disruptive in the corporate environment. So, we've got to think of far more than just the customer coming through the door.

There's many different avenues where people now are thinking differently about how they can push people's immune system, how they can make them healthier, and corporates now are getting on board big time, more so than ever before. So, it's a market that's untapped, but freely available. 

 

DAN DURAN: Excellent. Thank you, George. Before we put Stuart in the hot seat, let's go ahead. Yes, I see some hands. Let's open it up to some questions from you. How about back there on the-, in the corner, I see the mic is already close to you.

 

AUDIENCE MEMBER 6: Thanks guys, this has been really interesting.. So, we know that virtual online digital training is growing. But there's two other sections. There's obviously people that like to train by themselves, so in that gym environment, and then there's a group exercise environment.

So, given the pandemic and the trends for Loren, and for George, how have you seen that blend of gym members versus people that are coming from for group exercise? And then for Stuart, on the group exercise side how have you seen it in terms of the different types of group exercises? Is it RPM that's trending, is it yoga that's trending, is it the HIIT classes that are trending?

You know, we run yoga classes outdoors across Dubai, and it's easy for us to do because we don't need equipment, it's easy to provide space. But when you're in a physical location, you have a lot more challenges. You know, when your equipment, you know, sanitizing in between sessions. Do people feel safer when they have the ability to control their own space training in a gym? Or do they feel safer when they're in a group environment where the facility is guiding that and social distancing element.

So, for George and for Loren, in terms of gym versus group exercise for Stuart, what types of group exercises are trending most?

 

STEWART MILLER: Thanks for the question. We've see seen a number of changes, obviously, the biggest is in the space, because our product was a playground where you could move to different pieces of equipment. So, we've probably been through about four or five different iterations trying to find the right solution that kept the members happy. We're relatively small business, but we do have a couple of hundred classes a month, and we get constant feedback.

 

So, our members are our biggest critics, but at the same time, they are diehard fans and help us build our product. So, we're fortunate that they help tell us what made them happy, or made them uncomfortable.

I think there's been a-, as there has been over a number of years a shift from this word fitness and exercise into wellness. So, naturally, we take more consideration to the mindbody, we take more consideration to our space in the mindbody in our mindbody studio. So, we have only 70 square meters in a room. So, we are restricted to how many people we can put in, we charge per head. So, obviously from a revenue point of view, it's been radically reduced.

So, we had to try and find a formula that was a balance between making commercial sense and keeping the members happy and giving them the variety that they wanted. We have seen a big shift in mind body space.

 

So, it has been much easier to control as you say, you know, even outdoors is a big shift towards that. But in our studios, you keep to your space and you touch your own equipment.

So, that's been a lot easier for us to teach. Cycling has always been popular or probably our most popular discipline, that's been, you know, whitelisted for months. So, that's, you got your own space as well. And we're try and give you another level of comfort with screens and distance to the next person. But boxing has been a challenge, because it takes up a lot of space.

So, as on the commercial side, it hasn't been a great product for us right now. But definitely touching equipment moving around, HIIT has been the hardest hit. And in saying that the numbers in each of these disciplines hasn't been affected.

Which brings us back to a big part of the discussion we've been having that digitization, which is part of this discussion today has actually helped the businesses grow, because it's introduced a lot more people to our brand, that weren't used to it before when the surveys.

We've done that a lot of new members that never used us before, but have met their coaches online and wanted to train with them. And I think from outdoor spaces, you've also experienced some challenges and changes within the studios as well. 

 

LOREN HOLLAND: Absolutely. I think once we reopened and what we've seen is a trend since reopening is just the demand for GX is still kind of off the charts, we've always been a GX led model very similar to sort of Fitness First and George. The challenge has been that the capacities were reduced.

So, how do you meet that demand which just came back? You know, like a surge when you've got a studio, which might be a third of the capacity.

So, we took the decision to put more classes on you know that that has a P&L impact, as there is more instructor costs. But if we hadn't done that, then we wouldn't have been able to service the demand, we would have probably lost members, lost touch with those members. In terms of the types of GX, which we saw demand, which I think was one part of your question and just the same as before, all the same classes are the ones which are most popular.

We never got much feedback from members that they were too worried about the COVID protocols. I mean, we made it very clear that between classes, there was a 15-minute sanitization program where all equipment was going to be cleaned, mopped, so members can hopefully have that comfort from day one. But if we could refill our studios and go back to normal, we'd be getting 80-90 back into all of our major fitness classes. I don't think there's been any material shift in what we've seen.

 

GEORGE FLOOKS:  About two years ago, we push the boat out and said we're going to build four studios a club. So, we've always seen group exercise classes and personal training as the two anchors of our business.

And we ensure we invest very strategically in those two platforms. So, your generic fitness model would normally have had two studios, you would have had a main studio, maybe a spin or maybe a mind and body studio, but you would have settled at two.

We went on to four studios, the boutique market was getting bigger and bigger. And the boutique market was most of them just had one studio and what they offered in one studio was pretty unique experience and it was busy and people paid a premium for it. And my impression was well we can just build boutique studios in our environment and the quality of group exercise that we offer.

 

We could actually fill that space quite easily. So, what we find we've gone very big into the mind, body and wellness sector. We've opened it'll be up to probably a ninth hot yoga studio, which is a real shift. Mainstream health clubs don't have hot yoga studios. We've gone into reformed Pilates. So, there's always a debate. Do we go reformed Pilates? Do we go with a boxing studio? 

You could quite easily have five or six studios will ensure that we choose four that are best suited for that market. Some people don't believe us when we show them this but it takes three seconds for a class to be booked up at Fitness First.

So, people are literally sitting there with the app open. As the class comes available. They go book. Three seconds later the class is full, it's closed. So, the demand for group exercise has always been there. It's been there for the last 10 years. It's there now and I believe it will continue in the years to come.

 

So, real anchor and I think there's an opportunity to continue to expand in that market. When it comes to it, I might touch on one of the questions that Dan might be asking later, but I believe it's appropriate now, Dan. When we went into lockdown, we had four or five leases that were really signed.

And when we looked at, we looked at the social distancing was one meter, then it was two, then became three. And we thought, okay, where's this going to stop? And then you looked at your studios, you know, eventually, maybe only get 15 people into studio. And you thought yourself while this space for that many people, where does this go into the future?

 

So, in actual fact, there's five leases that we had signed, we actually pushed them back with the landlords, we said, we want to relook at our model and redesign our clubs. So, we took the opportunity to delay some. Silicon Oasis is one of them, we went back, we redesigned the club.

We took space from certain areas in the club that will not be used and not be as popular and the pre-COVID, which might be your changing rooms or your wet areas. And we allocated that space into group exercise studios.

So, all our clubs going forward, the studios were significantly bigger. So, when I say we cash proof ourselves for the future, we've got studios now that are set up where you go back two meters-, if you go back to three meters, social distancing at our new clubs, we're ready for it. We can accommodate pretty competitive numbers of customers. But more importantly, when someone's looking to book a class, it's available.

There's a position available for them. So, all our clubs going forward is a four studio, the makeup of those four studios might take on a slightly different shape depending on the demographic and the competitor analysis. But we're definitely in that space of mind, wellness, Yoga, hot yoga, Reform Pilates, we are in that space, and we are commanding it at the moment.

 

DAN DURAN: Excellent. Now in the interest of time, to try to somewhat stay on schedule here. I'm just going to ask two more final questions of the panel and like I said, Stuart, I'm going to put you in the hot seat here for one of them. You know, we've talked a lot about collaboration, we're here to share best practices and so forth. But from a competitive standpoint, what do clubs need to be able to become number one in the sector? And how would you measure that to see that you're stacking up?

 

STEWART MILLER: I think that a lot of the people in this room have had many years’ experience building clubs. And being in the fitness business. 10 years ago, I was fortunate enough to spend a lot of time with my friends at Virgin Active. And their focus was to build amazing dynamic game changing clubs. And they invested millions and millions of dollars in creating the most incredible locations. I mean, I'm sure some of you've been to, and that was their focus.

Those are the rules to win. That was to be number one 10 years ago. Now, those are the rules to play. If you want to show up, you've got to do that anyway. So, you got to tick that box. We believe that the businesses that are going to be number one in the future, are the businesses that embrace technology. And I think from the discussions we've had today, and speaking to my friends in Dubai, a lot of the businesses here are doing that. I think that the blend for us is important.

And I'm sure that each business will have its own version of a blend between analog and digital world. But it's about that customer-focused ecosystem. And it's about hyper customization. Everywhere you go, it's not a copy, paste, copy, paste, because each market, each area will be slightly different, like George says, maybe bigger Mindbody rooms.

Maybe there's bigger PT areas. Maybe there's technology with the app that allows you to engage with those members. There's equipment that comes into the cloud, the same equipment I use in the club, I want to use an app. I want the same app. So, these ecosystems that a lot of manufacturers are developing are going to enhance the experience for us. And we believe that health clubs of the future need to embrace that.

 

DAN DURAN: Thank you. Thank you. So, we're going to end with a rapid-fire question for all the panelists. But I would encourage you to stick around. We're all going to be here for a while. If you have some questions that didn't get answered, do seek out the panelists and ask them in person. So, with that, here we go. So, you're-, the person that goes first has the least amount of time to be prepared for this, but what are your top three goals for 2021 and let's kind of stretch it out to 2022 as well. We're going to start with you Glenn.

 

GLEN STOLLERY: Top three goals. Supporting clubs to get back to 100%. I mean, I think here in the UAE, with Loren and George touching on this. But we deal with 20 markets out of our Dubai office, including India, some of them are really struggling. So, that's our number one goal. Second one is technology, I think we've touched on that as well, is supporting clubs and they can offer a hybrid model something online and offline. And then the third one is innovation. So, we've got some boutique programs that we're about to release into the market, conquer ceremony to go to create a boutique club within a club. So, yeah, those are the three. 

 

DAN DURAN: Excellent, thank you. George.

 

GEORGE FLOOKS:  Thank you. 10% like-for-like revenue growth, let's not mess about, you need to put the cash in the till. And ultimately, that's what's going to help you expand, that's going to help you build bigger studios, and as your estate gets bigger, you need cash to refurb to stay relevant. So, 10% growth on 400AED million business. And 10% growth on that is a pretty handsome number. And that's next year's goal. The second one is our digitization.

We will fully digitize our business by first of September. And the third one is member retention. I haven't heard much about member retention here today in the market that we're in. Because it's a pretty small market.

And it's a very transient market, you got to be able to look after your customers and create an experience for them that keeps them coming back. And that's not unique in the industry. You just got to do it really, really well. And you got to create those services that keep bringing your customers back. So, we measure ourselves on a net promoter score, there's not many businesses here that do that. But we're number two in the world right now.

Third space in the UK is number one, they have a score of 56 versus standard for excellence on a net promoter score is 40. We sit at 53 at the moment, and this is independent bodies asking our customers would they recommend us to someone else? So, customer retention, digitization, and 10% like-for-like revenue growth?

 

DAN DURAN: Thank you. I think I have to put in a shameless plug here. On the net promoter score, ISSA is number one in the fitness industry in certification at 72%. No kidding, from an independent study we are 72 points. So, yeah......

 

GEORGE FLOOKS:  Very good. Then you know how good 53 there is then!

 

DAN DURAN: Feels good. It does. It feels good. Alright, Hayley, your turn.

 

HAYLEY COTTAN: For us at AKI, our, one of our goals is to launch NEW concepts. So, that's our bricks and mortar stores. So, we'll continue to grow those stores across the region.

But with a new concept now taking into consideration, you know, what is the consumer looking for when they're looking for a new retail experience, to support that, we'll also be growing our e-commerce platform B Fit as well, which supports the stores, and that has already launched in the UAE and then we'll be launching out into the other regions as well.

And then on the commercial side, just to continue, you know, to continue to support everybody, and especially on the equipment side, on the equipment side, bridging the gap between the digitalization and obviously the member experience as well.

And always trying to bring, you know, new innovative products to the markets, to help customers like yourselves be unique and be different. 

 

DAN DURAN: Brilliant, thank you, Loren.

 

LOREN HOLLAND: Yeah, I think I'll just kind of jump on the trend of growth. I mean, our three objectives because we're still very young, we were only the set up three years ago. So, for us, we're still maturing as a business. So, for us, it's just growth, growth, growth, you know, growth domestically, we still got an ambition to open another five clubs and cement opposition as number one in this market. But this year, we're looking to open our first International Club as well.

 

So, we've got an ambition over the next five years to become the number one GCC fitness brand and we are targeting leases in three international markets this year. And then I think probably the most important there is we want to be involved in the growth of the market as a whole.

I think when you step back at and look at the UAE market, the stats show that we're got around 7% fitness penetration levels. I don't honestly know if that figures even correct, is it even up to date.

There's no accurate data on that, but if we could grow that market from 7%, to say, 17%, which is kind of where some of the European markets are. There are some markets that are over 20%. I mean that has to be achievable, and that has to be sort of our collective responsibility. And I think in that we need to probably have more collaboration. So, I think events like today are great.

 

You know, I don't think this has happened enough. You know, even my own sort of peers. You know, I, there's people in this room today, I mean, Nitesh who's a competitor of mine. And you know, when we have a similar business model around budget, I think today was the first time I properly actually had a conversation with them.

I think if we can work together as an industry more, that's going to benefit everyone. So, I think that's got to be a key feature of something for 2021, 2022 and going forward.

 

DAN DURAN: He can drop the microphone right now. Because a mic drop would be the perfect finish here!

 

STEWART MILLER: I think we're going to look at it in three pillars. For us, it's got to be brand first. So, stay true to our purpose. Sharing the joy of exercise. It's people second, be the company that people want to choose to work for first. And then thirdly, obviously growth. We're here to win. And we want to build more clubs.

 

DAN DURAN: Excellent, excellent. Thank you. So, a huge thank you to Dubai Active for putting this together. But an even bigger thank you to all of you who made the time to be here, and to participate and to collaborate and to be a contributing entity in the greatest industry in the world, by far. So, thank you, and thank you to the panelists. And now let's mingle......