Gym in South Africa Virgin Active Planet Fitness
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  • South Africa’s health and fitness industry took a heavy financial knock during hard lockdown, with gyms forced to close for five months.
  • Virgin Active, the country’s largest gym chain, lost more than R1.7 billion in revenue with 55,000 members terminating their contracts.
  • Planet Fitness admits that it “burnt a significant amount of cash” and was forced to cut salaries to remain operationally viable when restrictions lifted.
  • While both gym chains have noted a steady rise in usage over the past three months, Virgin Active warns that it may take up to two years to return to 2019 levels.
  • For more articles, go to www.BusinessInsider.co.za.

South Africans are slowly but steadily returning to gyms across the country. Following a protracted period of dormancy, which saw health and fitness centres shut from late March to August 2020 due the national coronavirus lockdown, gyms, like all industries impacted by the pandemic, have been forced to adapt.

Virgin Active, which has 133 clubs in South Africa accounting for a third of the company’s global revenue, reopened its doors on 24 August. A financial report released by investment holding company, Brait, which has a 74.9% interest in Virgin Active, has detailed the decline in 2020.

In February, before the pandemic reached South Africa’s shores, Virgin Active had a total of 740,000 members. By September, that number had dropped by 7% to 685,000. In addition to the 55,000 contracts which had been terminated during that time, active paying users dipped by more than 34% when gyms reopened.

Approximately 200,000 members opted-in to Virgin Active’s fee-freeze option, which suspended payments between August and October. While the initial option afforded members the opportunity to gauge health concerns with no financial obligation, members whose accounts remain frozen in November and December will be charged 20% of the membership rate.

Virgin Active has noted a steady uptick in usage, which, compared to 2019, saw just 7% of members return in August. In September, usage increased to 35% and, the latest audit, which analyses the number of card swipes per day in comparison to the previous year, showed a surge to 57%.

This means that approximately 400,000 members have returned to Virgin Active gyms, at least once, in the last three months. This number is expected to increase before the end of the year, when members will need to pay to keep their accounts frozen. Adversely, in the tough economic climate, payments for frozen accounts could result in further terminations and a decrease in Virgin Active’s total membership base.

With the threat of a second wave of infections and associated lockdowns looming, Virgin Active notes that it may take between 18 to 24 months to realise pre-pandemic revenue levels. Restrictions, terminations, and frozen accounts halved Virgin Active’s revenue in 2020 to R1.7 billion.

Planet Fitness, although equally battered during the months of hard lockdown, has reported a surge in activity since reopening.

According to Gillian Elson, Planet Fitness’ Head of Marketing, 100% of its 251,000-strong membership base had returned to gyms by mid-November 2020. “We are absolutely thrilled to be achieving pre-Covid numbers on new gym membership sales,” says Elson, while noting that the surprising rate of sign-ups was being driven by a need to keep fit as the best defence against the coronavirus. “New members have flocked to join the gym and the majority of our clubs are approaching 100% usage, like-for-like pre-Covid.”

Elson explains that members were rearing to get back in the gym after months of being cooped-up indoors. A positive marketing campaign, which highlights the power of physical exercise as a key immune system booster, was well received. New sign-ups and a return to optimal usage rates have given Planet Fitness a much-needed cash injection, which will be used to open more gyms in the 2022.

“All [clubs are] operating very well, we are not closing any clubs at all,” says Elson. “We will be opening another 12 clubs in the next 15 to 18 months due to the demand in the market.”

In line with government protocol, gyms can only operate at 50% capacity at any given time. In this way, members have changed their training habits and traditional peak times – the hours before 09:00 and after 17:00 – have dissipated.

“What we have seen is that because people are still working from home, we don’t have large numbers during the historical peak periods and that members are now coming in during off peak times which assists in spreading the numbers across the day,” explains Elson.

Reflecting on the tough and uncertain five-month period at the height of lockdown, Planet Fitness CEO Manny Rivera says that the company avoided retrenchments by instituting salary cuts and relying on government’s UIF/Ters funding. “The business burnt a significant amount of cash as we were not billing our members at all during lockdown,” he says.

According to Elson, debunking the theory that gyms serve as hotbeds for coronavirus transmission remains a top priority. This, coupled with the health benefits of regular exercise, has been responsible for the surge in activity. Scientific proof is clear, without doubt, that in order to combat the virus you need a healthy immune system,” explains Elson. “There is no vaccine yet and people have to do their bit to build their own immune systems until a vaccine is available, so keeping fit and healthy is important.”

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