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Competing with Choices: Club Amenities Go Public

2019 poses new opportunities and challenges for clubs. With the effects of the Great Recession in the rear view, clubs are battling a different set of challenges in which they must continue to set themselves apart from new, clublike venues and amenities in the public sphere in order to remain a desirable destination.

ECONOMY
Despite pullback on the fast-growing U.S. economy, consumer optimism grew in 2018 according to an Ipsos and GenPop survey. Compared to 2017, optimism grew 7 points higher personally and 13 points higher for the country. And despite deep political divisions, Americans appear to be optimistic about 2019.

Risk of a recession is increasing, reports The Wall Street Journal. Its recent survey reveals that economists believe there is a 25 percent chance of recession this year—the highest level since October 2011. Last year the probability was only 13 percent. More than half (57%) expect a 2020 recession and 26 percent forecast one to occur in 2021. Factors such as the U.S.-China trade dispute, a divided government and the risk of rising inflation all pose threats to the American economy.

A majority of the economists surveyed believe that growth will slow regardless of a recession. While the U.S. economy churned with 3 percent growth in 2018, economists project 2.2 percent GDP growth in 2019 and 1.7 percent in 2020. The Federal Reserve similarly lowers expectations to 2.3 percent growth in 2019 and 2 percent growth in 2020.

Unemployment continues to remain low, hovering around 4 percent as of January 2019, when 304,000 jobs were created, reports the Bureau of Labor Statistics, exceeding projections. Kiplinger forecasts the unemployment rate to continue to drop to 3.4 percent by year’s end. Wages are expected to increase as well, rising to 3.5 percent by the end of 2019.

FITNESS AND WELLNESS

The U.S. fitness industry continues to boom. In 2017, health clubs attracted more than 60.9 million members and generated $30 billion in revenue, a marked increase from 57 million members and $27.6 billion in revenue in 2016, reports the International Health, Racquet & Sportsclub Association (IHRSA).

What’s driving the growth said Ben Midgley, Crunch Franchise CEO, are factors such as lowering health insurance costs through better fitness, increased focus on nutrition, wearables that help provide constant digital feedback for users to track their fitness, streaming exercise classes that provide users with on-demand training, low-cost gyms and popular outdoor obstacle races like Spartan Race and Tough Mudder.

More Boutiques and Choices

For years, one of the fastest growing fitness segments is boutique studios. According to IHRSA, between 2012 and 2015 memberships at boutique studios increased by 70 percent. The segment now represents 42 percent of the U.S. health club market—twice the number in 2014, reports CBS News.

Due to the increased number of fitness options, health club aggregators are reinventing the fitness industry. These companies allow users to search for specific classes and activities across multiple fitness providers like gyms and boutique studios. This also provides gym goers the benefit of being able to select a fitness class without the commitment—or pricetag—of a full membership to single fitness center. One of these apps, called Mindbody, is estimated to have booked 600 million classes and spa/salon appointments to 40 million people in 2017. This data also allows studios to dynamically price their classes based on demand in order to fill spaces and generate more revenue. Another leading aggregator, ClassPass, offers monthly subscriptions that give customers several fitness packages, ranging from $35 per month for two to five sessions, or up to $100 and beyond for 10 to 15 sessions.

2019 Fitness Trends

1.      Wearable Technology

2.      Group Training

3.      High-Intensity Interval Training (HIIT)

4.      Fitness Programs for Older Adults

5.      Bodyweight Training

6.      Employing Certified Fitness Professionals

7.      Yoga

8.      Personal Training

9.      Functional Fitness Training

10.  Exercise is Medicine

11.  Health/Wellness Coaching

12.  Exercise for Weight Loss

13.  Mobile Exercise Apps

14.  Mobility/Myofascial Devices

15.  Worksite Health Promotion and Workplace Well-being Programs

16.  Outcome Measurements

17.  Outdoor Activities

18.  Licensure for Fitness Professionals

19.  Small Group Personal Training

20.  Post-rehabilitation Classes

Source: American College of Sports Medicine

 

Social Wellness Clubs

More health clubs are meshing fitness, wellness and social activities under one roof. In New York City, “wellness-obsessed workaholics” can pay $375 per month to join The Well, a social wellness club with the focus to improve members’ minds and bodies. Members check their digital devices at the door and can enjoy one-on-one meetings with a health concierge with expertise in physical therapy, reflexology and other specialties; yoga and meditation classes; a diverse range of fitness classes; spa services; relaxation areas and more. The club also features support groups and wellness education resources like lectures and a library.

Wellness clubs like Wellvyl in New York City have a similar mission that brings people together through health-centered socializing. “We want to be like the Soho House for the fitness and wellness community,” said Wellvyl found and CEO Christopher Krietchman. Wellvyl targets professionals who head to the gym instead of bars after work with programming like a workout class followed by drinking wine and snacking, health industry networking events, workout dance parties, singles’ events and more.

Emerging Fitness Technology

Club Industry, a leading health club news and education resource, looked ahead to see what technology will be shaping the fitness industry over the next five years. Here’s what they are forecasting.

Wearables

Wearables continue to permeate the mainstream. International Data Corporations (IDC), a market intelligence firm, predicts that the wearable market will double from 2017 to 2021 with roughly 240 million units sold in that time.

Body Assessments

3D body assessment equipment has begun to enter the fitness center space. Gold’s Gym has installed 150 Styku 3D body scan products to give users a visual representation of their progress and allows health club managers better interact with members. This data can create an emotional connection between the gym member and their workout.

Predictive Modeling

Technology now exists that uses a collection of more than 150 characteristics on a person in order to create an action plan to help health club operator engage with the customer. Called Reunify, this technology builds a profile on a member using the club’s customer management system and combining it with public records and the Reunify database. From there, actionable items such as upselling or reengagement techniques can be recommended to apply to the customer.

Facial Recognition
This technology is beginning to emerge at health clubs, tracking a member’s workout and engagement during a workout and facilitating the check-in process. Tinoq is health technology startup that applies this technology to give health club operators in-depth member engagement data that allows the club to optimize its operations in areas such as design and layout.

Facial recognition technology can also allow for a more seamless entry into the fitness center and provide security in tracking nonmembers from entering.

Benefits of Fitness Technology

Myzone is a leading wearable device that wraps around a user’s chest, accurately measuring heart rate. The tool is used to track health, for gamification, and to compare with other users in group settings. Here are some of the benefits of the wearable.

  • Users stay at the health club 24% longer
  • Users increase their health club visit by 33%
  • Users spend 3 times more on secondary fitness items than average gym-goers
  • Users who have more than 4 social connections on the app workout 41 percent more during their exercises

Source: MyZone

GOLF

According to the National Golf Foundation (NGF), the total number of golfers has stabilized around 23.8 million—the same rate as 2016. As this figure holds, alternate golf activities like Topgolf and others continue to entrench themselves in the industry, benefitting traditional golf. This group of players, called “off-course participants,” increased by 7 percent from 2016 to 2017. Interestingly, 41 percent of these participants are women, compared to just 24 percent at green grass facilities.

Nontraditional golf also funnels newcomers to the game. An NGF survey reveals that 23 percent of new golfers began to play green grass golf after first teeing off at Topgolf. Almost 75 percent of those respondents said the driving range-bar hybrid influenced their decision to play.

Participation among various segments is strengthening. NGF data shows that the number of passionate golfers, those who indicate golf is one of their favorite sports, grew from 8.8 million in 2016 to 8.9 in 2017. Latent demand, comprised of those who are very interested in playing but have not yet, is up significantly from 12.8 million in 2016 to 14.9 in 2017. And the number of beginners rose for the first time to 2.6 million in 2017, reports NGF, up from 2.5 million in 2016.

Nontraditional Competition

Though dominated by Topgolf, nontraditional venues are diversifying. Golfuture seeks to allow players to finish 18-hole rounds in just 45 minutes. The concept divides the entire course into several sections: a tee area for par 4s and 5s, fairways and par 3 tee areas, and the greens, allowing golfers to hit their shots in bunches. In the tee area, golfers hit their par 4 and 5 tee shots on the fairway. A computer tracks and directs each ball corresponding to its designated green/hole. In the fairway area, golfers hit their second shots and tee off for their par 3 approaches. These condensed courses use only about 15 to 25 acres of land and allow golfers to finish a round more quickly than on a traditional course. 

Drive Shack is another competitor that meshes a driving range with food, beverage and games. Drive Shack uses video and sensors to track key swing metrics like launch speed, backspin ratio, and peak height.

ClubCorp has stepped into the off-course arena by investing in DriveZone and Bigshots. These venues, like Topgolf, offer players a fun environment where players can tee off, track their shots via Toptracer technology, and enjoy food and beverage options with their friends. ClubCorp has also invested in golf simulators at clubs.

 

GOLF PARTICIPATION IN 2017

All U.S. Golfers: 23.8 million

Women: 5.8 million

Juniors: 2.7 million

Beginners: 2.6 million

Core Golfers: 12.2 million

Committee Golfers: 19.5 million

2017 Rounds Played: 456 million

Total Off-Course Participants: 21.2 million

Off-Course Only Participants: 8.3 million

Latent Demand: 14.9 million

Source: National Golf Foundation

 LIFESTYLE

The Rise of Club Culture in the Public

Outside of private clubs, people have flocked to club-like experiences that offer exclusivity and prestige in a variety of venues.

Airport lounge investments have increased, reports International Airport Review, a leading aviation information provider, signaling an increase in demand for these more exclusive, relaxing spaces away from the hustle and bustle of airports. The lounge experience is reserved for members and their guests, typically offering comfortable seating, showers, higher quality food and beverage, nap areas and other “first-class” amenities to help travelers feel at ease. Airport Lounge Development (ALD), which has a global portfolio of these spaces, saw its guest activity increase by 70 percent year-over-year ending in 2017. ALD is developing its lounges to offer locally-sourced foods, environmental-friendly bars, prestigious and socially conscious wine labels, and is also offering an app that allows guests to shop online for items at the airport.

Globally, seven of the top hotel loyalty rewards programs have a total of 380 million memberships, reports Top Hotel News. Approximately 4 million new members sign up per month. Hilton’s membership has increased by 26 percent from 2017 to 2018, and Choice Hotels International saw a 17 percent increase during that same time, with several other large hoteliers seeing similar increases. Benefits typically include free high-speed internet, late check outs, room guarantees, higher quality rooms and upgrades, mobile key service and lounge access.

Hotel club lounges often include all-day buffet and other F&B options, happy hours, comfortable seating, a dedicated receptionist, nooks, social areas and extra guest services. Other perks include private concierge service and business-center amenities like charging stations, super-fast Wi-Fi, meeting rooms, printing and photocopying, books, shoeshine services, dry-cleaning and TVs.

Travel

One new trend in the luxury travel segment merges high-end programs with edgy, exciting experiences. In early 2019, Virgin’s cruise brand Virgin Voyages will begin to offer its guests luxury cruises equipped with a tattoo parlor, drag queen shows and bars at each restaurant, alongside sophisticated dining options, exercise classes and upper-class perks—all without any upcharges for exclusive events and venues or bottled water. Coined as “rebellious luxe,” the company’s CEO Tom McAplin said, “We see an opportunity for a young-at-heart crowd who don’t want that stuffiness” of a more traditional luxury vacation … we see … a way to be luxurious and a way without the pomp and circumstance; they love the concept of being able to be above the premium [cruise] category but be edgier and a bit more sophisticated.”

More luxury travel trends, such as “hands-on luxe,” are emerging, reports a joint study by TrendWatching and Small Luxury Hotels. This trend helps travelers design their own travel experience, going as far as choosing their room fragrance or the color of their own toiletries and linens. The wellness industry is offering unique, immersive spiritual experiences like a nighttime outdoor spa session at Power Spots at the Sankara Hotel & Spa Yakushima in Japan or a floating spa in Spa Village Resort Tembok Bali in Indonesia. Calm, technology-free environments like libraries and meeting rooms for creatives, are emerging at hotels, even including a Lewis Carroll-themed park equipped with a maze, nature trail and kitchen garden at Rockliffe Hall in England.

Luxury hotels are also focusing on helping their guests get better sleep. Linens that prevent sweating and eliminate bacteria are replacing standard sheets and at 137 Pillars in Thailand, guests can enjoy “Sleep By Design” therapy, a 90-minute session including massage and meditative music that can be conducted at the hotel spa or in-room.

Hotel dining is shifting as well as more hotels allow guests to customize their meals and eat where they want in or around the campus. At Foxhill Manor in England, guests can enter the kitchen to talk with the chef and staff to go over ingredients and create a menu. Guest can then choose to eat throughout the hotel, whether in their rooms, a terrace or even in the hotel’s media room. 

New Office Spaces

More hotels are incorporating stylish, but practical work spaces at hotels to allow both guests and the general public to work and collaborate. The AC Hotel Phoenix Biltmore in Phoenix offers a 5,000-square-foot space with couches, a communal table, power outlets at each seat, and a large high table that is used for work and then for drinks after 4:00 p.m. The work area is available for both guests and the public free of charge and provides coffee and snacks. The space also offers computers, printers and office supplies. Pivot62 is a restaurant and workspace at the DoubleTree by Hilton Vail, in Vail, Colo., that offers free 24-hour Wi-Fi, workstations, conference rooms and a kitchen area with complementary coffee. The Revolution Hotel in Boston, charges nonguests $20 a day for access to its coworking space, called Conspire. The facility offers communal tables, bar style seating, couches and an eight-person conference room. The hotel also offers the public three levels of membership that include a drop-in desk, dedicated desk and even a private office for top tier members.

Across the country, public office spaces are emerging for individuals, startups and even big businesses to convene and work. These spaces are often equipped with free snacks and drinks, group work areas, lounge seating, private booths and other work-friendly areas for members to gather and work. Membership prices can range from as low as $45 per month to into the thousands for full access.

We Company, formerly WeWork, is one of the fastest growing public worksites. As of August 2018, the privately held firm said total revenue rose to $421.6 million from $198.3 million in the year-ago quarter as memberships jumped to 268,000 at the end of June from 128,000 a year earlier.

FOOD & BEVERAGE

The restaurant industry continues grow, reaching a projected $825 billion in revenue in 2018, up from $799 billion in 2017, reports the National Restaurant Association.

Eatertainment

While millennials have been labeled by some as the cause of the demise for certain restaurant chains, they are driving the rise of “eatertainment,” a convergence of dining and entertainment experiences under one roof.

Growing franchises like Dave & Busters and Punchbowl Social combine restaurant, sports bar, entertainment and gaming concepts into one. Games and activities include bowling, skee ball, ping pong, darts, classic arcade games and karaoke booths.

At several Punch Bowl Social locations, virtual reality gaming has been installed with a large screen TV, headset and couch for patrons to play one of 10 games. To play, customers have to find a member of the staff dressed as Waldo in order to be signed up.

Food is also critical to the experience. Punch Bowl Social has partnered with talented chefs such as the James Beard award-winning Hugh Acheson to craft their menus. Food items also include vegan and vegetarian options, gluten-free dishes as well as a growing craft beer menu, kombucha teas, lemonade, and a cilantro fizz featuring house-made ingredients.

In fiscal year 2018, Dave & Busters opened 17 new locations and increased its revenue by 13 percent. Last year Punch Bowl Social had just nine locations, but now has plans to have a total of 22 by year’s end. For both, these units often require large spaces to house all the activities and guests, many times occupying vacant spaces in malls that were once used for retail only, which now give patrons another reason to frequent the mall.

The interest is not just from millennials. According to Datassential, 59 percent of U.S. consumers say they are interested in visiting an eatertainment location. Sixty-one percent of adults ages 18-71 say they would rather spend on an experience, such as eating at a restaurant or other activity, than buying an item from a store, according to the National Restaurant Association. 

Restaurant Economic Forecast

Fast-casual restaurants

2019 Projection: Up 8.3%
2018: Up 8%

Casual dining
2019 Projection: Up 3.4%
2018: Up 3.2%

Fine dining
2019 Projection: Up 5.2%
2018: Up 5%

Source: Technomic

 

Top Food & Beverage Trends for 2019

1. Cannabis/CBD-infused drinks

2. Cannabis/CBD-infused food

3. Zero-waste cooking (elevated cuisine using food scraps)

4. Globally inspired break- fast dishes

5. Global flavors in kids’ meals

6. Hyper-local (e.g., restaurant gardens, onsite beer brewing, house-made items)

7. New cuts of meat (e.g., shoulder tender, oyster steak, Vegas Strip Steak, Merlot cut)

8. Veggie-centric/ vegetable-forward
cuisine (e.g., fresh produce is star of the dish)

9. Chef-driven fast-casual concepts

10. Craft/artisan/locally produced spirits
Source: National Restaurant Association, “What’s Hot 2019 Culinary Forecast”

Other Trends for 2019
Technomic has revealed its big trends for this year based on in-depth research of key factors in the industry.

Middle Eastern flavors, particularly from Lebanon, Syria and Turkey, are finding their ways onto menus. Sauces like s’chug, pomegranate molasses, toum, labneh and tahini.

Natural remedies like turmeric are in, and 2019 will bring on more enhancing ingredients that seek to improve brain function, beauty and mental health. Ingredients like collagen, cannabis and karkade are emerging.

Food will appeal to even more senses. Building on a visually interesting menu fit for social media, expect dishes and ingredients to move, like bonito flakes; change color; or glitter. Menu items that eaters can hear, like popping candies, will also become more popular.

Third-party delivery platforms like Gubhub, Uber Eats and more are competition for customers. New pricing models will be introduced such as subscription services that eliminate delivery fees. Major franchises like Subway, McDonald’s and Chipotle have also entered the delivery space using these third-party companies.

Technology is reshaping the food-buying experience. Amazon Go, which uses cameras, sensors and customers’ personal phones to experience food shopping with no lines or cashiers. Customers walk into the store, pick up an item off the shelf and walk out. They are billed through their Amazon Go app for any items they took from the store. Only nine Go stores exist currently, however that number may reach 3,000 by 2021 according to Bloomberg. 

Transparency will continue to be important to the food experience. Expect increasing demand for transparent pricing, showing true net costs, corporate performance, fair trade, living wages for workers and executive pay. Restaurants will be expected to reveal their environmental impact, conservation initiatives and work to protect animals’ well-being.

More “Club” Choices
In recent years, more elements from club culture have made their way into public life. Member-only benefits, an emphasis on high-end yet casual experiences, player-friendly golf options, flexible facilities, and other club strengths are increasingly overlapping with mainstream desires, emphasizing the need for private clubs to stand out. Clubs should be mindful of these shifts in order to stay relevant to current and future members. 

Club Trends Winter 2019

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