The 5 Most Important Factors When Calculating Fitness Club Demand

The 5 Most Important Factors When Calculating Fitness Club Demand

Before you agree to buy, or invest in a health or fitness club, make sure you conduct a feasibility study to understand the five factors that matter the most in determining the potential market demand for the club.  These factors are population density, travel time, median household income, educational attainment, and competition which are discussed below.
1) Population Density. Demand for a fitness club is directly related to population density. Large club operators like to locate their clubs in markets where there are at least 60,000 and preferably 100,000+ people who are in close proximity to the facility. Smaller format clubs and boutique exercise studios can succeed in smaller markets of 20,000 to 40,000.

market-study-map2) Proximity or Travel Time. In suburban markets, where people drive to get around, clubs draw approximately 70% to 80% of their members from an area within an eight minute drive of the club.  This is the club’s primary market.  The club’s secondary market, from which it can draw approximately 20% of it members is an area within a 12 minutes drive from the club.  The remaining 10% of a club’s members may come from outside of the club’s primary and secondary markets.

It’s important to note that these markets are defined by travel time, and not miles or distance. In every market, these two factors are distinct. Note, also, that markets can be defined as travel time from either a person’s home or office. Many health club demographic studies show that up to 80-90%% of a club’s members come from within 12 minutes travel time of the facility. When measuring travel time, you should use the most popular routes used by local residents during peak times.

Peak times are the peak club usage times such as between 6 and 8 a.m. or between 4:30 and 7:00 p.m., Monday through Thursday. In most cases these times are also rush hour so travel times are at their longest.  In most suburban markets, 8-12 minutes of travel time is equivalent to approximately three or four miles from the club, and it can be as low as two miles in congested areas or during peak commuting times.

In urban markets, where parking is limited and car travel less popular, the club’s primary market is an area within an 8 minute walk or commute of the club’s location and a 12-minute walk/commute for the secondary market.

These markets need to be researched and plotted precisely. These concentric rings on a map should show you the primary, secondary, and total market for a club’s location. Once a club’s total market is calculated, you should use various demographic services to obtain essential information, like the number of people who live or work within the primary and secondary markets, their ages, their median household incomes, home ownership, etc.

3) Household Income. There is a strong correlation between median household income in a market and fitness club membership and dues. While roughly 20% of the general population are members of a health  or fitness club, member penetration rates among high-income earners can often exceed 30%.  Conversely, when household income falls below $25,000, only 7% of that population are members of a health club.

Household income is also a key determinant of membership dues rates. Generally speaking, in markets where the average household income is $75,000 or more, members are comfortable paying monthly membership dues in the $60 to $125 range. .

In markets where the average household income is between $50,000 to $75,000, the market will support monthly dues in the $45 to $74 range. And where average household income is between $20,000 and $50,000, the market will support monthly dues in the $10 to $44 range. However, you need to be aware of the competitive environment in your primary market.  In the last 10 years, the success of the of low-priced clubs has created downward pressure on dues in many markets.

4) Educational and Professional Attainment. Educational or professional attainment levels are two other factors that can predict demand for fitness clubs. In general, the higher the educational attainment in a market, the higher the overall demand for health and fitness clubs serving that market.

It is interesting to note that the overall health & fitness club membership rate among full-time college students is 24%; similarly the health club membership rate among people with advanced degrees (masters degrees, doctorate degrees, etc.) is 25%. However, among high earners (making $75,000 or more) but who did not go to college, the membership rate is less than 12%.

5) Competition. It’s important to remember that all of these factors help predict total market demand in a club’s market.  As a result it is also helpful to plot the club’s competitors on this map so you know how many other clubs you are competing with for the total number of potential fitness club members in your club’s market. For example if the feasibility study shows that there is total market demand of 15,000 potential fitness club members in your club’s market and there are six other clubs in your market (or that have markets that overlap yours) then the total projected demand for your club would be 2,500 members.

Because of the importance and complexity of assessing demand in a club’s market, it is essential that a feasibility studys be conducted by an experienced third party who is not a developer, architect, or builder.  This feasibility study should then drive a financial model so you as the buyer, investor or lender, can do a sensitivity analysis to understand the impact that different levels of demand and different pricing structures will have on the overall success of the club.

If you would like to schedule a free consultation with Sports Club Advisors to learn more about conducting a feasibility study for a new or existing club, please contact Rich Jackim at (224) 513-5142 or at


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