2. Introduction to Gym/Health Club
2.1. Popularization
The gym/health club industry is booming across the world. People are more aware of the importance of their health and how regular exercise is necessary to stay fit. Companies also know that a healthy employee is an employee that doesn’t miss work. There are 6 reason for this growth in the U.S. health industry, according to Midgley in Forbes: Health Insurance Costs, Demand for Healthy Food, Wearables, Streaming Exercise Classes, Budget-friendly Gyms, and Outdoor Obstacle Races. And these reasons are not limited to the U.S.
1. If a person exercises regularly, they will have fewer health complications and costs associated with treatment. Individuals and companies recognize this. Many
companies, such as Google or HTC, have on-site health clubs. These clubs promote healthier employees and the IRS allows U.S. companies to deduct the cost of these gyms. (Stimson)
2. The desire to eat healthier has also made people to seek out new ways to say healthy, such as joining a gym.
3. Just like healthy eating, wearables also promote people to be more engaging and active in their health. It’s not uncommon to see people have a FitBit to track their health.
4. Streaming an exercise class isn’t limited to the home. People also do it at gyms where they can enjoy a communal feeling, because in communities people flourish, especially in Asia.
5. Growth in gyms has mostly come from low cost gyms and niche gyms. If the cost is low enough, people feel like there is a low risk. And if something is specialized
enough people are willing to pay more.
6. Outdoor events such as Mud Runs or Crossfit have been extremely successful at attracting young people, and in turn they go to work out facilities to improve, train, and learn.
7. Going beyond Forbes’s findings and the U.S. market, we can see there are other reasons for the considerable growth in gym/health clubs. Namely, people are more
knowledgeable about their health and have a desire to be healthy.
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In terms of financial standing, the fitness industry is doing quite well internationally. In the U.S. alone, the growth in health club revenue is outpacing GDP, according to Piper Jaffrey’s 2018 report. From 1996 to 2016, U.S. health club revenue grew 3.5x, whereas GDP grew 2.4x. That is, revenue went from $8billion USD to $28billion, in 20 years.
Also, according to 2018 IHRSA (International Health, Racquet & Sportsclub Association) data, from 2009 to 2017, the U.S. experienced a 3.3% annual growth in gym members. At the same time, there was a 3.1% annual growth in gym goers.
And when we extend into other international markets, we see similar growth. In Europe, there was 3-4% annual growth in gym members, while a 3% annual growth in the number of gyms.
(“European Health”)
2.3. In Taiwan
The Sports Administration of the Ministry of Education has been aggressively developing more sports minded, health conscious, citizens. This can be seen in the development of “32 civil sports centers and 390 sports facilities of all types will be built between 2010 and 2015.”
(“Sports Affairs”, p. 44), and hosting the World Games in 2009, Deaf Olympics in 2009, and 2017 Summer Universiade. The government has also created programs to train more physical fitness trainers. All in all, the effect is that resources are available for citizens to use as they are becoming more aware of the importance of physical fitness.
2.3.1. Penetration Rate
However, when the percentage of citizens that join a club, i.e. penetration rate, is viewed, the percentage is quite low in Taiwan compared to other Asian countries in developed markets.
And even lower when compared to mature markets like in the U.S. or Australia. (Walsh) (Kufahl). In Taiwan, only 3 in 100 of all citizens has a gym membership, in 2016. That is far lower than other Asian countries (as seen in Fig. 1) and even more so behind the U.S. and Australia, which have a longer history of gym culture. The 3% rate is expected to rise with the advent of more gyms being available.
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Source: http://www.healthclubmanagement.co.uk/health-club-management-features/IHRSA-Asia-Pacific-Health-Club-Report/32770 ,
https://www.clubindustry.com/studies/ihrsa-reports-57-million-health-club-members-276-billion-industry-revenue-2016
Figure 1: Penetration Rate in 2017
Taiwan’s health club industry is in a so called second tier market in Asia. According to the IHRSA, second tier markets are “..rapidly expanding…fitness facilities and instruction are increasing in demand and professionalization…with a growing concentration of leading players.” (Rodriguez)
What is holding Taiwan’s health club industry from becoming a first tier one is the lower penetration rate compared to mature markets, and having less diverse choices in health clubs.
3 3.3 5.8 5.85
15.3
19.3
TAIWAN JAPAN SINGAPORE HONG KONG AUSTRALIA U.S.
Penetration Rate (as %) in 2017
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2.3.2. Further Data on Taiwan market from IHRSA
Based on IHRSA data from 2011 to 2014 (“Latest U.S. Data”), (Charts in Appendix) - 26% increase in gym-goers, from 460,000 to 580,000
- 41% increase in fitness clubs, from 131 to 185. And there is an estimated 300 clubs in 2019.
- 10% increase in fitness revenue income, US$333million to US$369million
2.3.3. Average Monthly Gym Membership Cost
Source: https://topics.amcham.com.tw/2016/09/fitness-industry-benefits-taiwanese-health-business-alike/
Figure 2: Average Monthly Gym Membership Cost by Country
Clearly there is growth in the Taiwan health club industry. And the average monthly cost of
$36usd ($1110nt) is affordable, as seen in the willingness for people to join gyms and the growth in the number of gyms. However, gym membership also seems to be lower than other countries because of income levels. Singapore has a GDP per capita of almost 2.4x that of Taiwan. (“Country Comparison”) And that is almost reflective of the 2.1x higher cost of gym membership in Singapore.
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On a side note, boutique gyms are priced higher than average, and Millennials with higher than average incomes also favor boutique gyms.
2.3.4. Types of Pay Models
The models for how Taiwanese pay for gym costs has changed drastically, in part from the defunct gym, Alexander. That gym had a pay up front model that seemed ok until the company went under and people were left with no gym and no financial return. As a consequence, the large sum payed up-front model isn’t used in Taiwan. Some typical pay structures include:
- Pay per visit. This model is common at government owned sports centers located through Taipei and New Taipei City. People pay based on how long they stay or for a one-time visit. For example, gym costs are $50nt/hour, and pool usage is $110/visit.
- Monthly fee. This is common in the big chain health clubs such as World Gym and Fitness Factory. Members pay the monthly fee at start of month. Costs typically range from $1000-$1400nt/month.
- Point Card. Light Fitness has members buy points. They then use them for classes whenever they want. And the card is exchangeable to others. Very popular with younger people.
2.4. Health in Taiwan
Sadly, one of the reasons for the growth in the Taiwan health club market is due to the health of the citizens. According to 2016 Taiwan government data and a 2017 survey:
1. Heart Disease is the #2 leading cause of death (behind cancer). And in 2016, 21,000 people died from cardiovascular disease. (Fulco)
2. 76% of Taiwanese don’t exercise enough. According to the WHO (World Health Organization), 150 minutes of moderate exercise per week is recommended. (Fulco) 3. Obesity rates in Taiwan vary by city, from 30-40% obese. New Taipei City has an
obesity rate of about 38%, whereas Taipei is 33%. (Lin)
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