Solved Case Analysis: The U.S. Health Club Industry, 2005-2016 By John R. Wells and Gabriel Ellsworth

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Description

In 2015, the U.S. health-club industry generated revenues of $25.8 billion, up from $14.8 billion in 2004. Members of health clubs accounted for 17% of the population, up from 14%. The number of clubs had grown from 26,830 in 2004 to 36,180. In the process, the list of leading chains had changed significantly. While a higher proportion of Americans exercised on any given day, the majority still did not, and the average number of hours exercised had remained essentially flat. Meanwhile, the prevalence of people classified as overweight and obese had grown from 66.3% to 70.2%. A slowdown in growth and other challenges that the health-club industry had faced since 2004 meant that investors were more careful with their money. The steady rise of LA Fitness to industry leadership with a 7% market share suggested that there were still opportunities for consolidation. However, some observers argued that the industry would always be fragmented-it was simply too easy to enter. Another key debate concerned how best to position in an industry where new formats and business models proliferated. The sector had attracted a great deal of private equity in the past. Would it prove a good opportunity for investors in future?

Publishing Authority:

Harvard Business Review – Harvard Business School

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