Is The Honeymoon Period Over For ClassPass?

0

LONDON, United Kingdom ClassPass has been holding crisis talks with a number of leading boutique fitness studios in London following their decision to quit the monthly subscription service.

Flying in from New York last week, for an event held by the company’s Studio Empowerment team, ClassPass Global Head of Operations and Partnerships, Michael Wolf, met with brands including 1Rebel and Core Collective in a bid to resolve the situation.

Both studios have since issued statements to confirm their renewed partnership with the popular platform. However, the dispute, ignited by proposed changes to the ClassPass revenue structure has left some studio owners questioning the sustainability of the model.

“ClassPass is devaluing boutique fitness with their ‘one size fits all’ approach,” explained one boutique studio owner who wished to remain anonymous.

“Their new proposed contracts simply aren’t sustainable for studios – they have offered us a much lower percentage than our usual class prices – less than in the previous year’s contract and it’s not feasible to operate with such low margins.”

Unhappy with a number of initiatives implemented by ClassPass since its launch in London in 2015 – including the site’s option for users to purchase additional classes via the platform (members are limited to 3 classes per studio per month), rather than direct with the studio as originally proposed – a handful of studios including Ride Republic and The Power Yoga Company, are set to exit the model.

ClassPass say that creating sustainability and driving growth within the fitness industry is one of their top priorities. The innovative brand, now valued at more than $200m, is committed to expanding the depth of its offerings and relationships with partners, which currently stands at almost 400 studios in London alone.

“We value our London partners and continue to pay out rates that are reflective of the market and fair to our partners, ” Wolf told Welltodo.

“ClassPass provides a platform for studio owners to share their craft on a larger scale and empower them with the tools, resources and technology to grow their business in a more sustainable way, which has garnered us more than an unprecedented 96% retention rate with our partners. We also offer our studio partners complete control and flexibility over their ClassPass inventory so that they are maximizing on the opportunities for incremental revenue as they see fit,” he added.

ClassPass has attracted over 15 million reservations to date, thanks to the flexibility and variety of classes found on the model. The subscription service, priced at £79 per month, endeavours to make high-end boutique fitness accessible to everyone.

For many studios the platform has helped introduce their brand of boutique fitness to a much wider audience as well as fill classes that might not have been booked – qualities that help to further inspire the booming fitness industry says Amalia Steel, co-founder of yoga fitness studio Ethos.

Is ClassPass in trouble?

Image: ETHOS

Having recently expanded to Spitalfields Market in London, the boutique studio is keen to replicate the strong community atmosphere found in its original location in Cambridge, and Steel believes ClassPass is the perfect model to help connect the brand with like-minded people.

“Our philosophy is based on integration of methods, which could not be more compatible with Classpass,” Steel explained. But not everyone is in agreement.

One studio owner who took the decision to leave ClassPass told Welltodo that despite acknowledging its place in the London market, due to the platform’s low monthly membership rates they feel it detracts from premium studio offerings.

“ClassPass provides many studios with an additional revenue stream, however we feel that the studios with a strong infrastructure in place need to develop their own customer base, identity and hone in on their individual business models,” the anonymous source explained.

The potential for ClassPass to de-value boutique brands, is one of the reasons high-profile studios such as Barry’s Bootcamp and Heartcore have not integrated with the model.

ClassPass were unable to discuss the specifics of any of their negotiations with partners, but the brand appears to have won back favour with at least some of its London clients. An email from Core Collective acknowledged that the rather public ‘dispute’ had now been resolved, before confirming that ClassPass access would resume to its previous levels.

1Rebel has been in crisis talks with ClassPass about changes to the model

Image: 1Rebel client email sent Thursday, 17 March 2016

 

For other studio owners, ClassPass is no longer on the agenda; the lack of a tiered system for studios and add-on services allowing members to top-up at individual studios being deal-breakers.

Generating more than $100 million in revenue, the departure of a small handful of studios is unlikely to be a strain on the company’s exponential global growth – currently in operation in 39 cities across 3 continents, including 8,000 studios and gyms.

However, for ClassPass to maintain its impressive membership figures it requires high quality clients. A dilemma that dynamic studios may leverage in order to mould the platform into a service that works as much to their advantage as it does for ClassPass.

For now, ClassPass is said to be committed to investing in their partners in a bid to encourage growth.

In the United States, the company has launched a host of new initiatives to ensure this, including loans to help facilitate studio improvements or open new locations.

The scheme is yet to be rolled out in London, but ClassPass is actively initiating heightened conversion and connection with studio clients on a global scale.

Welltodo Newsletter

Share.

Comments are closed.