As high-end fitness operators continue to defy the cost of living crisis, Third Space is bolstering its London footprint.
What’s happening: With backing from private equity firm KSL, the luxury health club operator is targeting explosive growth, adding four new sites to Clapham Junction, Moorgate, Wimbledon and Battersea –– boosting its portfolio to 12 clubs across the capital.
Despite COVID, its lockdowns, and now the current squeeze on consumer spending, Third Space’s existing clubs—featuring multi-functional training spaces, fitness studios, swimming pools, spas, medical centres, and altitude chamber—are set to generate in excess of £70M this year.
With the addition of the four new clubs, the brand’s CEO Colin Waggett told The Times, he expects that figure to rise “well above £100 million”.
What it means: As economic headwinds continue to impact the fitness industry, a December YouGov poll found that 10% of UK adults have either cancelled or are considering cancelling their gym membership.
Yet, others—especially wealthier consumers—have deemed wellness spending as an essential part of their lifestyle, prioritisng a holistic approach to their health over other social activities.
Chasing growth. While European budget gyms like PureGym and Basic-Fit make gains with new members seeking a low-cost price tag, on the other end of the spectrum, amenity-filled premium operators see growth ahead:
- The Club by Bamford, a members-only health club—with spa, wellness clinic, and restaurant—will open this spring at Daylesford Farm in The Cotswolds, UK.
- Buoyed by recent membership growth, Equinox will launch additional sites in New York and Washington DC throughout 2023, bringing its total footprint to 128 clubs across the US and UK.
- Pillar Wellbeing, a wellness hospitality concept centred around high-performance living, will debut its luxury fitness facilities, bespoke nutrition and recovery treatments in Doha and London later this year.
- Last year, RSG Group acquired the Spanish portfolio of luxury health club Holmes Place and recently opened wellness social club HEIMAT in Paris.
But, there’s a membership ceiling on high-end clubs — and they know it. In the US, luxury operator Life Time raised prices this year, targeting 10% fewer members who pay 20% more in dues.
Takeaway: While current tailwinds are helping high-end fitness operators outperform the market. As the cost of living crisis endures, however, their forward momentum will depend on their ability to deliver holistic wellness experiences that can’t be replicated elsewhere, convincing consumers their lifestyle is priceless.