Competition hits gyms’ bottom line

Council-run gyms are cutting membership fees and predicting lower profits because of competition from franchise fitness centres in the South West.

Last month the Bunbury City Council discussed cutting the joining fees at the South West Sports Centre for full, family, corporate and concession memberships to a flat fee of $35, a reduction of 64 per cent on fees for this financial year.

A budget review by the Dardanup Shire Council found money from Eaton Recreation Centre fitness memberships was expected to come in $35,000 below budget projections.

In the review, the 7.5 per cent drop in income was attributed to increased competition.

The report notes multiple new centres and personal trainers had set up business in the region in the past two years.

Dardanup shire chief executive officer Mark Chester said the council may have overestimated the revenue the centre could gain in a financial year.

“The franchises are having an impact because people can get in 24/7, so people can go as they please but at our centre there are restricted hours, ” he said.

“I think we may have overestimated how much we would gain in profit and underestimated the impact of our competition.

“We have good, up-to-date equipment and provide an enjoyable environment. I hope these factors contribute to members staying.”

It is not just council-run gyms which are feeling financial pressure – small independent fitness centres are also struggling to compete with the new franchises.

The Exercise Club of Bunbury manager Michael Leslie said despite being around for almost 19 years, the gym’s facilities would have to be upgraded to keep its members and attract new ones.

“A lot of big franchises are coming to town which are very competitive and are growing, ” he said.

“It is pretty challenging at the moment. You need something different than other gyms to be competitive.

“There are more and more people getting into fitness, though, which is lucky for the gym.”

Dardanup Shire Council expects its costs to run Eaton Recreation Centre will grow from $115,192 in 2012-13 to $126,583 at June 30, 2014.

In part, more funds are needed to pay for the long service leave of its manager and renewal of the centre’s electricity contract at a higher cost than before.