It’s that time of year again when we look ahead and plan for the future. Being in contact both with leisure operators and employees on a daily basis gives us the privilege of seeing the leisure industry from multiple perspectives. That, teamed up with our crystal ball skills, means we can have a good stab at what is going to be big in leisure in 2016.
Here are our predictions for leisure industry trends in 2016
The end of membership plans?
2015 has been the year of the boutique gym. With the rise of budget offerings from big brands such as Xercise4Less, and the middle-ground being eroded, boutique gyms have filled the demand for more personal and luxury health and fitness facilities. Niche offerings such as cycling studios have popped up all over London and in other major UK cities.
On the back of this, eagle-eyed businesses have introduced pass schemes, giving members access to a wide range of gyms and fitness studios, often at a price much lower than going directly to the club. With access to a greater range of workout options at a cheaper price, pay-as-you-go passes such as those offered by PayAsUGym and ClassPass are a more attractive proposition for busy people who want more variety at a more economical price. It’s not hard to see why these passes are rising in popularity.
Sadly for the operators, it means an erosion in profit margins as they are putting forward the same offering but at a discounted price – and presumably the pass providers are taking a cut too – meaning many boutique leisure facilities are struggling to make a profit at all. While schemes such as these are great at picking up the slack in capacity, much like what the spa sector has been experiencing with deals from group buying schemes such as Groupon, in the long-term the special offers and “loss leaders” need to turn into sustainable custom and profit.
The general consensus from those that we speak to is to participate in long-term reduced membership schemes with caution. An over-reliance on this business model could well end up in a downward spiral where profits are significantly reduced.
It seems clear that these businesses are here to stay as they’re obviously popular with customers. New operators to the market will need to take heed and build their businesses with third-party referrals firmly in mind.
The rise of the franchise
2016 is set to be a big year for the franchised health and fitness businesses. Inside information suggests that several major operators are about to hit the market in a big way having sat under the radar whilst franchisees waited for suitable property to become available. We expect a huge number of franchised gyms opening in 2016, possibly over 100.
And it’s not just health and fitness. Our visits to spa and beauty trade shows also show a strong trend towards the franchise model with some interesting concepts on the horizon. Watch this space!
The National Living Wage
The National Living Wage paying £7.20 an hour for all employees aged 25 and over becomes statutory in April 2016. This is an extension of the National Minimum Wage, and up to now has been entirely voluntary.
The National Living Wage will mean an increase in pay for many UK leisure industry workers, especially those near the bottom of the wage tier. Rightly, the government do not want to raise wages too high for those aged 18 – 25 as this will stifle employment of those who desperately need the work experience to make any progress at all in their careers. But for those who employ a large number of lower-paid over 25s, the National Living Wage could make a huge difference to company profitability.
It is only right that those who have experience and skills are paid a wage which enables them to live without having to claim in-work benefits in order to pay for a roof over their heads or to feed their families, but this will inevitably put the burden back onto employers. It is expected that jobs will be lost in 2016 because of this but hopes are high for the labour-intensive leisure industry. Until robots can make effective and quick pool rescues, or give a good massage, or deal with nervous and emotional clientele, the human touch is very much required in effective leisure operation.
For employees it may mean better pay but employers will be expecting more for their money. However, it should mean better staff retention and engagement, as wage levels tend towards a standard and the incentive to move for a pay rise reduces. It will certainly be interesting to see what develops in the second quarter of 2016 and beyond.
Olympic (and Brazilian) Fever
August will see the much-anticipated Summer Olympics and Paralympics in Rio de Janeiro. Pessimists expect that Olympic fever will be much lower than when London hosted in 2012, and they are probably somewhat correct, but we still expect an interest in niche sports again come the autumn. Who knows what the breakthrough sport will be this year?
The British team are hoping to improve on their impressive medal haul from 2012 but it will be hard to beat previous years’ success in sports such as cycling. Athletics and swimming are tipped to give Team GB their biggest hopes. Expect a flurry of people in the pool trying to butterfly, dive, and synchronise their way to future Olympic glory.
A tennis renaissance?
With the recent success of Britain in the Davis Cup, we fully expect a rise in interest in tennis come the spring. Which leisure operators will be in the best position to offer this in 2016? David Lloyd clubs is the obvious answer, but we also expect a rise in membership of good old fashioned local tennis clubs, and a push in the school sports curriculum to take advantage of any rise in interest from younger participants.
Leisure trends in 2016
2016, like any year in leisure, will be dynamic and interesting. With such close ties to customer demand, the leisure industry will be shaped by how it can best serve its paying customers. What you can be sure of is whatever the future holds for leisure operators, 4Leisure Recruitment will be there to make sure they have the skilled employees that can make all the difference between a profitable business and a floundering one.