Gym companies are making a killing in South Africa, where the industry generates more than R12.5 billion in revenue every year.
According to The Economist, this is the highest in the world. If correct, it means that the country’s largest gym chain, Virgin Active, makes about R7.5 billion in gym membership fees per year.
It was revealed in a case before the Competition Tribunal last year that Virgin Active controls at least 60% of the gym market in South Africa, with more than half a million members.
This week, Virgin Active SA refused to be drawn into the debate about its revenue. However, during an interview on 702 on Monday, the company’s managing director, Ross Faragher-Thomas said he was not sure how The Economist came up with this figure. “But it is a thriving and vibrant industry and it’s growing enormously.”
Virgin Active has enjoyed great success in South South Africa where it owns 137 gyms countrywide.
Chief operations officer for Gym Company Ian Hepburn said that although the R12.5 billion figure was a bit high, it was not too far off.
“An independent study we conducted two years ago showed us that Virgin Active controlled about 70% of the gym market.”
“When you multiply that 70% by an average of R500 monthly premium [Virgin Active] charges, it would make sense that the South African gym industry brings in those billions in revenue every year. But this is just an assumption.”
Hepburn said it was sad that more than two-thirds of the gym industry pie in South Africa was enjoyed by one company.
“Although Planet Fitness, which has 32 gyms across the country, and Zone Fitness, which has 22 gyms in Gauteng and Cape Town, get a big slice, it’s still not as big as the one enjoyed by Virgin Active,” he said.
Hepburn blamed this “unfair market practice” on medical aid schemes such as Discovery and Momentum that subsidise and reward their members for being part of Virgin Active, Planet Fitness and Curves gyms.
“If members were paying the full R500 that these clubs charge instead of R100 per month, many would have found other options that cost far less,” Hepburn said.
But Faragher-Thomas believes that members are attracted to Virgin Active by the different packages that the health club offers.
“The key to the attraction of any successful health club company is innovation and creating an offering that is accessible to a broad number of South Africans.
“Proximity of clubs, multiple membership-fee offerings and a range of services and facilities play a significant role in not only attracting members but keeping them engaged in their personal fitness goals,” he said.
Hepburn said the location of Virgin Active health clubs was also influenced by the relationship that the company has with medical aid schemes. “Landlords consider Virgin Active and other big players as low-risk because of their membership numbers, which are bolstered by medical scheme subsidies.”