24 Hour Fitness

Essay by joshua062971University, Master'sA+, October 2007

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24 Hour Fitness (high concentration in the Western U.S.) is a large part of the public health club market with the main competitors in their market: Bally's (high concentration in NE) Gold's Gym, and Wellbridge. 24 Hour Fitness has thousands of smaller unincorporated gyms and spas in the U.S. market that are a small threat at best.

In Asia, 24 Hour Fitness has entered through acquisition into two main business hubs (Singapore and Hong Kong). Other entrants have begun to make presence into Asia, California Fitness Centers, Clark Hatch Fitness Centers, Bally's also has plans to open 25 to 30 centers in S.E. Asia within the next few years 1. Gold's Gym also is presenting entry into the Asian Market through licensing with GlobalFit Industries 2.

Analysis of Firm and Change Drivers24 Hour Fitness has differentiation in it's IT and personalization of workout and nutrition tailoring that other clubs lack.

They also have an atmosphere of catering to the needs of their clients in the types of activities that they can choose from by providing several different types of clubs ranging from a standard health club to a more sophisticated high end model that could tailor to a higher end clientele. Another key piece to solidify this in the minds of their customers is their "All Club" option. This could be said to be a network externality that is a differentiation from the other clubs that have standard offerings. As more clubs with different amenities are added to a geographical location, the benefit is increased for those who choose the option.

24 Hour Fitness has continually improved their Revenue per employee over the past 5 years an average of 18% (Table 1) over that span. It is speculative to imply that it is through attrition or through improvements...