LIFTS Episode 96 - Exercise Is Medicine: Inside the 2025 Global Fitness Report with Liz Clark & Anton Severin of HFA

0:00Frankly, everybody that works at a gym or runs a gym are really frontline healthcare workers that should be seen that way. 70 % of adults now qualify as a beast. That's up to 40%. And for adults over 70, that number approaches 80%. Wellness has become the new anchor. So when you think about, you know, some clubs before were looking at boutique as an anchor, I think wellness is now what really people are looking at as an anchor. How do we make sure that what a ring is reporting is the same as what a watch is reporting, is the same as what a treadmill is telling you? And how do we get sort of all the manufacturers on the same page?

0:41Matthew Januszek:Welcome to this week's episode of Lyft. I'm Matthew Januzek, and I'm here with my co-host Mo Iqbal. Mo, you are totally the opposite side of the world today. I think we're literally the opposite side of the world. Yeah, we're recording this. I'm in Sydney, Australia. And Matthew, along with the guests, you both are on opposite coast, but it's been quite the trip. I'm here for South by Southwest in Sydney, and I'm really excited. I'll be speaking and doing a presentation along with Amber Taylor, who I've known for a long time from Les Mills. One of my colleagues, Emmett from ABC Fitness, will be talking about a really cool topic, which is psychology and AI and fitness.

1:27So we're excited for it and really happy to be in what I think is one of the most beautiful cities in the world. I just went for a run this morning and just running outside the Sydney Harbor is just beautiful.

1:38Matthew Januszek:Very good. I'm very excited about this. For years, I've followed these reports and Mo and I had a little bit of a backwards and forwards as we were preparing for it today. And I mistakenly called it URSA. It's one of those things I still can't get out of my head. I don't know if I'm on my own on that front, but as long as I've been in the industry, which is sort of 25 plus years, I've always looked forward to these reports that come out to see what's happening in the industry and who's growing. And this year, this report was also pretty interesting to see what's happened. So I really appreciate the opportunity to speak to the crew from Health and Fitness Association and talk through the report.

2:24See, that wasn't that hard, was it, Matthew? No, he didn't. Well, no, you're right, Matt. It is a special edition because the conversation on this report, which we've seen reports for many, many years, but this one's special because it's about, this conversation we're about to have defines where our industry goes next, and it's really forward-looking. And today we're joined by two people who are leading that charge, Liz Clark, the president of Health and Fitness Association, formerly called URSA, and Anton, who is Health and Fitness Association's VP of Research. And if you're not familiar with HFA, formerly called URSA, it is the global trade and advocacy body for health and fitness.

3:07It formerly, as I mentioned, was called URSA. It represents over 150 ,000 health clubs and 230 million members worldwide, which is just massive. HFA is really focused now on driving policy, promoting data transparency, publishes reports like the ones that we're about to talk about. It helps operators, investors, government agencies to understand the economic and public health impact of physical activity. And at the helm of that is someone who I call my neighbor because she literally lives less than a mile away from me when I'm back at home in Arlington is Liz Clark. Liz Clark is, if you don't know her, is a powerhouse.

3:47She's little, but she's big in her voice and in her impact. And she's really, you know, she took over HFA, I think it was in 2021. And you've really rebuilt the organization, reinvented it, gave it a new identity post pandemic. You've also, I would say repositioned it more from a trade group that puts on trade events to what I'm looking at is really a global public health partner. So Liz, Anton, welcome to Lyfts. Thanks for having us. I'm excited about this today.

4:21Matthew Januszek:Great to be here. There's certainly a lot of a long list of things that we wanted to talk about. But one of the things that came in literally a few minutes before the podcast started was a new study that came out. And I thought this, although it's not really related to the report, it is related to the industry we're in. So I thought without sort of putting you off guard too much, I just thought I'd start with this. And essentially, it's about this study that came out this week, which expanded the clinical definition of obesity. And overnight, nearly 70 % of Americans now fall into the category up from 40%.

4:57Matthew Januszek:And so I was curious from your vantage point leading the global fitness industry, how should we interpret this? Is this a crisis, a reclassification, or perhaps maybe a wake-up call about how the fitness industry and the medical industry could and should be working together? I think that it's fair to say that this is a crisis and it's a crisis of greater consequence than we've ever seen before. We've known that we've been in crisis mode for many years as an unhealthy nation and continuing to get more obesity is problematic, especially for children and what that means. So one thing that we're trying to do here at the association is to change the narrative and change the way that we talk about what it is that our industry does.

5:44And exactly to your point, Matthew, working closer with the medical community, because one of the things that I've been saying since I got in this role is that we are preventative health care. And frankly, everybody that works at a gym or runs a gym are really frontline health care workers that should be seen that way. So for me to see scary numbers like that, I think it's something that we need to work together on. Anton can talk a little more about his perspective from the overall data. But I'll tell you, even just this morning, we were on a call with the World Health Organization and talking about how we continue to be working closer and closer to make sure that this narrative is being heard by the right people and then ultimately being able to create the policies and implement them to really make a difference.

6:38Yeah, and I would just say, like, I did briefly read the study you were referring to there. Matt and I would just say that unfortunately this is one in a another piece in the puzzle of a long row of research that we see come out that that that highlight dire public health metrics right so obesity is certainly being one but we also see like increased rates of you know everything from cancers to to declining mental health status of you know both adults and and adolescents and we know right that physical exercise and structured exercise is a key part of the solution to a lot of these public health crises and so like we are you know committed to certainly like highlighting the the data the evidence-based backing that we know is out there to to you know help promote to protect and grow our industry.

7:39And, you know, that is something we do on a daily basis. With this new standard that has been now endorsed by the American Heart Association, this is crazy, but 70 % of adults now qualify as obese. That's up from 40%. And for adults over 70, that number approaches 80%. So what's different, it's not that people got, you know, obese overnight, but it's really how to define what a B3 is, which I kind of like. The new definition includes metabolic dysfunction, inflammation, and body composition markers, not just BMI. So for years, us in the industry, we're really critical of BMI. BMI is not a really good indicator of health and wellness, but that's how we've defined obesity.

8:20Now it's taking these other three markers, which I think are really important. That's just not semantics. I mean, this is a seismic shift. It means that almost 230 million Americans are now considered metabolically unhealthy. We've never seen a number like that before. I think it's really fitting because it hits at the exact moment of this year's HFA report where you call fitness essential, not optional. I really loved how you framed that. So Liz, question to you is if you could capture the headline of the 24-25 report, what would it be? We're in crisis and it's our responsibility to address it however we can.

9:04And I think everybody with the different modalities that all encompass this entire industry, which I know that we'll talk about that later, but how does everything from not only just a strength and weight training, a cardio workout impact this crisis, but is there science around other pieces of this industry? Is there science around recovery of cryo, red light, stretching, yoga, Pilates? I think all of that is going to be really interesting, that everybody needs to be part of the solution. We need to realize that this is a crisis together that is fixable if we're willing to help lead.

9:48Matthew Januszek:Generally, when I've read the report, it has seemed as though a lot of the information comes from the US, I guess, with that being one of the biggest markets in the world, it's obvious why that would happen. But probably just as a start point, I wanted to kind of get your thoughts on the international side of the business and the report to get your views on what were some of the sort of surprising data that came back from the international business that may be different to what you're seeing in the US, if anything? I think there's a lot, and I think Anton can answer that in a second. I'll just say that similar to Mo, I've also been a road warrior in the last few weeks as well and spending a lot of time internationally talking about our global report, sharing key findings from it.

10:40We were recently in Amsterdam for our European Congress event, followed by Dubai in the Middle East and and MIFIT in a conference there. So really interesting data and stats about penetration rates that, again, Anton's much closer to sort of the key interesting findings, but there certainly are many. And ones that I know that in these markets around the world are very interested to see, but then also challenging themselves to improve, which is, I think, a great message. But maybe, Anton, if you want to share some of the more of the highlighted data, that'd be great. Yeah. Yeah, no, I mean, as you note, Matt, I mean, the US market is, you know, from its position as the foremost markets in the world, like has, I wouldn't say like an outsized role in how we talk about the industry, but probably like an appropriate size, the impact it has.

11:40But, you know, I think the story that comes through from our work going into the global report is really one of a global industry that's currently in a period of both resilient growth, optimism and transformation. And that really carries through all continents of the world. So the global report basically covers a selection of 30 markets around the world. And it varies what sort of data we have access to in various markets. But for all the countries where we do have comparable year-over-year data, we did see a robust growth in key metrics, such as industry revenue was up between 5 % to 11 % across these group of markets.

12:32like with a median of 8 % facility counts were also up by 4 % on average. Memberships was up by 6%. And when we take that research with some of the other data that we put out, for example, two weeks ago, we put out our fitness industry benchmarking report that kind of looks at key operational and financial metrics and kind of provide benchmarks, we see that, again, like across the board, we are in a period of having a very healthy industry where, again, like average revenue growth is close to 10 % both in the U.S. and internationally as well. And so while, yes, while we tend to talk a lot about the U.S.

13:24markets, it is important to highlight that there are a lot of very healthy markets out there. I mean, UK, Germany and Europe, for example, like, you know, are kind of like the number two and number three markets when it comes to both memberships and industry revenue. But also, right, there is another part of the story, which is the huge potential and untapped potential that's still out there. So take, for example, the country of India, where we recently published an extensive market report in collaboration with Deloitte. So this is a market that has a membership penetration rate of less than 1%.

14:06Still, they're generating about 2 billion USD per year in revenue. And the penetration there is expected to double by the end of this decade. Similarly, we're seeing countries like Japan, Saudi Arabia, Brazil that have penetration rates around 5%, 6%, 7%, still generating$2 billion to$3 billion in revenue each year. So there is a lot of momentum. There's a lot of optimism in this industry, but there's also a lot of potential for continued growth going forward. We constantly keep on talking about how we feel like this year is one of the most optimistic years. And just looking at this report here, one I think is just really nicely done and thorough.

14:55Gym penetration in the U.S. hit 24.9 % in the U.S. with record highs across Europe and Asia Pacific. And I know, Liz, you and I talked about your goal of wanting to hit 30 % by 2030, which is awesome and ambitious. But there's a clear cultural shift. fitness, I think, is now really being seen, at least in more developed nations, as part of the healthcare continuum. Globally, this report tracks 250 million active members, 77 million in the US, 72 million in Europe. And you've seen, as you mentioned, Anton, double-digit growth in Latin America, Asia. I think India, with under 1%, I think you mentioned in the report, is 0.8 % penetration gives you decades of runway for sustained growth.

15:37So even though we may think that certain markets are close to peak in the near term, there's a lot of opportunity. And I don't think this is a short-term rebound, right? And you think from the whole, one of the interesting things about the report is revenue per member, and I think you touched on that, Anton, is up 17%. I think that's correct, since 2019. You've got churn is down. And then additionally, members are engaging across multiple categories. As you see, gyms add more services from digital recovery nutrition members are spending more money spending more time and more engaged with the brands and i think that was really um a really welcoming thing to see because i know the industry's been pushing for that for a long time yeah i think an important kind of point of context here to note as well right that a lot of this growth that we're seeing and that we've seen uh since since the end of the pandemic has happened against the backdrop of quite challenging macroeconomic environment, with high inflation rates and a regulatory and policy environment that hasn't always been the most favorable.

16:43So this growth is happening in spite of that. And that really speaks to how consumers are rethinking their relationship with exercise. that this is not a discretionary spending that's subject to cuts in a tough economic environment. This is core to who they are. This is increasingly core to their core spending, household spending. And increasingly, it's also being seen as core to their health and their health care. And if I could just add to that, Anton, I think this does reflect, if you look at some of the older data studies that came out a year or two ago, that was finally we're seeing people are working out first and foremost for their mental health.

17:30I think that is a huge change in where this industry was founded and people are prioritizing their mental health. I think we are seeing really interesting developments coming up with the younger generation, sort of a sober, curious generation, if you will, kids that would rather go to the gym than go to a bar. And we've seen some other reports that if there was expendable income, people would cut travel, they would cut restaurant eating, but they wouldn't cut their gym memberships. So there is like a devotion to the industry and to their habits, which I think is really positive and really encouraging.

18:09And I think that's what those were early trends that we saw. And now this is the report that reflects all those numbers.

18:15Matthew Januszek:In the report and tying into your last comments, it mentions gyms are gyms as these third places. and and i guess if you know partly i guess the reason for the change from the name from ursa to now maybe the health and fitness association i remember speaking to you about this a number of years when this came out but but it's almost like redefining what the health and fitness industry is when you use the terminology uh third spaces what does that mean in relation to sort of square foot allocation of some of these operators because there's now certainly a difference to what there was in 10 years ago.

18:58Matthew Januszek:Like just even on the fitness side, we're seeing some big shifts in terms of how people are prioritizing things like strength training, which is referenced. But also now we're seeing all this, almost like this move to what you would typically see in a spa facility where you have massage and you have some facilities now that are moving into things like IV, providing peptides. It's really becoming a very different space and how to define that is quite different. And within those businesses, there's probably subsections that are being very successful and other things that are dropping off. So coming back to my question, how do some of these changes and these areas of success relate to what you're seeing people allocate floor spaces to in terms of some of the services?

19:56So what I would say to that is I think we've seen a real rise in two major categories, and that's both the HVLP category as well as the luxury high-end category. So those ones are growing the fastest. Obviously, luxury high end, more square footage. People are bringing in all kinds of different modalities. I do think that there has been more of a shift back to strength away from cardio. I think that's going to be an interesting pendulum because that does swing back and forth. But we're seeing a lot of investment going toward that in both the HVLP and luxury high end. And like I said earlier, the different modalities of recovery are being brought in in many, many interesting ways.

20:42And I think we're going to continue to see a growth of that in a significant way. It's really a reimagination of the space. And I've got a few comments here. strength, to your point, is about, I think, 42 % of the total flow area. Cardio is a little bit down. Recovery and wellness zones are exploding, right? And there's so many new types of this, which we've seen. So I think, one, wellness has become the new anchor. So when you think about, you know, some clubs before were looking at fatigue as an anchor, I think wellness is now what really people are looking at as an anchor. And if you think about this, we've all been in the industry for a long time.

21:17Actually, Liz and Anton, maybe both of you are newer. Matthew, you've been here for decades, but I remember 10 years ago when we were talking about recovery, that was an upsell. Recovery was an upsell. Now it's the expectation when you go and you're to your point, you're seeing an HVLP and also premium. Then you see Lifetime investing 100 million in pick-a-ball and recovery. Equinox has partnered with Function Health. Yesterday, totally off topic, but my flight was diverted from Sydney to Brisbane because of bad weather. so I ended up going to check out a gym that Matt and I have been talking about for a while called Total Fusion and let me tell you it talk about a third space it is incredible I've never seen anything like it it blends Equinox with the remedy place it's recovery at the forefront and it's something that I've never seen before so I think consumers are really redefining what quote-unquote a health club means and it's not like right now it's not just about lifting weights or doing some Cardi, it's about physical and mental community all combined.

22:19And to go even further, I don't think it's about getting the six-pack anymore. Yes, that would be great, but it's about lifespan and health. But these are conversations that are happening. So I think we are at the stage now where the gym is really becoming that third space. And the consumers want that. I think operators are evolving for it. Membership types and programs are reflecting that. So this is a transformation that I think we've been wanting for a long time and is now finally here? I think that we've got a great opportunity to even dig deeper down and track even that more specifically because we know people, when they're going into these gyms, are they going straight to the stretch lab?

22:59Are they getting on a treadmill? Are they going, are they lifting weights? I think we have some opportunity partnering with the wearable community, et cetera, as to say, how are people using these different modalities and what is growing. We know uniformly it's all growing, but I think that we're going to see some really interesting trends. I'll just say something though, and this came up at a recent conference I was at, that we as in this industry, when we use the word recovery, I think we all know what that means. But still, I think if you search recovery, you get drug rehab centers. So I think we've got some work cut out for us to really do some more defining of what that recovery sector really is and what that means moving forward.

23:48But this is all part of, again, what we understand as the industry, but maybe not quite beyond our borders, I think, just yet.

24:02Matthew Januszek:I didn't think of that. And we've talked about this quite a lot in a number of podcasts where this broad term recovery seems to mean so many things. But what does that mean to the end user? And are they understanding of buying it? And that's probably something that definitely needs some work. It sort of leads into my next question, which is, if you look at the average revenue per member, and although it doesn't necessarily provide this in the report, you could sort of roughly work this out. And as an example, if you look at, I've sort of broken it down into three categories, which is premium, which referred to where there's some significant investments being made and significant revenue increase that's being made at the top end.

24:53Matthew Januszek:And if you look at it, if you average it out over a year, it's between$1 ,500 and$1 ,700 on the premium end. In the midsection, it's around about$400 to$600 per year. per member. And then on the HVLP, it's somewhere in from 60 to 300 per year. And I was just interested to get your thoughts, because there's definitely seems as though there's a lot of opportunity on the upside in terms of the existing membership base. And that's to go from providing a real basic service where you're essentially renting equipment, which is a section of the market that seems to be doing really, really well, but it's certainly restricted by that price point.

25:41Matthew Januszek:And my guess is that there's a lot of pressure on the cost side, whether that's through labor, whether that's through building new facilities, energy for et cetera, all increasing. So it would seem as though particularly in some of the more developed markets like parts of Europe and the United States, that there is going to come to a point where we're going to be fairly limited to some of the expansion. And I think we're starting to see this slow down now. I think that's definitely having an impact on some of the manufacturers now because a lot of the growth on their businesses is from remodels and refits as opposed to new club openings.

26:22Matthew Januszek:So I was just interested in your views. How much of a focus should we be putting now in terms of increasing the value of that member and and that's not only the value to the to the operator but also providing more value to the member because clearly a lot of people that are going into many of these facilities have very little knowledge about what they should be doing what they should eat how they should train um how that how you know how going to a gym would apply to different people at different stages in their life men women etc and and so i was curious to get your thoughts probably probably to both of you really on that particular subject.

27:00Matthew Januszek:You know, what are your thoughts on, as an industry, we should be focusing on? And is this good news for the industry if we can find some ways of increasing value to the business owner, as well as the members that are coming into these facilities? So what I'd say to that is, I think we have a lot of work to continue to recruit trainers and group exercise instructors. I'm hearing from around the world how difficult and challenging it is to continue to grow that. And that is such an entry point for a new gym user. And we've seen that when you have a trainer or a group exerciser, you're more educated about your workout.

27:39You're more educated about how the machinery all works versus somebody that just walks into a gym and may not really understand even how to use some of the stuff or maybe they've been using it for a long time the wrong way. So I think that we have an opportunity to work closer with trainers and to bring more into our industry. But Anton might have a totally different perspective on that. No, I mean, I think there's a lot of points here you could hit on, but I think that's a very good one. So, you know, for example, again, like going back to the US where we probably have the most data, right? We see that over the past couple of years, so past five years, like there's a marked increase in how to what extent members engage with both personal training and small group exercise, small group training.

28:31So we've gone from back in 2019, 15 % of members had taken PT sessions in the past year. Last year, that was 23%. Similarly, when it comes to small group, that went from 28 % to 32 % in that five-year period. However, at the same time, we see that the average number of sessions that these people take each year has been going down. And we think that one of the leading reasons is that because there is just a shortage of staff and professional trainers to kind of help them and meet the demand that's out there. So I think there's a lot of work to do there to kind of meet that on top demand. And that's obviously like a potential growth area when it comes to kind of revenue per member as well.