Trading levels in January and February will show if fitness sector is recovering

The health and fitness industry continues to face tough trading conditions with first quarter results in 2006 crucial to continuing the early signs of recovery in the market.

Last year saw a hive of deal activity involving names such as 24 Hour Fitness in the US, and Virgin Active, LA Fitness and Holmes Place in Europe, as well as the £835m sale of Fitness First to private equity group BC Partners in September.

According to Deloitte leisure partner Adrian Balcombe, 2006 is likely to see further transaction activity, with many private equity houses considering exit plans for their health and fitness investments, after owning clubs – such as Cannons, Holmes Place and Esporta – for around three years.

Balcombe added that the sector’s performance in the traditionally strong post-New Year months will demonstrate how well it is recovering.

“The focus over the past few years has been on improving operational performance in the industry – with management from other leisure industries being introduced to health club operators,” he said.

“Although the industry is showing signs of recovery, the 12-month membership cycle means there is a significant lag in results being published to support this. The usual UK seasonal burst of activity in January/February 2006 will be when the industry can truly see if the tide in its fortunes has turned.”

See also Adrian Balcombe’s predictions for the industry for 2006 on p42 and Matthew Goodman’s analysis of potential merger and acquisition activity on p60 Health Club Management January 2006

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