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LIFE TIME SHAPES UP TO BE GYM CATEGORY KILLER

By Kathy Showalter

A Life Time Fitness center can be big. How big? Well, think not so much fitness club as fitness mall. Even fitness town would be nearer the reality, in some cases. But the place is typically way beyond “gym” Big.

The 140,000-square-foot unit seated on 10 acres in affluent Dublin, Ohio, could take a first-time visitor’s breath — even before said visitor were to begin panting on any of the 400 pieces of cardio, resistance and free-weight equipment; the two full-size basketball courts plus multiple squash and racquetball courts; climbing wall; indoor and outdoor aquatics centers with waterslides, lap pools and zero-depth recreation pools; or the saunas, steam rooms and whirlpools.

On one side of the grand entrance is the Life café, the place for nutritious meals and snacks, shakes, bars, vitamins and supplements; on the other side is the Life spa, where members can book a haircut, massage, manicure or pedicure. The child-care center contains its very own gym. And after the workout, there are plenty of towels for the whole family, enough to soak up Lake Michigan.

But Rob Zwelling, general manager of this branch, which is one of the company’s largest and newest, says he is unshaken at the prospect of building a membership to support the operation. For seven years he managed a smaller Life Time center 10 miles southeast, in Columbus, at Easton Town Center. There he learned that good customer service keeps new recruits flowing through the doors. “It’s part of our branding,” Zwelling said. “Every one of our departments has objectives, and one of them is to say hello and goodbye anytime a member comes in or goes out of our door.”

Last year Life Time generated $511.9 million in sales, two-thirds of which came from monthly memberships that range from $49 for an individual seeking just the basics to almost $220 for a family that wants access to all the services. Memberships can be canceled at any time, with 30 days notice — an unusual policy indeed in an industry dominated by yearlong contracts.

“We have to earn our members’ business every time they come,” CFO Michael Robinson told analysts in September. Life Time aims to expand the number of its centers by 15 percent yearly, excluding acquisitions, Robinson said. The company is on track to open nine centers this year and 10 next year, and planners are already working on developments through 2011, he said.

At press time Life Time was set to open a second store in Atlanta, and it has also been expanding in Dallas and Austin, Texas. In any given year somewhere between 50 and 65 percent of the company’s new clubs open in places where it has already established a “beachhead,” Robinson said.

The chain’s centers range in size from 10,000 square feet to over 200,000 square feet, Robinson told analysts. A facility can have one floor or six, and it costs about $30 million to build one of the larger ones. The company will either buy land or lease it over the long term, as the situation warrants.“Our architects have developed a prototypical set of design and construction plans and specifications that can be easily adapted to each new site to build our current model centers,” said Jason Thunstrom, Life Time’s director of corporate communications.

Life Time tries to identify individual members’ needs, including personal fitness classes and training, weight loss programs, team sports and summer day camp programs.

Nearly 77 percent of Life Time’s customers own a home with a median value of over $320,000. Roughly 75 percent report household income of at least $75,000 a year and have two or three children.

Established Life Time centers maintain about 11,000 memberships annually. And a new center can, by means of advance sales, generally draw about a third of its target membership by opening time. Further, one of these clubs typically reaches about 90 percent of its anticipated peak membership within three years of opening.

The Life Time unit at Easton anchors one piece of that development, but the Dublin center stands alone, with multilane roads surrounding on three sides. “You should have seen this place this summer,” Zwelling said. “It was hopping.”

That draw has persuaded Steiner + Associates, which brought Life Time to the Easton shopping center seven years ago, says Beau Arnason, Steiner’s executive vice president in charge of asset performance. “They provide a great service to those who shop Easton,” Arnason said, “and from a tenant standpoint, Life Time Fitness benefits tremendously from their high-profile location there.”

Though Easton does not track the cross traffic between Life Time and other tenants, Arnason, himself a Life Time member, says he sees cross-shopping all the time.

“Anecdotally, I think all the Life Time members shop Easton,” he said. “I see them go from Life Time to Starbucks every morning, or if they work out after work, they shop or go to a sushi restaurant across the street. It’s all about a healthy lifestyle.”

Joe Moore, president and CEO of the Boston-based International Health, Racquet & Sportsclub Association, says Life Time is raising the bar in the U.S. fitness industry, which posted some $17.6 billion in sales last year. “They give great value for the dollar,” Moore said. “It’s been a wonderful addition to the fitness community.”