How to turn your Hotel Gym into a Profit Centre

How to turn your Hotel Gym into a Profit Centre

I have been raving on about this opportunity for a while now! Hotel gyms are often under utilised which means there is scope to market "exclusive" memberships to these facilities to the general public.

Just as the so called 'Six Star' Palazzo Versace has done on the Gold Coast in Australia recently. You can read more in this July 2016 article on the Herald Sun titled Gold Coasts Most Luxurious Gym opens its door at Palazzo Versace.

The article suggests the reason for selling just 80 memberships is to provide a more personal experience to those members. That is certainly one advantage to members, but I am sure that wasn't forefront in their minds.

The real reason they are doing this is to create a new profit centre for the hotel while at the same time preserving a reasonable degree of privacy and privilege to the hotel guests and other residents using the gym.

A careful balance between preserving the 'expectation of exclusivity' of hotel guests while increasing bottom line profit.

As a side note I can imagine that the residents of this hotel (there are residents with paid condominiums) might just resent "outsiders" being able to use the gym in addition to hotel guests.

Benefits of Selling External Memberships

Firstly lets explore the benefits of turning your hotel gym into a new profit centre...

More Capital to Fund Equipment

Increased revenue means more money to spend on equipment. This in turn provides benefits to the hotel guests using the gym.

Your external members will also be more demanding than hotel guests. They will certainly tell you what extra equipment you need, which ultimately makes the gym better for hotel guests.

Better Utilisation and Stimulation for Existing Staff

If you have a full time personal trainer or even front desk staff member then the extra visitors to the gym will provide more challenges and fulfilment for existing staff.

Personal trainers get bored easily, and they like nothing more than being active helping members.

Having a small number of external members will help provide enough work and interest for the existing staff - and attract more qualified people. It may even be sufficient to sustain a full time personal trainer.

Opportunities for Cross Promotions

External members who join your hotel gym will probably already be your raving fans. They will be super receptive to all sorts of promotions and events that are happening in the hotel.

This could include promotions for food and beverage, but also to other profit centres such as day spas, massage and other wellness products.

If you are a chain hotel or have multiple locations then the opportunities abound. You can now promote your other properties to your external gym members which they may not to be familiar with.

Cream off the Top

In effect, the hotel guests are subsidising the gym in the first place. That means you don't need reach a certain number of external members to break even.

Every new external member once you have invested in your new systems should be pure profit because the existing infrastructure, cleaning and maintenance costs should not change significantly.

A simple calculation of 100 members paying $12 per week returns over $60'000 per annum in additional bottom line revenue.

Provides a better atmosphere

There is only thing worse than a crowded gym and that is a completely empty one. By opening up your hotel gym to outsiders, you can be assured that at most times there will be some people exercising and providing some atmosphere and sense of belonging.

Many women do not like exercising at hotel gyms because they are often "empty" and lonely places.

Potential Problems

It's not all beer and skittles... There are multiple stakeholders to consider and things can go wrong by opening up your hotel gym to outsiders.

It's not something to rush into. Do your research and try to anticipate what could go wrong and then put systems in place beforehand.

Resentment from Hotel Guests

This shouldn't happen if you follow my suggestions below for capacity management. Or in other words, if you cap the membership at the right level, staged over time.

Hotel guests rightly have an expectation that a hotel gym will be more private and exclusive than a public gym. They will expect to be able to use (at the minimum) the type of equipment they require for their training session without waiting or queuing at all times.

If you are conducting regular guest experience interviews (either through a consultant like Raving or other means like online surveys) then you should be able monitor what guests impressions are and adjust external members accordingly.

Adherence to Club Rules

This one will depend on how you operate the gym in terms of whether it's staffed when open or 'self service'.

In a self-service or 24 hour gym scenario the gym may not be staffed at all times. However, you probably do have staff on the front desk who can do walk through's and monitor the behaviour of members in the gym.

The club manager can also monitor CCTV every morning to check on the behaviour of members discreetly.

Adherence to policies such as using a towel during a workout, not dropping weights and wearing appropriate attire will all be critical to ensuring a good environment for everyone.

In a hotel gym situation, I would recommend adopting a very strict "three strike" rule for paid memberships.

Just be careful with this, because if you are selling annual memberships only then you might need to refund memberships which becomes an administrative nightmare.

That's why the best way to sell memberships is weekly so you can cancel a membership without any bad publicity, legal issues or recourse from members.

Selling memberships weekly also permits you to give a short notice period to rescind the whole scheme if there are any significant problems.

Safety & Security

All external members should be ID checked, have their photos taken and be subject to recorded CCTV surveillance at all times. That is the only way to ensure you can monitor and control external member behaviour.

Having CCTV connected back to the front desk is also critical, as is a telephone that dials reception immediately when picked up for any emergencies whether medical or other.

On the positive side - these enhancements to the gym will only improve your guest experience for regular hotel guests.

How to Implement it Correctly

Audit your Equipment

You will need to make sure your existing equipment is adequate for the requirements of external members.

Let me make this clear. External members will be much more demanding than hotel guests, so you need to make sure that you have a broad range of equipment that satisfies their needs.

That means your cardio section should have the essentials like treadmills, cross trainers, bikes etc.

Your strength section should have sufficiently heavy weights to satisfy the ongoing needs of regular members and not just people passing through for a few days. Weights ranging from 1kg through to at least 25kg are essential in this regard.

That may also mean beefing up your flooring and air conditioning to handle the extra member numbers and more intense use of equipment.

Branding

Opening up your hotel gym to external members is the perfect opportunity to consider establishing a separate brand from the gym.

Just as you may already brand your hotel restaurant, it's a great strategy to brand your hotel gym and not just give it a generic name.

Test the Concept First

Turning your hotel gym into what is essentially a public gym and new profit centre is not something you do lightly. We recommend doing a soft launch of the concept and promoting it exclusively to past guests of the hotel with a very low membership cap.

For example, a typical gym can sustain approximately 100 members per 200sqm of space. Most hotel gyms are modest in size at around 150sqm to 300sqm.

The best way to determine the cap on memberships would be to audit the gym during peak times and calculate the % occupancy of each section of the gym.

For example, your gym probably has a cardio section consisting of treadmills, cross trainers and bikes. Each of these sections should be audited at peak times to see an average usage.

You can then work with whatever 'capacity' you have to sell to the general public taking into account the current loads.

How much spare capacity you leave for existing hotel guests just depends on your branding and positioning.

You want to make sure that each section of the gym (treadmills, cardio, weight floor) is not pushed beyond capacity by allowing more outside members in.

The beauty of doing a soft launch and ramping it up over time is that you can control numbers and also charge a higher price due to scarcity.

Let's say you launch the gym with just 20 external members. You can then audit the gym over a month to see what effect these extra members are having on your equipment utilisation.

The last thing you want to do is pull a number out of thin air (as it would appear Palazzo has done) and declare that there will only ever be 80 members.

A better way to implement it is through a waiting list system where interested parties subscribe to an email list where they express interest in joining the gym.

Then every 2-3 months you 'open up' this waiting list and make time limited offers to these people to join through an email automation system.

Another great way to do it would be via a refer a friend system. So you may start with a modest number of new external members (let's say 30).

You then make new memberships only available to friends of the existing members. This is the typical way 'Country Clubs' operate, and this works extremely well for exclusive gyms inside 5 star hotels.

Access & Discount Cards

Palazzo was definitely smart to offer members a 15% discount at their hotel. After all, they are there already and they might as well have lunch or dinner after they workout.

Just make sure your POS system is capable of implementing this type of discounts and that all staff are appropriately trained and aware of the arrangement. The card should clearly state "Please present at time of bill" so there is no extra burden on service staff to reprint checks.

Ideally the discount card would be the same card used to access the gym and provide clear instructions on it for this purpose.

The best card for this purpose would probably be a credit card style ID card with photo identification printed on it. This also makes checking into the gym possible without going through an actual access control system.

Conclusion

Just about every hotel that has a reasonably well equipped gym can turn it into a profit centre. The benefits outweigh the disadvantages in most cases, notwithstanding the initial capital investment required for setup and the ongoing management.

My main recommendation would be to take things slowly and implement changes in stages, taking the time to listen to and respond to feedback from guests.

If you have any questions about turning your hotel gym into a profit centre, please post below in the comments and good luck!

 

Chris Jack is the editor of Locus Focus and a professional hotel photographer based in Brisbane with over 20 years experience in digital marketing. He also hosts the weekly "Sharper Hotel Marketing" podcast.