Lifetime Fitness 2010 Annual Report Download - page 11

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5
Increase membership and optimize membership dues.
Of our 89 open centers at December 31, 2010, 69 had reached maturity, which we define as the 37th month of
operations. Our goal is for a mature center to operate with at least 90% of targeted membership capacity by the end
of its third year of operations. Due to recent economic conditions, our mature centers, in the aggregate, are currently
below our 90% target.
We have 20 centers that have not yet reached maturity. These 20 centers averaged 65% of targeted membership
capacity as of December 31, 2010. We expect the continuing increase in memberships at these centers to contribute
significantly to our future growth as these centers move toward our goal of 90% of targeted membership capacity by
the end of their third year of operations. Our membership levels for our non-mature centers were as follows:
As of December 31,
2010 2009 2008 2007 2006
Non-mature centers ........................................................ 20 24 36 32 28
Non-mature centers percentage of targeted capacity ..... 65.3% 64.0% 62.6% 66.4% 65.3%
In addition to increasing membership levels, we focus on optimizing our membership dues by improving the mix of
our memberships. Our membership dues mix can be improved by increasing the number of members covered under
a membership (for instance, an individual to a couple membership, or a couple to a family membership). In addition,
a member can upgrade a membership to a higher plan level (for example, from Gold to Platinum).
In order to achieve and maintain our membership goals, we focus on demographics, center usage and membership
trends, and employ marketing programs to effectively communicate our value proposition to existing and
prospective members. We also offer a membership option, referred to as a Flex membership, for members who do
not access the center, but still want to maintain certain member benefits.
Increase products and services revenue.
In 2010, revenue from the sale of in-center products and services grew $33.6 million, or 14.4%, to $266.4 million
and we increased in-center revenue per membership to $440. We believe revenue from the sale of our in-center
products and services will continue to grow. Our centers offer a variety of in-center programs, products and services,
including individual and group sessions with certified professional personal trainers, LifeSpa services, member
activities programs, wellness programs, pilates and yoga, tennis programs and the food and beverage from our
LifeCafes. We expect to continue driving in-center revenue both by increasing sales of our current in-center
products and services and introducing new products and services to our members.
Revenue from ancillary businesses grew $5.3 million, or 39.8%, to $18.8 million, which was due primarily to
growth in athletic event revenue, including revenue from recently acquired athletic events. In addition to athletic
events, we believe revenue from the sale of our ancillary products and services will continue to grow in other new
business categories for us, including training and certification programs and corporate wellness initiatives.
Our Industry
We participate in the large and growing health and wellness industry, which we define to include health clubs,
fitness equipment, athletics, physical therapy, wellness education, nutritional products, athletic apparel, spa services
and other wellness-related activities. According to International Health, Racquet & Sportclub Association
(“IHRSA”), the estimated market size of the U.S. health club industry in 2009, which is a relatively small part of the
health and wellness industry, was approximately $19.5 billion in revenue and 45.3 million memberships with
approximately 30,000 clubs. Based on IHRSA membership data, the number of health club memberships in the U.S.
increased 10% from 41.3 million in 2005 to 45.3 million in 2009. Over this same period, total U.S. health club
industry revenues increased 23% from $15.9 billion to $19.5 billion.