Working Out

South Pacific Health Clubs

Chances are, during the summer you made new-year promises to get fit, get rid of a surplus of kilos and generally improve on your health. If it has lasted this long, you deserve a pat on the back.

In Victoria at least, it will be easier to keep in shape because of South Pacific Health Clubs, an organisation that has expanded rapidly over the past couple of years. South Pacific is meeting with success due to its down-to-earth approach to giving people of all ages and sizes what they want and need in the way of not just facilities but also – importantly – a pleasant environment in which to work out, get fit, tone up or just stay healthy.

South Pacific is owned by Conn Constantinou, who tells Business in Focus he started some two decades ago as a personal trainer – except in those days, as he now says, “they were not called ‘personal trainers’. They were ‘gym instructors’. Things were very different then.” This was of course before the whole business of keeping trim became fashionable. “It was a very basic industry back in those days.”

But technology came to the gym. Equipment became more complex – and therefore less attractive for people to have in their home because of the expense and the space required. “As the technology improved, so did facilities and as the industry started to mature, more services and products were offered, which gave people more variety and thus interest in trying to get fit and lead an active, healthy lifestyle,” explains Conn.

In the late 1980s he was running a couple of “basic gyms” in Melbourne. Then in 2001 he opened the very first South Pacific Health Club, located in the Iconic St Kilda Sea Baths Complex; being an absolute beachfront property it offered uninterrupted views over the bay. This grew rapidly from a small health club into today’s multi-service facility (indeed 2014 will see St Kilda’s tenth renovation). In the meantime Conn opened another club, a brand new purpose built facility on the corner of Bourke and William St in Melbourne CBD.

In 2011 there was an opportunity to snap up another beachfront site at Port Melbourne. “Our philosophy has always been to go for unique locations,” he says. “This was a 140-year-old bluestone building directly overlooking Port Melbourne beach. Being heritage listed we could not change too much, but it had such presence,” and was added to the South Pacific brand, as was another taken over at Williamstown. Then in mid-2012, Conn was offered the chance to buy two more clubs from another chain, at Malvern East and Nunawading (both Melbourne suburbs). “The timing was not perfect, as we had only just opened the Port Melbourne club, but we did plan to grow and the opportunity was there, so we acquired them in 2013,” he shares.

Conn explains that the structure of his operation differs considerably from that of the previous owner of the most recent acquisitions; “our focus is on the member experience with a high level of member and staff interaction. We are a lot smaller and more flexible and we have a personalised and caring approach, all of which helps turn them around together with relatively low overheads and costs. We are in a people business, where people motivate people; we don’t have a large head office. One of the strengths of South Pacific is that we make all decisions at club level as opposed to a corporate setting away from the action. We visit each club each week and it’s more of a family environment where the managers have a say in what goes on in their club daily and they can plan their business model for what works within their local community.”

South Pacific expects to spend the next year or two in consolidation mode following its recent burst of expansion. However, Conn remains interested in any market activity and would not lightly dismiss any business opportunity that arises, notably in unique locations with suitable demographics. “We would consider either acquisition or starting a new centre and we are talking to some landlords and operators about future activity,” he offers. “We certainly want to grow our brand.” But to maximise the leverage of the brand, rather than marketing each facility individually, he would feel more comfortable with 10 to 15 clubs rather than the current half-dozen. Despite the highly competitive health marketplace, the constantly growing demand for fitness and associated services in metropolitan areas can ensure healthy profits (as it were), “as long as you do it right, with the right mix of services and facilities.” At the premium level especially, it is product offer – including the interaction between members and from members to staff – that counts more than price.

There are distinct strata of health clubs that differentiate them within the crowded and highly competitive marketplace. Being a multiple award winner of The Victorian Fitness Business of the Year, South Pacific sets out its stall as more of a premium offering with a higher level of equipment and services – ‘extras’ such as pool, child care, group fitness classes (a more holistic approach including Pilates and a variety of different Yoga styles, for example), cafés, nutrition services. “There are not a lot of these ‘premium’ models in Australia,” says Conn. The majority are in a ‘middle segment’ with communal gym facilities and group classes but not much more, while the lower segment offers little more than basic cardio and weights facilities.

Conn also points out the clear distinctions between the clienteles at his own clubs. At Bourke Street, for example, there are clear peaks in early morning, lunchtime and early evening; 80 per cent of the membership is corporate and is based in a 600 metre radius of the club itself (interestingly, business people who wish to keep in shape won’t necessarily walk far – although that relates in part to their limited available free time). The suburban ones – Williamstown is a good example – have more of a community feel to them and the membership profile is somewhat older. Conn says that the model his clubs offer could be replicated in other cities around Australia because Melbourne does not have such a specific set of demands, although he does not have any set plans to expand interstate.

The proportion of local people using or wanting to use health clubs is generally around 10 to 12 per cent of the population. Despite some preconceptions of ‘gyms’ as centres of sweaty male dominance, the industry average for health clubs is for around 60 per cent of users to be female. At the South Pacific level, many of the services are indeed female-oriented, including the spa at the St Kilda club which is run as a separate operation and has picked up several industry awards.

Spa Dreamtime’s clientele is 80 per cent female and Conn admits that although he would welcome more male customers, it is not likely to happen in the near future; spas are more female orientated at the moment. The spa, “inspired by the European resort-style spas scattered along the coast lines of Europe… delights your senses with sheer pampering with every spa treatment. Utilising pure sea water, precious ingredients from the sea and the natural world,” it is run mainly as an additional service to the members of the St Kilda South Pacific club and is not planned to become a focus point of the business. “Over time, we may put spas into some of our other facilities, however the spa suits the St Kilda beachfront location and local clientele. We have no current plans to introduce spas into our other clubs but it may suit future locations.

The demand is very much year-round and hardly seasonal at all except for that new-year rush of resolutions, most of them burned out before Easter. It’s very much a people business too, says Conn; “you really need to have the right staff onboard, people with vision and motivation who believe in a high work culture.” It almost goes without saying the staff must believe in working out themselves and be convinced of the benefits of a healthy lifestyle. “They need to lead by example and believe in what we do.”

A weakness of many clubs in the fitness industry is their ability to retain members. Conn is approaching 2014 with a focus to improve customer loyalty. “There are a lot of competitors out there that they will go to if you don’t look after them,” he emphasises. He and his team are, as you might say, working on it.

Making Sense of Management

Management is the art, or science, of getting things done through people. Sounds fairly straightforward – except for the fact that people are not robots waiting to do our bidding. People have their own minds, motivations, and goals. So how do managers keep operations – and the people behind them – running as planned?

December 19, 2018, 9:24 AM AEDT