The government needs to provide the fitness and physical activity sector with a plan which will not only provide immediate, essential measures to secure its future, but will also help it to recover and grow.
Appearing before the Digital, Culture, Media and Sport (DCMS) Committee today (12 January), industry leaders said the pandemic has had a “devastating effect” on the sector.
Those giving evidence to the committee during the meeting were ukactive CEO, Huw Edwards, PureGym MD, Rebecca Passmore, Mytime Active’s CEO, Marg Mayne and Rich Emerson, CEO of the Climbing Academy Group.
All four outlined how lockdowns during the past nine months have led to concerns not just over individual businesses, but the future of the sector as a whole.
Offering his views on the current state of the industry, Huw Edwards said the rollout of vaccines offered “light at the end of the tunnel”, but that the industry had been hit hard and urgently needs government support.
“The third lockdown is a new chapter in the pandemic and we fully respect the government’s measures,” Edwards said.
“But the reality is that in this crisis that we face has had a major impact on the facilities and the members we represent.
“If we get to 23 March with the sector still in lockdown, that will mark a year since the industry was first forced to close its doors.
“In that year, we would only have been operating for 121 days, losing more than 240 trading days – and more than 700m individual visits to facilities.
“We’re now in a situation when a significant number of operators – from the smallest to the largest – are facing major financial problems. Many have major issues relating to cashflow and are on the cusp of survival over the next couple of months,” he said, while explaining that the major operators and ukactive have been in dialogue with the government on a ‘open book’ basis, showing their accounts and the impact of the closures on their financial state.
Edwards called for targeted financial help for the sector and a “clear, three-stage plan” in addition to existing support.
“What we need to see from the government is a plan that has three phases – a plan for survival, plan for recovery and then plan for the development of the sector so it can play its role in society.”
He said new schemes were needed to help refloat the sector, including an extension of the Cycle to Work Scheme to cover the purchase of gym memberships and home fitness equipment and that ukactive has done an economic impact study of this.
Edwards’ call for extra help was mirrored by Passmore who outlined three measures she said would help the industry.
“Firstly, the sharing of the burden of rent,” she said.
“Secondly, a continuation of the rates holiday – which should be proportionate to the loss of revenue – and thirdly, to review the VAT the industry pays.”
Many operators face a rent cliff face at the end of March when the current rent moratorium ends and a year’s worth of rent comes due. The sector is lobbying for a scheme to be put in place to offer support through this period.
When asked about how confident she was that PureGym – and the wider industry – would survive the next six- to 12-month period, Passmore said: “At PureGym, we’ve been able to access additional finance, so I’m confident that we will be able to get through this.
“But I fear the gym sector, as a whole, is going to suffer from something of an ‘economic Long COVID’.
“Operators may be able to reopen, but the reality is that it will take time to build revenues back up again.
“We’re not a high-margin sector, so we will need to get revenues back up to a really decent level, between 75 and 80 per cent, before we can start eating into the losses we’ve suffered.
“Ultimately, we will see operators going out of business.
“This will result in the public having less places where they can get exercise and improve their physical and mental wellbeing.
“Additionally, those operators who will be able to hang on and survive won’t be able to maintain or improve their offer.
“I am, however, confident that the underlying demand (for gyms) remains strong and that members will return. After all, one of the most googled terms of 2020 was ‘when will gyms reopen’.
“That is reflected in us seeing a really strong bounce back in memberships and – more importantly, in visits – after the first lockdown. Memberships were back to 80 per cent of their peak, year on year and visits were at 93 per cent.
“Having said that, without targeted financial support, the ‘economic long COVID’ will absolutely affect the sector and we will see permanent closures.”
• To watch a recording of the entire DCMS Committee session, click here.