What is the Potential of Saudi Arabia Fitness Services Market?
The Saudi Arabia Fitness Services Market has shown tremendous growth in value and number of fitness service centres. The increase in demand for weight management services, mushrooming female exclusive fitness clubs which operate under Saudi Arabia’s strict compliances have also gained popularity over the past few years. Moreover, competitive pricing of membership rates, rising awareness of appearances among individuals, growth in the presence of certified personal trainers, and the ability of fitness centers to use capital to scale up and diversify have facilitated the market as a whole.
Rising population of youth in the country has been complimenting the size of this industry. Coupled with increasing lifestyle diseases
Such as heart problems, asthma, and diabetes in the overall population, there has been a significant shift of people preference towards fitness centres in the country. Additionally, the ease in on the regulations on women has also increased the women specific fitness centres in KSA. Women can attend fitness centres where they are trained by women trainers; also, support from government for the betterment of the KSA population has enabled many companies to expand in KSA.
While consumers’ desires for fitness services persist to grow in Saudi Arabia, surging income levels and increasing awareness have also assisted the growth of fitness service industry in the country to a great extent.
What are the major revenue Streams in Saudi Arabia Fitness Services Market?
The revenue stream of Saudi Arabia Fitness Services market has been majorly divided into gyms membership, and personal training which account for ~% and ~% respectively.
Demand of qualified professional trainers has been a major reason behind the revenue generated by personal training segment. Customers tend to opt for gym that have qualified personal trainers and can guide and train during the gym sessions. The total number of personal trainers in organized fitness centers of Saudi Arabia has been around ~ in the year 2017. Also, as an average every unorganized fitness centre in Saudi Arabia has 3 personal trainers.
On the contrary, gym membership accounts for ~% of share in the total Saudi Arabia Fitness Services market. Numerous new gyms have been sprouting in various regions of Saudi Arabia. The growth of population, increasing lifestyle diseases, increasing obesity rate, along with government driven health and fitness norms, with the initiative of the government of opening more parks, cycling lanes, and running lanes for the public to support and promote active lifestyle have brought about a positive change in the mentality of people towards fitness. Additionally the support from government by lifting the laws on women, now female population are free to join fitness centres has increased participation of people in gym. The fitness centres have also attracted customers with additional services such as spa, salon, swimming, etc. that does not need personal trainer services, hence resulting into increase revenue share of membership as compared to personal training services.
What is the Current Position of Organized Sector of the Industry??
The market is majorly divided into organized and unorganized sector, where unorganized sector accounts for ~% of total market revenue in 2017 dominated by fitness services providers which have one fitness center in Saudi Arabia operating under one brand name. On the contrary unorganized market shares ~% in the total Saudi Arabia Fitness Services market revenue in 2017, containing fitness service providers which have more than one fitness center in Saudi Arabia operating under one brand name.
The major factor for the growth of Saudi Arabia Organized Fitness Service Market is the demand of personal trainers, as personal training has always been a USP of organized fitness centers and this has resulted into an important factor for the growing number of such centers in the country. Additionally, organized players provide different types of integrated services under the same roof (such as Resistance training, Aerobics, Zumba, and others) that has also contributed to the growth of organized centers in the country.
Conversely, while choosing the fitness centers, majority of the customers in Saudi Arabia consider price as the most important parameter. Since unorganized fitness centers are less expensive, most of the population opts for these services over organized ones. The ratio of unorganized fitness centers to organized fitness centers is skewed, attributed to the initial investment and operating expenses, as unorganized fitness centers demand much lesser fee as compared to organized fitness chains.
What are the major parameters which dominate customer decision while opting for a gym?
Location: Customers prefer fitness centers which are nearer to their accommodation facility as it becomes convenient for them to access it any time. Additionally, the female population in Saudi Arabia prefers to join the fitness center which is near to their homes in order to ease their daily commute.
Availability of Experience and Skilled Trainers: Majority of the fitness center going population in Saudi Arabia demand for fitness trainer as they prefer to work out under the guidance of professional for more efficient exercise and better results.
Membership fee: People prefer those fitness centers that provide multiple services at a lower price. Additionally, people try to opt for different payment options and discounts on annual subscription, which helps in saving, and proves to be more economical
Services Offered: Rather than travelling from one fitness center to another for different services, customer opt for those fitness centers that have multiple services under one roof
Equipment and Infrastructure: The type and quality of fitness equipment offered by a fitness service centers is another factor while opting for a fitness center.
Brand Image and Reviews: Population of Saudi Arabia usually gets less influence by the reviews of the people those who are already going to the fitness clubs. They believe to form their own opinion rather than reading the reviews given by other gym members.
Which are the Major regions contributing Highest Revenue Share in Saudi Arabia Fitness Services Market?
Riyadh: Riyadh has highest population and largest area in Saudi Arabia, consisting of more than 40% of the youth population. Majority of the youth population in Riyadh is facing obesity problems due to unhealthy eating habits. Riyadh being a metro city in Saudi Arabia has led the population to have hectic lifestyles which has increased their dependency on fitness centers
Makkah: Mecca is among one of the largest contributors in terms of organized fitness services centers in Saudi Arabia. Increase in awareness of health and fitness especially among the female in the cities along with influence from TV has increased the demand of fitness centers in the country
Dammam: Dammam contributes to about ~% of the total fitness services centers in Saudi Arabia. The region being the administrative center for the Saudi Arabia oil industry, it is the fourth largest populated city in GCC. The high population along with high disposable income has helped the increasing the fitness services market demand
Madinah: Many fitness chains in the country have expanded their presence in Medinah by opening new branches. It has resulted into increased fitness services demand in past few years. Also, joining the fitness center has become the trend among the youngster because of changing population lifestyle
Others: Other regions that contribute to the demand of Saudi Arabia Fitness Services Market are Tabuk, Skaka, Hail, Al Khobar, and many more.
How Government has helped in the growth of fitness services market growth in KSA?
In February, 2017, the government of Saudi Arabia started granting licenses for women’s gyms, which includes labor, rural affairs, and commerce ministries. The ministries involved in providing the licenses are labor, rural affairs, and commerce ministries. Also, studies conducted for the Saudi Arabia Olympic Committee (SAOC) under the direction of the General Sports Authority (GSA) have proposed a major transformation in the provision of physical activity in the Saudi Arabia.
Women-only gyms are exclusive to female population, and no men trainer is allowed to train the subscribers. Apart from fitness clubs such as NuYu and Curves which are exclusive to female subscribers, fitness clubs such as Gold’s Gym provides fitness services to both men and women, however the time slots are different to maintain privacy for female members.
Additionally, as part of the broader Vision 2030, one of the major new mass participation initiatives which is included in the Government’s National Transformation Program (NTP) agenda is to increase female participation through a series of initiatives that includes new licensing process for fitness centers and special university-based programs.
The council regulates the licenses, and the companies are restricted to receive licenses that offer competitive activities, such as football, volleyball, basketball, boxing, and tennis, and the focus of centers should be on techniques that contribute to weight loss and fitness, such as swimming, running, and bodybuilding.
What are Licenses Required, Costs Structures and Penalties pertaining in the Market?
In order to carry out and expand business, the company needs to maintain or obtain a variety of licenses, certificates, permits and approvals from regulatory, legal, administrative, tax, Zakat, and other authorities and agencies, both in the Kingdom and in the UAE, in particular a municipality license for the conduct of commercial activities, a sports activity license and a civil defense license for each of its fitness centers in the Kingdom.
The processes for obtaining these licenses, certificates, permits and approvals are often lengthy and most of the licenses, certificates, permits and approvals are subject to conditions under which the licenses, certificates, permits and approvals can be suspended or terminated if the licensee fails to comply with certain requirements.
When renewing or modifying a license, certificate or permit, the relevant authority may not renew or modify the license, certificate or permit and may impose conditions that will adversely affect the company’s performance, if it did renew or modify the license, certificate or permit.
If the Company is unable to maintain or obtain the relevant licenses, permits and approvals, its ability to achieve its strategic objectives would be impaired, it may be forced to close down the fitness centers for which operating licenses are missing and/or pay financial penalties, which would have a material adverse effect on the business
Where is the Future of the Market Positioned to be by the End of 2022?
The market is expected to grow up to USD ~ million by the end of 2022E. Household Disposable Income: It has been projected that increase in household income along with increasing awareness towards fitness services will attract major number of people to join fitness centers during the period 2018-2022E. Household income has been expected to increase at a CAGR of ~% during the period 2017–2022E. Fitness service chain including Fitness First, Gold’s Gym, and NuYu, plan to set up more fitness outlets in various regions of Saudi Arabia by end of the year 2022E. This will positively lead to increase in number of membership in fitness centers and accordingly it would be a major reason for increase in the number of organized fitness centers. There is a steady increase in demand of certified personal trainers among customers of fitness centers in both organized and unorganized fitness center market. Personal training in a fitness center is a major revenue stream and increase in demand of this service will further increase the revenue of the centers. Market is expected to continue to grow, where it would have more number of both organized and unorganized fitness centers catering to the needs of the increased customer demand. Obese population has been expected to increase in future, as people in Saudi Arabia prefer junk food which can be a major cause for increase in demand for fitness centers. With the increase in obesity and diseases people are getting more focused towards their physical health and fitness.
Would the Share of Organized Sector Increase by the End of 2022?
Unorganized sector is expected to dominate the fitness service market with a share of ~% in the total number of fitness service centers in Saudi Arabia in 2022E. Membership Fees: Lower membership fees is expected to be the major reason behind the dominant share of unorganized sector in the revenues of overall fitness service market in Saudi Arabia by 2022E.
Expansion: Opening up of new unorganized centers with enhanced facilities in new areas can be another factor which is projected to drive up the revenues from unorganized market.
Services Diversification: Unorganized gyms are expected to diversify their services portfolio to attract customers and compete with the organized gyms. They are expected to start providing value added services including Zumba, Aerobics, Spa, Sauna and others which would increase their revenue.
Organized Market: The number of fitness services centers in organized market is expected to increase to ~ in 2022E from ~ in 2017 with a CAGR of ~%. Organized sector would expand owing to increase in the number of branches of already established gyms, more number of people joining these centers as health consciousness in Saudi Arabia is rising and entry of new foreign players and expansion of other unorganized service providers.
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Ankur Gupta, Head Marketing & Communications