Life Time goes country club
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Bahram Akradi. Photo courtesy of Life Time Inc.
Life Time is still down 145,000 members from its pre-pandemic peak. The health club chain doesn't want them all back.
Driving the news: Life Time has regained only about a third of the 220,000 members it lost during the pandemic, but by adopting a more exclusive and expensive membership model, it says it can reach pre-pandemic sales numbers without them.
- Life Time members are paying an average of $1,219 in dues annually, up from $984 per year in 2019, according to the company's financial filings.
What they're saying: "(We're going to have) 10% fewer members, but higher dues, which is where we want the business to be," Life Time CEO Bahram Akradi told Axios Twin Cities. "We don't want to have as many members — like a country club has that limit."
- Akradi said he expects existing health clubs — Life Time has nearly 160 — to reach 2019 monthly membership revenue within six months.
Why it matters: Life Time is one of Minnesota's largest employers, with about 5,000 workers in the state, including its Chanhassen headquarters, so its bounce back is important to the local economy.
Zoom out: The pandemic and forced closures and restrictions devastated the health club industry, wiping out $29.2 billion in revenue and 22% of facilities in the first two years, according to the National Health & Fitness Alliance.
- Akradi noted that the industry got very little government help — big companies did not qualify for PPP loans, and there was no industry bailout like airlines received. A $2 billion federal grant program did not pass.
Life Time was also hit hard. It stopped collecting member revenue and lost $360 million in 2020. It went public in 2021.
- It's now adding cash back to its balance sheet by selling its clubs to real estate investors and then signing long-term leases to stay in there. It's already sold nine this year for $375 million.
What's ahead: Before the pandemic, Life Time had an ambitious plan to build villages that combined its clubs with coworking spaces and apartment towers, all under the Life Time brands with package memberships.
- Akradi said those villages — they're already complete in Florida and Vegas — will continue. A new Edina club is next to a coworking space, and Life Time is seeking approvals for an apartment tower now.
Bullish on pickleball
Life Time members may have seen Akradi at the company's recently converted pickleball courts in Bloomington.
State of play: An intense mountain biker in recent years, Akradi has scaled back his time on the trails and is now playing pickleball for 10 hours a week, he told Axios.
What he's saying: Akradi doesn't just love the sport personally, he's convinced it's going to become the biggest thing in fitness.
- "I'm almost certain that in a half a dozen years there'll be more people playing pickleball than any other sport in the U.S.," Akradi said.
What's ahead: Life Time is betting big on the sport. It's already adding 250 courts to its clubs and plans to add 350 more by the end of the year.