Life Time's country club bet is paying off

• The Chanhassen-based company has reported eye-popping revenue increases that have resulted in a doubling of its share price in the past year.

By the numbers: That's in part due to higher dues.

• Life Time's members are now paying an average of nearly $200 in monthly dues, up 12.7% from a year ago, according to the company's third-quarter financial report, released last week.
• Despite these aggressive increases, Life Time is seeing a 70% member retention rate, which Akradi told Axios is the best in the company's 32-year history.

What they're saying: He said that loyalty is based on Life Time's 165 clubs becoming a second or third place (after their home and work) for many of its members, with average monthly visits climbing from eight to 12 in recent years.

• "Members love Life Time. It's not just a gym. It's not just a club. There's that emotional connection."

Between the lines: The key to getting members to pay premium prices is to offer a premium experience, which is why Life Time is aiming for fewer members per club.

Zoom in: Five years ago, Life Time opened one of its highest-tier clubs in Edina, with a rooftop pool deck, recovery lounge, athletic fields, and Rare Steak & Sushi restaurant. The interest has been so high that Life Time has instituted a wait list, Akradi said.

• "We simply cannot keep people out of that club," Akradi said. "So we raised the dues, raised the dues, raised the dues and added to the enrollment fee. Finally, you just have to have a wait list."

The big picture: Life Time has become cash-flow positive after tough years during the pandemic when gyms were shut down. The company has also been paying down debt by selling some of its clubs and then leasing them back.

What's next: The company's new financial position will allow it to speed up expansion, with Akradi forecasting 10 to 12 new clubs per year going forward.

Life Time's northwest metro vision

Life Time has 100 potential club deals in the works, but the majority of them aren't in Minnesota, the company's birthplace and a market where you can usually find a club nearby.

Yes, but: That doesn't mean the brand is done here.

State of play: Construction is underway on the company's 25th Minnesota club, a full-size facility in Rosemount that will open in early 2025.

The intrigue: After that, Akradi has big plans for the northwest metro, where he wants to build a large club, apartments and co-working space — a concept he calls Life Time Village that incorporates live, work and play.

• "We will eventually build a much bigger campus in the northwest part of the town. Don't ask me the name of the city yet, because it's sort of a hush-hush," he said.

The future: AI personal trainers

Artificial intelligence is a big part of Life Time's future.

Zoom in: The company already uses machine learning to create an algorithm to understand how much it can raise dues before it loses members.

• It also has an AI-powered app that helps customers find classes and facilities, but Akradi has alluded during earnings calls to deeper investments in the technology.

What they're saying: I asked him if someday, the AI app will basically serve as a member's personal trainer.

• He confirmed that's the plan and predicted by this time next year all of his members will be using the company's L.AI.C app (pronounced Lacy).
• "Ultimately, it's your companion," he said.
• "This should basically say, based on your data from your watch, based on your sleep, based on your heart rate variability, you maybe should do yoga instead of a high-intensity workout. It's really exciting."