"Exercise is the wonder drug”. “Everyone can feel better if they move”. “There are benefits no matter the type of exercise”.

If we believe these things to be true then – unlike any other industry I can think of – this is a consumer category with up to 100 per cent addressable market and we should be appalled at a sub-50 per cent penetration rate.

This poses a big question, and although it’s a complex picture, it needs to be addressed because the opportunity for fresh investment and supply is huge. The answer is not straightforward, but the starting point in identifying it is honesty and awareness.

The economics of success are nuanced. There’s strength in subscription businesses with stable fixed costs – once your costs are covered by revenue, it can be straightforward to expand margin by adding more customers. But that approach has a limit for gyms and that limit is capacity. Be it floor space, car parking, a fire certificate or studio spots, growth has a limit.

We should be appalled at a sub-50 per cent penetration rate

This can be a blocker for fresh investment so operators need to grip this issue and find creative ways to drive quality of earnings rather than simply member volume. At Total Fitness, 35 per cent of our revenue growth this financial year is attributable to quality rather than volume. This is where health clubs can really win from the middle ground, since the number of levers available to pull is greater with a wider cross-section of customers.

The flow of fresh investment – which in recent years has tended to come from private equity – has slowed significantly and the appetite for new investments is not what it was. It’s time for the investment community to look again at the sector and I believe it will, but we need an industry-wide effort to advocate for the fundamental strengths of the proposition.

This is an incredible sector with tailwinds like no other in retail or hospitality and we need to stop positioning one model as better than another and advocate for the whole, because everyone can win. 

With lower levels of fresh capital coming into all segments of the market, the pipeline of openings is not spreading to all areas of the country. I believe all models can work in the UK if we’re willing to adapt them to suit the market.

As operators we’re wedded to our macro market position – low-cost is priced low, middle market in the mid-range, and upper/premium at the higher end, but being rigid in our price proposition precludes us from adapting our models to work in new markets where property rents are higher, or market sizes smaller. The reality is that our market position doesn’t mean much to the customer. Customers understand value and price within their local context, not ours. We must grip this more local dynamic, so we can find winning formats in new markets.

Finally, exercise is hard. It can be scary. It can be unpleasant. That’s the customer reality. I admit to being guilty of celebrating exercise that is hard, scary and unpleasant and I think this is a deep sectoral paradigm that shuts out the 80 per cent of addressable market we need to reach.

The Nordics already have some of the highest gym penetration rates globally, but we still see significant room for growth.

The industry is supported by strong structural tailwinds. We’re riding a broader health and wellness megatrend, younger generations are increasingly fitness-orientated and tend to maintain these habits as they age, and at the same time physical inactivity remains a major global public health challenge. Together, these factors support long-term growth for the industry.

That said, this is a gradual structural shift rather than a short-term step change. Over the next five to 10 years, we expect growth to come from converting more people to be regular exercisers, improving retention and engaging population groups that historically have been less active.

Even in high-penetration markets such as the Nordics, several barriers remain. Some are economic, but many are behavioural or psychological. For many people the biggest hurdle is not access to gyms, but getting started and building a lasting habit.

Sustainable growth requires balancing expansion with operational excellence and capital efficiency

Lowering these barriers requires making fitness more accessible and inclusive, through flexible pricing, welcoming environments, strong onboarding and digital tools that help people stay consistent.

There is also a broader societal opportunity. The least active groups often have the greatest health needs and closer collaboration between the fitness industry, employers and public health authorities could help position gyms as part of the preventive healthcare solution.

Operators need to evolve from being space providers to becoming long-term health partners for their members. This requires a stronger focus on onboarding and retention, as well as using data and digital tools to personalise the member experience and support long-term engagement. Community building and social training formats are also increasingly important in helping members stay motivated.

Furthermore, there are significant opportunities in expanding reach through partnerships with employers and public sector actors, while developing offerings tailored to different stages of the member life cycle.

Lastly, financial discipline remains crucial. Sustainable growth requires balancing expansion with operational excellence and capital efficiency.

Every market is different, but there are a few elements from the Nordic experience that may be relevant. First, accessibility and scale matter. Large and well-distributed club networks help lower the threshold for participation. Second, fitness has become part of everyday life. In the Nordics, exercise is widely normalised. It is not seen as extreme or elitist, but as a natural part of daily routines.

Finally, the industry has benefited from stable and professional operators with a long-term perspective, focused on sustainable growth rather than short-term gains.

Ultimately, gym penetration tends to increase when fitness is positioned as an accessible and integral part of everyday health, not as a niche lifestyle product.

Younger generations are increasingly fitness-orientated / SATS

The health and fitness sector is one of the most compelling consumer-facing lending propositions in the UK today. What makes it particularly attractive is that demand is underpinned by a powerful structural shift: health and wellbeing is no longer discretionary in the way it once was. Fitness is also evolving into a social activity and that move towards experience and community creates stickier membership bases and stronger lifetime value per customer.

From a lending perspective, the model has attractive characteristics. Revenue visibility is relatively strong given the recurring membership structure, particularly for operators with a diversified membership base and disciplined pricing strategy. Once mature, clubs typically benefit from a largely fixed cost base, meaning incremental membership growth can drive attractive margins and operational leverage.

Well-run operators with strong site selection and a clear proposition can also generate robust cashflow profiles, which is what lenders ultimately look for.

The current penetration rate in the UK suggests significant headroom for growth. We believe penetration can increase meaningfully over the medium term, driven by several factors – the UK has an ageing population that’s increasingly focused on active longevity, while younger generations view gym attendance as part of their identity and social life. Fitness is no longer purely transactional, it’s experiential and community-driven.

As public health systems face strain, there’s growing recognition of the role that strength training, cardiovascular fitness and general activity play in reducing long-term health costs. That cultural shift supports higher sustained participation. While it may not move overnight, penetration in the low-to-mid 20s over time does not feel unrealistic if operators continue to innovate, differentiate and broaden their appeal across age groups and price points.

From a lending perspective, the health club and gym model has attractive characteristics

Affordability remains a barrier for some consumers, particularly in a cost-of-living environment where discretionary spending is under pressure. That said, the market has evolved to provide options across price points. Continued clarity around value, including what members receive relative to cost, will continue to be key.

Another barrier is confidence and accessibility. Operators that invest in onboarding, community-building, coaching support and building inclusive environments tend to perform better because they reduce psychological friction. The growth of guided strength training, small group formats and personalisation is helping to address this.

Time is also a factor. Hybrid working has changed attendance patterns, but also created opportunities. Operators located near residential hubs who offer flexible access and integrate digital tools alongside physical membership are well positioned to remove convenience barriers.

The operators that will drive higher penetration are those that make fitness feel accessible, inclusive, socially engaging and not just a place to exercise. From a lender’s perspective, those are also the businesses that demonstrate stronger retention and more resilient long-term performance.

Operators need to make fitness feel accessible, inclusive and social / Shutterstock / PeopleImages

The US member penetration reached 26 per cent in 2025, the equivalent of 81 million Americans. When including non-member users, total consumer penetration was more than 33 per cent, or nearly 104 million Americans.

It’s hard to speculate how high penetration could go and in what timeline, because participation depends on a wide range of factors, including economic conditions, demographic trends, shifting cultural norms, pricing and public policy developments.

What would be likely to have the most structural impact over time is a deeper integration of physical activity into preventive healthcare. Exercise being systematically recognised and supported as part of the healthcare continuum – with fitness facilities positioned as key preventive health infrastructure – could materially expand penetration.

This shift is central to the Health and Fitness Association’s (HFA) mission and public opinion is aligned with it. In recent HFA polling, a large majority of Americans agreed that doctors should discuss physical activity with patients as part of routine care (88 per cent). Seventy nine per cent believe that exercise programmes should be prescribed in the same way as medication and 79 per cent also agreed referrals should be made to certified exercise professionals, when appropriate.

Deeper integration of physical activity into preventive healthcare would have the most structural impact

Non-members cite a range of barriers – gymtimidation, lack of time and preference for working out independently, but cost consistently tops the list in poll after poll. In our December 2025 national survey, 42 per cent of non-members cited cost concerns as the primary barrier. Cost was also the most frequently cited obstacle in every market surveyed, from Canada and Germany to Saudi Arabia and Japan.

Affordability is not something the industry can solve unilaterally. Fitness facilities operate on relatively thin margins, so broad-based price reductions imposed at the operator level would likely result in facility closures, ultimately reducing access.

While consumers experience affordability as a personal financial question, the solution largely lies in policy. HFA’s price sensitivity research, published last year, indicates that a 10 per cent price reduction enabled through tax deductions, credits or similar policy tools could incentivise up to 17 million additional Americans to join a fitness facility.

Similar modeling in Europe shows comparable potential: a 10 per cent reduction in effective price could motivate up to 4.8 million in Germany, 2.7 million in Spain, and 250,000 in Ireland to begin using fitness facilities.

This is precisely the type of legislation HFA is advocating for at state and federal levels and such policies also enjoy broad public support. Seventy one per cent agree that people should receive tax incentives or tax credits to participate in physical activity programmes and 83 per cent say that health insurance plans should help cover the cost of fitness and exercise programmes.

While operators cannot solve affordability challenges, they can actively support the industry advocacy efforts that seek systemic solutions. That includes engaging with industry associations, participating in data collection efforts that underpin policy arguments, hosting lawmakers in their facilities and helping to communicate the economic and public health value of the sector.

Operators also have a role to play in continuing to professionalise the industry, demonstrating high standards in training, safety, transparency and community engagement. That strengthens the sector’s credibility as a legitimate part of the preventive health ecosystem.

For countries with lower penetration rates – and  in most markets – two universal priorities stand out.  Firstly, build strong, unified industry representation to engage policymakers. Secondly, advance policies that improve affordability and recognise structured exercise as preventative health infrastructure. 

A price reduction via tax credits could incentivise millions of people / Shutterstock / SeventyFour