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Tuesday, May 24, 2022

Fitness Company Pumped About Beefing Up in L.A.

Fitness company Equinox Holdings LLC is preparing to bulk up its L.A. presence.

Equinox earlier this year took over the few remaining Sports Club/LA gyms that were under ownership of Sports Club Co. Inc. of West Los Angeles. Equinox, already the biggest upscale gym chain here, now plans to boost its L.A. presence in the next year and a half.

During a visit last week from Equinox’s corporate headquarters in New York, Chief Executive Harvey Spevak met with the Business Journal at the recently rebranded Equinox health club in Beverly Hills.

He said the company has withstood the recent downturn and is taking advantage of its healthy balance sheet. He wouldn’t disclose revenue, but called the company “highly profitable.”

“We performed very well during the recession, and we were well positioned postrecession,” said Spevak.

The company now has 11 gyms with the Equinox name in Los Angeles and will open four more. It will also launch four locations of its brand SoulCycle, an indoor cycling studio that is popular with the rich and famous in New York.

The first SoulCycle planned for Los Angeles will open in West Hollywood in January and the second will debut in Brentwood a few months later. The first of the four new Equinox health clubs will open in Marina del Rey in February.

“Los Angeles has always been a very attractive marketplace for the health club industry,” said Rick Caro, president at New York fitness club consulting firm Management Vision. “If Equinox were to become the national leader in (the health club industry) as it seems to want to be, then clearly it needs to have a great presence in Los Angeles.”

Competitive market

Equinox opened its first health club in Los Angeles County in 2001 when it moved into a space at the Paseo Colorado shopping complex in Pasadena, followed a couple of years later by opening another location in West Hollywood and then in Santa Monica.

“When we first came to Los Angeles, people said that they thought there was demand for us but that we would have limited success because it’s such a competitive market,” said Spevak.

With the purchase of Sports Club, Equinox emerged as the biggest player in the upscale gym market in L.A. health clubs. A monthly membership to an Equinox health club can run from $140 to $300, depending on options. A single class at SoulCycle goes for $32. Those prices are well above mass-market competitors L.A. Fitness and 24 Hour Fitness, where monthly memberships are about $40.

As might be expected, those lower-price chains are more numerous, however. There are about three dozen 24 Hour Fitness centers in the county. The number of local L.A. Fitness centers swelled from 27 to 51 last week when the Irvine-based chain completed its acquisition of many Bally Total Fitness centers nationwide.

Equinox has a mass-market, no-service gym named Blink Fitness, but it doesn’t plan to introduce that in Los Angeles. Ditto with its other studio chain, Pure Yoga. It will focus exclusively on its Equinox and SoulCycle brands here.

Spevak said the company plans to spend “north of $20 million” to rebrand and renovate the four one-time Sports Club/LA gyms it acquired in the $130 million deal in August. Two of those gyms are in Los Angeles: the one on Wilshire in Beverly Hills and the other on Sepulveda Boulevard in West Los Angeles. The others are in Irvine and at New York’s Rockefeller Center. Already, the Beverly Hills Equinox has replaced most of the Sports Club signage, including a massive sign overlooking Wilshire Boulevard.

John Atwood, managing director of health club consultancy Atwood Group in Natick, Mass., said Equinox’s success during the recession says more about its niche with upper-income clientele than about the health club industry in general, which he said only just survived the downturn.

“The economy is affecting every health club, I’m sure, with the possible exception of the most upscale clubs, because those clubs are so expensive that the average middle-class person would not belong to them in the first place,” he said. “A lot of the people who belong to clubs like Equinox are in the top 5 percent of income.”

‘Global lifestyle’

Spevak said Equinox plans to double its profitability in the next three to four years. Moving into Los Angeles is just a portion of that plan.

“Our overarching vision is to build Equinox into a global lifestyle company,” he said.

The company has plans for two foreign Equinox clubs in the next three to five years: one in London and another in Toronto.

“Once we knew that our business was going to not only survive the recession but be strong coming out, we took the opportunity to accelerate our growth,” he said. “We said, ‘Hey, this is a great time to grow if you have the right strategy, the right management team and the right capital.’ What we’re doing is highly unusual. We’re going against the grain a little bit.”

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