Hampshire: Leisure sector 'under threat' as gym collapses, says R3

Following the sudden closure of a Southampton gym this month, figures have emerged which suggest more than a third of Hampshire sports and fitness facility businesses are at risk of failure in the next year. 

Accolade Fitness in Northam has ceased to trade ahead of its impending voluntary liquidation.

According to insolvency trade body R3, using statistics provided by Bureau van Dijk from its company information tool Fame, 35% of businesses within the sector in Hampshire have a heightened risk of failing in the next 12 months.

The figure is higher than the county’s cross sector average, which shows that 25% of businesses across all sectors are at risk of failure. It is also higher than the national percentage of sports and fitness facility businesses at risk (30%).

According to members of R3’s Southern Regional Committee, cash-strapped consumers and high equipment finance and insurance costs are just a few of the factors contributing to a very difficult trading environment for private Hampshire gyms and sports centres.

Mike Pavitt, vice chairman of R3’s Southern Regional Committee and partner at Paris Smith LLP, said: “The recession has undoubtedly left consumers with a limited discretionary spend. Anecdotally we understand that many gyms have seen something in the region of a 30% drop-off in membership as people have cut out non-essentials. Add to this an annual drop-off in the summer ‘dry season’ when more exercise-seekers turn to outdoor pursuits and the advent of pay as you go, unstaffed budget gyms and it becomes a fiercely competitive market.

“Whilst having to fight for market share with discount offers, gyms are often squeezed by rising business rates, high insurance costs and expensive space requirements, not to mention finance repayments on equipment with high market pressure to renew and replace.

“It’s therefore no wonder that many Hampshire gyms are struggling.”

Pavitt added that gyms may be able to improve their prospects by focusing on branding, innovation, customer care, sensible opening hours and more traditional advance payment schemes which could help companies keep the cash flowing.

R3 stresses that by no means every business at risk of failure is destined to end up in a formal insolvency procedure but warns that those who ignore the warning signs are putting themselves at risk.

He concluded: “Our advice to any businesses hearing the alarm bells of financial distress is to contact an insolvency practitioner at the earliest opportunity – they may be able to save the business, but if not they can at least limit the damage for those affected."