Hong Kong Health & Fitness
American fitness franchises are encouraged to consider opportunities in Hong Kong.
After living through COVID-19, health and fitness has never been more important, and this global trend is gaining momentum in Hong Kong. The years 2020-2022 were tumultuous for Hong Kong’s fitness industry as prolonged gym closures put 150 centers out of business. Fitness First was one of the larger casualties who closed all 8 of their centers and exited Hong Kong permanently.
Despite the short-term challenges related to the pandemic, the industry is showing signs of recovery. With total revenues exceeding $500 million annually, more than 365 fitness centers (gyms, yoga studios, boxing rings) have opened over the past 12 months. This reflects a trend of increased mental and physical wellness by the Hong Kong populace.
Prior to the pandemic, the perception of gym life in Hong Kong was young males go to gyms to bulk up,and females attend yoga classes. This has changed dramatically. Hong Kong’s aging population (median age is 44.8 years), and long life expectancy (85.3 years) has contributed to this change. As a result, fitness centers are targeting programs for those who choose to live a healthier and more purposeful life.
The location of fitness centers has moved from prime business districts targeting professionals to large housing estates in Kowloon and the New Territories. This trend coincides with the shift to a hybrid work model introduced during COVID lockdowns. Hong Kong homes are also generally small, so heading out to a neighborhood gym for a quick workout is a good way to end the day.
Besides shifting gym locations, fitness operators are also adopting new gym formats, making the traditional big box gym obsolete. The fastest growing fitness operators are mid-sized facilities offering 24-hour access. For seasoned fitness enthusiasts, big box gyms are also less appealing because they tend to favor certain types of workouts. This is contributing to the rise of specialty fitness centers with the most popular being yoga and martial arts.
When expanding into Asia, Hong Kong is often a top market for U.S companies due to the ease of starting a franchise business in the territory. There are no specific laws governing franchises, and when disputes arise from franchise agreements, they are subjected to Hong Kong common law.
Prior to COVID, Hong Kong was one of the most cost-prohibitive cities globally. Since, the pandemic, however, commercial rental rates have softened by about 30%. Industry experts estimate that rental costs in main business districts traditionally account about 60% of the monthly operational costs of gyms. As such, lower rental rates have enabled operators to negotiate better lease terms and improve the profitability of their centers.
Opportunities for U.S. Fitness Franchisors
Since the pandemic started, two US-based fitness franchises, Anytime Fitness and Snap Fitness have expanded rapidly in Hong Kong. Anytime Fitness’s expansion plans were highlighted in a recent South Morning China Post article. In this respect, and with only 10% of the population holding a gym membership, these two American firms see tremendous prospects in Hong Kong. Pricing their memberships between $80-100 monthly, they forecast that membership sign-ups could double over the next 3 years.
Both companies have succeeded in building a strong network of franchises employing fitness professionals wanting to strike out on their own. Instead of targeting traditional expatriate clients, new fitness franchises like Anytime and Snap Fitness are aiming for sustainable growth by targeting local neighborhoods. In addition, they also see potential in Hong Kong’s status as financial center, giving them access to capital with innovative financing solutions.
We expect more U.S. fitness franchises to consider expanding in Hong Kong. For more information, please contact Natalie Tong at Natalie.Tong@trade.gov