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Fitness First muscles in on Asia with 50 new clubs

Fitness First: Seeing market in Asia mature
Fitness First: Seeing market in Asia mature

U.K. gym chain Fitness First is further muscling into Asia with plans to open 50 new clubs over the next five years and invest around $140 million in the region, the firm announced Monday.

Fitness First Asia CEO Simon Flint told CNBC's "Squawk Box" that the firm planned to expand in Hong Kong, Indonesia, Malaysia, Singapore, Philippines and Thailand, with particular focus on Singapore and Thailand, the chain's strongest Asian markets. The chain currently operates 88 clubs across the six countries it is active in.

"It's a very exciting time in the region, we've had a decade of expansion and steady growth over that time," said Flint.

"But now we're seeing...the markets tending to mature somewhat, and people [are] getting more conscious of their exercise needs," he added.

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The international gymnasium chain has struggled in recent years as niche exercise studios offering the likes of pilates and hot yoga, together with 24-hour budget gym chains became increasingly popular, eating into the chain's market share.

The firm flirted with a debt default in 2011 but was rescued by U.S. hedge funds Oaktree Capital and Marathon with a £550 million pound ($923 million) debt-for-equity swap the next year, leaving private equity owners BC partners with a minority stake. BC Partners bought Fitness First for £835 million ($1.4 billion) in 2005, but failed to float the business in 2011.

Flint said the firm is now in a strong position to expand, with $40 million to invest in the existing estate in Asia, and $100 million to grow the market over a five year plan.

A worker runs on a treadmill at a fitness club.
Tomohiro Ohsumi | Bloomberg | Getty Images

Fitness First estimates that only 5 percent of Southeast Asia's population are currently members of a health and fitness club, compared to 30 percent in more established markets like the U.S. and 15 percent in Europe.

They believe more Asian people will start to go to gyms however, as they become more aware of the benefits of fitness, as incomes rise and governments' promote healthier lifestyles to combat rising obesity. In the 12 months to 31 October 2013, membership in the region rose by 4 percent.

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Fitness First Asia reported near 10 percent revenue growth over the same period to $213 million.

Asked how Fitness First was responding to the increased appetite for niche exercise rather than an 'all-in-one' gym package, Flint said they were focusing on group training services.

"Things are changing and that's something that we're conscious of," he said.

"What we've learned is that people are looking to be more engaged... so one of the parts of our formula as we expand is to engage people in what we call 'freestyle group training'...for markets like Hong Kong and Singapore, where people are really busy, it's very important to get the job done in a shorter time."

In January, Fitness First announced it was spending almost AUD$50 million ($46 million) to revive its business in Australia, which represents around 25 percent of its global business. The group said it planned to invest heavily in staff training, new centrally located gyms and services like small group training packages, after selling off 19 clubs and cutting 120 jobs there in 2012.

The group also downsized in the U.K. following the buyout led by Oaktree Capital, and announced it was investing £270 million ($453 million) over the next three years, in a bid to revitalize another of its key markets.

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