Heavy lifting starts to pay off for Gold’s Gym
When Ali Al Samahi took charge of Al Ahli Group’s Gold’s Gym venture in 2012, the chain had already opened five gyms. Two years later, he’s more than doubled that number to hit 12.But his most challenging goal, he says, is to open a further 10 gyms within 2014’s remaining months.
The goal is daunting but Al Samahi knows what he’s doing. A banker by trade, he was brought in to Al Ahli Holding to head up the Ventures division that was set up to explore new ventures in fitness and entertainment.
“I joined in 2012. I have a decade of banking experience, and our CEO felt that I could lend certain skills to the Group. My first task was to get Gold’s Gym to be one of the leading fitness chains in the UAE,” he says.
BUSINESS RUNS IN THE FAMILY
Al Ahli is a family-owned business with an operational history stretching back 40 odd years. The Group’s roots are in general trading, construction, and petrochemicals – robust, heavy, tangible industrial sectors. But current CEO Mohammad Khamas wanted to haul the business into the 21st century and diversify into entertainment, cinema and fitness.
“I’m taking care of the newer ideas we’re adding to the Group’s portfolio. We’ve got a few entertainment ideas in the pipeline, including a comic and Japanese manga store. We’re also looking to start some Arabized comic magazines and are exploring kids’ entertainment,” Al Samahi says.
Fitness was an excellent market to get into, both in terms of returns and social responsibility, Al Samahi says. “Obesity and diabetes is becoming a pandemic in the UAE, and we wanted to step up and encourage people to live fitter, healthier lifestyles, and do our bit for the community. At the same time, as fitness becomes more of a lifestyle, there are opportunities for good gyms to attract regular businesses.”
AN OPPORTUNITY TAKEN
“Our CEO was a member of a gym chain that is now a competitor. And he used to ask himself daily why that was the only game in town – why there were no competing gyms offering a better experience. He saw the potential and decided to do something about it,” says Al Samahi.
In 2010, Al Ahli started a conversation with the CEO of the California-based chain of gyms. By November 2011, terms had been agreed to and Gold Gym’s debut branch had opened in Deira’s Business Village, adjacent to Emirates HQ.
“The initial plan was to open another three clubs and stop at eight. But then we realized how big the market was and decided to add another 10 to the game plan. But now, the goalposts have moved yet again,” Al Samahi says.
Apart from the gargantuan task of fitting out and opening another 10 clubs across the UAE, Al Samahi says he is also looking at markets abroad.
CONSIDERATIONS OF MONEY
Fitting and kitting out a gym takes anywhere between AED 10–15 million, estimates Al Samahi. That money is recouped through a combination of membership, retail space and merchandising – areas in which Gold’s Gym is prospering. “In under four years, we’re currently the largest gym in the UAE both in space and in membership.”
Membership has bloomed on Al Samahi’s watch. “When I took over, the five clubs already opened had around 5,000 members. Today, we have 25,000 members spread across 12 clubs. The plan is to have 2,000 members a month per club.”
Al Samahi doesn’t believe in overcrowding and says Gold’s Gym will actively consider capping membership in the busiest facilities. “Overcrowding isn’t in our business model. First, we’d run the risk of losing trust. Second, people would think that we’re here to grab as much money as we can. At Gold’s Gym, the overall experience is very important.”
The rise in membership is part of the reason Gold’s Gym is pursuing a policy of aggressively opening new outlets. “We want to make sure the fitness community and all our members have Gold’s Gym outlets to go to.”
Gold’s Gym high membership base means breaking even isn’t arduous. “It depends on the rents we’re paying for the space. That’s the main expense. But all our clubs break even in terms of operational costs somewhere between nine and 15 months. And it takes about two years to recoup the initial investment.”
CHALLENGES AND SUCCESS
The main challenges in running a fitness chain of Gold’s Gym caliber involve the twin resources of space and people. “Finding the right spaces with the right fit has always been the biggest challenge. I have a list of requirements – adequate size, parking, and so on. That, and of course finding the right trainers. We recruit from the world over because we want a culturally diverse environment,” Al Samahi says.
Al Samahi’s expansion plans depend on finding spaces in packed urban centers. “We keep our eyes open and ears to the ground. The minute we hear of a space becoming available, we jump at it.”
It takes Al Samahi between 60 to 90 days to kit out a space and get it ready for members to roll in. It helps that Al Ahli’s resources allows the Group to craft interiors in-house.
Al Samahi says there are a number of factors that contribute to Gold’s Gym success. “We have a wonderful team in place. But we also try to mold each Gold’s Gym to the community – coming up with price structures, membership options and even training classes that suit each community. And we explain that clearly to our clients – that Gold’s Gyms are priced differently depending on location and community.”
At present, Al Samahi’s commitment to hit 22 clubs by year-end has him fully occupied. If that weren’t challenging enough by itself, there are other considerations at play. “The 10 new clubs will need to be at least three times the size of our current ones. Dubai’s city centers are growing and we want large spaces to be able to serve the communities around us.”
Al Samahi’s hands become animated as he traces out a scenario for expansion. “We want to be in communities. I’d be looking for something in the Jumeirah Circle and Jumeirah Village area to build on our Ibn Battuta branch. And then move down to the Jumeirah Lake Towers and also add another on the Marina Side. Perhaps one in Media City. Once you have that network in place, you’ve basically provided anyone who wants to exercise with a convenient location. There’s no excuse to not exercise anymore.”
As seen on Zawya Business Pulse. To see more, please click here