Business of fitness: UAE's $380m exercise industry enters a new cycle

With the rise of health apps and tech-driven concepts, many threats and opportunities still exist for the Gulf's most established market of its kind
By Lubna Hamdan
Fri 01 Sep 2017 01:16 PM

Imagine cycling on the streets of Tokyo with neon-lit skyscrapers on either side, techno tunes blasting in the background. A few minutes in and you find yourself on the corner of Hong Kong’s bustling centre, seaside on your left and city on your right. Except you’re not in Asia at all. You’re in virtual reality cycling class The Trip, located in the heart of Dubai.

The immersive fitness class is one of a series of choreographed fitness classes brought to the region by New Zealand-based Les Mills International, famous for offering high-intensity interval training (HIIT) that claims to burn up to 900 calories an hour.

Despite some of its classes’ unique futuristic appeal, Les Mills is just one of over 800 distinctive health and fitness concepts in the UAE, where the industry was estimated to be worth $380m in 2016 according to research firm Statista.

The UAE houses some of the world’s most prominent fitness brands, including American chain Gold’s Gym and UK brand Fitness First. But even with a sizeable offering, just six percent of the UAE population are registered members of a health club, according to a report by the International Health, Racquet & Sportsclub Association (IHRSA), which recorded penetration rates of almost 20 percent in developed countries such as the US.

Opportunities

The UAE’s population is not getting any healthier, with obesity levels stuck at twice the global average. Reports by the World Health Organisation (WHO) show 70 percent of men and 67 percent of women aged 15 years and older in the country are considered overweight.

“When these statistics are combined with the fact that the weather makes it almost impossible to exercise outside for several months of the year, you have a market that is ripe for the picking for savvy operators,” says the head of Les Mills Middle East, Glen Stollery.

While Stollery claims setting up a fitness facility requires little more than “leasing a property and throwing in exercise equipment,” he says starting a successful business is when the struggle begins, largely due to the fact that many apartment buildings in the country have a reasonably well-equipped gym servicing their residents - a challenge most health club operators outside the UAE do not face.

“This means that commercial clubs need to offer some differentiation - they can’t simply offer exercise equipment, as many city dwellers already have gym access free of charge,” says Stollery.

So what are people missing in the UAE’s health and fitness industry? Motivation to exercise, according to Stollery.

“[People] know they can train in their building, follow a routine off a YouTube video or even run around the block. But the fact of the matter is, most don’t because they’re not motivated enough to do so.

“There’s something about exercising in a group, training with your friends with the latest music and a motivating coach that gets people excited about exercising.”

The firm’s immersive fitness classes, which follow a pay-per-class model, have been operating at 80-100 percent capacity in Dubai. Attendance, according to Stollery, is the only metric he uses to measure how motivated his members are, but also how successful his concept is.


Kickboxing is fast becoming a popular fitness activity in the UAE as it combines a range of different full body workouts

“The reality is that if you’re simply offering exercise equipment without a high-performing group exercise timetable, then you’ll likely struggle in this market,” he says.

Les Mills’ business model sees the firm partner with club operators to provide them with content, as opposed to operating the clubs itself. It is one of the reasons behind’s the brand’s rapid success in the UAE, where it plans to set up a total of ten partnerships by the end of 2018.

Its immersive classes take place in GFX fitness studio in Business Bay, a space that occupies less than 200 square metres, eliminating the price of premium real estate that haunts more traditional fitness centres. And while a virtual reality set up requires an initial capital investment in AV technology, it can be set up with a reasonably low investment thanks to its small footprint. But real estate is not the costliest factor in the equation.

Gyms versus freelance

Guillaume Mariole, founder of Dubai-based wellness company Ignite Fitness, says talented staff are hard to come by and even harder to afford. He argues that this is due to the influx of freelancers who work illegally in an industry that requires more regulation in terms of freelance jobs.

“Staff cost too much because the market is unregulated, so they get to call the shots, rather than the companies, who take all the risk. There are extensive costs associated with staffing, licensing, insurances, permits, office, equipment, VAT - the list goes on. Things are getting tougher as we have to compete with freelance trainers who don’t conform to the same set of rules.

“Business owners are taking a hit for new costs to ensure they remain compliant, while freelancers just skim along in the background,” he says.

It has not helped the more traditional players that consumers now request more value for their money than ever before, with brand loyalty less important and affordability more significant. While this leads to greater challenges for less forward thinking fitness centres, Ignite’s wide portfolio of fitness and wellness services reduces its vulnerability.

The firm, which launched in the UAE in January 2010, achieved 20 percent growth in six years, it claims, while maintaining average gross earnings of 10 percent. Mariole expects it to grow by another five to ten percent in the next six to 12 months.

“There is significant opportunity yet to be captured within the UAE. Any market is good to start a fitness business, I wouldn’t pigeonhole the UAE. As with any market, some will do well while others fail,” he says.

UAE-based certified personal trainer (PT) and yoga teacher Abbey Sketch agrees that the UAE’s fitness industry lacks regulations compared to some other developed countries, where fitness professionals are required to update their credentials every two years. But after five years in Sydney, London and Dubai, she says there is plenty of space for private trainers to make money in the UAE’s fitness market - more so, in fact, than in many other cities.

“One of the pros of the UAE fitness industry is that more people are interested in private training and yoga sessions, because it is common to expect services to be delivered to your doorstep here,” says Sketch, who charges a little above the average of AED250 ($68) per session.

Sketch was initially a trainer for an international gym chain in Dubai, at which she worked 10-hour days and sold personal training packages to earn commission on top of her salary. Because of the hectic work schedule, she switched to freelancing. While she is not struggling to find clients, she says demand in the market is no longer what it used to be. Customers are much more health conscious.

“It’s not just about walking on the treadmill and cutting out carbs these days. Clients in the UAE are more interested in proper training and nutrition and are becoming smarter about who they seek out for fitness-related help,” she says.


Gyms require substantial upfront investment in the form of equipment and other facilities

The luxury option

The demand for exclusive training and customised programmes has resulted in an increase in luxury gyms in the UAE. One such gym is Embody Fitness, stretched across 10,000 square metres in Lamborghini’s largest global showroom on Dubai’s Sheikh Zayed Road.

With a capacity of just 200 members at any one time, the centre offers residents a bespoke membership including training, nutrition, meal plans, sports therapy and regular monitoring. It opened in April 2017 and has already acquired 65 members.

The Embody founder and CEO is James Miller, who spent 25 years working as an investment banker and CEO of a bank in Dubai before self-funding his fitness business four years ago in the UK and this year in Dubai.

“Most people do not enjoy going to the gym but do it out of necessity, which is also why a lot of people struggle to make it a sustainable routine in their lives.” he says of the challenge that any gym faces.

“One of our company mottos is, ‘The hour of a day that a client comes to Embody should be the best hour of that client’s day.’ To do this, you have to provide a completely different experience for that client, who can then actually look forward to their exercise,” he continues.

Miller believes that this philosophy will allow him to fulfil his objective of making the business profitable in its second year.

Once that goal is accomplished, Embody will partner with five-star hotels to provide a higher standard of fitness and wellness service than what Miller says is currently on offer in the city.

But how easy is it to set up a luxury gym in the UAE? One challenge the founder faced was the typical length of lease terms available in the market, which may work better for a retail client but not for a business that requires significant upfront investment in the property.

“Lease terms don’t typically match the life cycle of investment, which doesn’t encourage long term, higher quality investment, but I am sure the market is moving in that direction,” says Miller.

Volatile revenues

While luxury gyms in metropolitan cities may require a large investment, smaller-scale fitness concepts such as yoga studios are more concerned about volatile revenues.

“A yoga studio customer base differs from those of gyms, which tend to adhere to a membership model. Roughly 50 to 75 percent of yoga customers pay for a drop-in or package rate, which makes revenues more volatile,” says Kimberley Stokes, owner of Urban Yoga studio in Dubai.

The concept was launched in December 2013 when Stokes says the yoga industry “woke up.”

“We went from having just a handful of yoga studios, to ten opening in the same year. Everyone recognised the gap in the market at the same time. In the last five years, there has been a lot of change in the industry. There have been times where there was a studio opening or closing every month,” she says.

While Stokes firmly believes there is money to be made in the UAE’s fitness industry, she says the key to a successful fitness company is tackling Dubai’s ‘business-hours’ work culture which is unlike London or New York’s, where there are more people who work odd, and late, hours.


Embody Fitness is a luxury personal training centre in Dubai and one of many new operators in the emirate

“This means that there are peak times of customer demand during the morning, evening and weekend. There is little demand all afternoon, which means most studios are either empty or closed during this time. The studios that do well are the ones that are able to attract customers throughout the day and evening,” she says.

One business that has tapped in to this restless work culture is 9Round, a kickboxing, full-body fitness programme that uses functional, interval, cardiovascular, and circuit training regimes developed by a world champion kickboxer.

With no scheduled class timings and workouts that change on a daily basis, the concept allows clients to start their 30-minute circuit — which can burn up to 500 calories — while being supervised by a certified 9Round trainer at all times.

Despite higher-end prices starting at AED2,800 ($762) for a three-month membership, 9Round has attracted over 120 members in the first five months after its launch in April 2017. And while its business model sets it apart from the more traditional methods, 9Round’s UAE manager Noura Alsulaimani says competition is still the main driver behind the concept.

“The biggest challenge for now is the competition with other gyms, as there are so many concepts and they all have their own uniqueness. The variety of gyms in the UAE is impressive,” she admits.

The future: low-cost competitors

Unique as 9Round’s concept may be, high-cost operators might be in for a difficult ride as low-cost operators continue to take a large chunk of the market.


Many residential buildings have well-equipped gyms making it challenging for UAE operators

“These budget clubs savaged traditional fitness operators throughout Europe and the US by leveraging technology and offering memberships that were 50 to 75 percent lower than typical existing facilities,” says Stollery of Les Mills Middle East, where a virtual reality cycling class is priced at just AED50.

“We’re now starting to see many lower cost operators enter the market in the UAE such as GymNation, MetroFitt and Snap Fitness.

“These operators will be offering memberships at half the rates of most of the existing clubs and this will no doubt cause the same levels of disruption seen elsewhere,” he warns.

The demand by consumers for more value for their dirhams has also given rise to unique business models such as Guava Pass and Class Port. These are app-based providers that charge as competitive monthly membership prices as traditional fitness centres, while offering access to dozens of different facilities.

As the UAE’s promising fitness market continues to mature and compete with markets such as the US, Stollery warns existing operators need to stay on their toes.

“The biggest mistake we see is the assumption that if your club is busy today, it will still be busy tomorrow.”

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