have been hardest hit by the recession, with
a number of operators looking to evolve
their offering in order to retain membership
through more competitive pricing.
As in 2010, the budget sector was where the
greatest activity took place with around 14
operators now active in the UK market.
In April, Virgin Active nearly doubled its UK
portfolio with the acquisition of 55 Esporta
fitness centres and racquet clubs in a deal
worth around £77.5 million. The freeholds of 17
racquet clubs were subsequently sold to British
Land for a total consideration of £179 million
on the basis of Virgin signing 25-year leases
with an initial annual rental of £13 million.
In October, Total Fitness (having been acquired
by management and Barclays Ventures via a
pre-pack administration a year earlier) went
into liquidation. Having closed a number
of clubs throughout the year, incumbent
management was endeavouring to renegotiate
lease terms with landlords across the portfolio
as Business Outlook went to press.
Elsewhere, Fitness First, developed its
own take on the budget sector with the
introduction of its “Klick” brand, whilst
Bannatynes brought lower-end clubs to the
market, such as one in Cheltenham which was
acquired by Fitness4Less. Significantly, some
operators chose to maintain their portfolios
in the hope that values would return to
the marketplace – although there is little
indication of a return to historic high values
of a few years ago.
With activity quite slow, those health and
fitness clubs that did come to market were
largely from the individual owner-operator
end. During the year we sold a number of
such clubs including the Axis in Derby and
Eden in Scarborough to the burgeoning
operator Eze Fitness and the GL-14 portfolio
to Bannatyne Fitness.
Other sectors
Not bowling along
The bowling sector struggled in 2011 as it
continued to suffer from a lack of variation
in its offering. Consolidation continued in the
sector as viable opportunities were hampered
by the lack of suitably large floor area –
investors seeing greater potential for success
in utilising areas for other entertainment and
leisure forms such as cinema.
Film fillip
Cinema appeared to suffer less than most
from the economic strain, with audiences
boosted in the peak summer period thanks
to the release of major movies like the latest
in the Harry Potter franchise. Cinemas also
continued to benefit from a greater variety of
secondary revenue streams and the roll-out of
digital and 3-D capabilities across corporate
portfolios enabled operators to capture
additional business.
In transactional activity, Odeon Cinemas’
acquisition of five cinemas from Reel Cinemas
(
UK) Ltd late in the Summer was the most
notable.
Hi-de-Hi days back?
UK holiday park businesses held up
reasonably well in 2011 as more families opted
for the ‘staycation’ instead of holidaying
abroad. However, operators’ secondary
income from the sale of chalets and caravans
remained under pressure. Consensual exits
formed the basis of the limited transactional
activity during the year, with investors’ eye
for the key locations creating opportunities at
the more marginal end. The next year could
be different, however, with a likely increase
in distress disposals.
Sporting chance
Other notable movement in the year saw
the further rise of the ‘small-sided football’
format. Although the sport is very land-
intensive, operators like Goals, Powerleague
and Play Football continue to be able to
benefit from round-the-clock usage thanks to
tie-ins with schools ensuring all-day use.
A tip for the future may be the new concept
in indoor skiing being championed by former
UK Olympic skier Chemmy Alcott. Skiplex in
Chiswick uses a conveyor-belt mechanism to
allow skiers of all standards to develop their
techniques without the need for large areas
of land employed by the snow-domes.
A number of golf courses came to the market
during the year, as the ongoing need for
considerable capital expenditure and pressure
on flexibility of membership arrangements
drove some operators out of the market. As the
quality of some courses continues to decline
and operators cannot invest sufficient capex, we
expect to see further distress sales in 2012.
On a brighter note, driving ranges are proving
popular, especially as more operators enhance
their offerings. In late 2011, Christie + Co
brought the World of Golf centre in New
Malden to the market. The centre not only
includes a two-tier driving range facility, but
an adventure golf course with animatronic
dinosaurs, a golf superstore and a Costa
Coffee franchise licensed to sell alcohol.
34
Business Outlook
2012
