Feb 15, 2007 4:30 PM
Interview with Howard Brodsky, CEO of Health & Racquet Club, New York
As the New York Health & Racquet Club celebrates its 35th anniversary, CEO Howard Brodsky comments on changes in the industry, changes to his New York-based company and his plans for expansion throughout the Northeast.
Q: How has New York Health & Racquet Club (NYHRC) changed during its 35 years of existence?
A: In the 1970s, 1980s and early 1990s New York Health and Racquet Club had no competition. It had the celebrities and models because there was no place else to go. I got here 4 ½ years ago. The company was stale and had been for four to five years. We had the Silent Generation (people born 1925-1945) and then Baby Boomers, but to see a Gen X in this club—it didn’t happen. So we had to attract them while not alienating the Baby Boomers and the Silent Generation. We did that with music and classes. So now you can walk into the club and see someone who is 21 years old working out with someone who is 80 years old.
Q: What has the company done in last 35 years that you are proud of?
A: We have loyal employees who work very hard. We’ve been able to groom talent and keep them. I think that’s what I’m most proud of—the people. We did go through tremendous changes when I came here five years ago. I’m also proud of the financial results we’ve had. We went from losing money to making money.
Q: What are your member and revenue numbers?
A: We have 32,117 members. Revenue in 2006 was $41 million. Five years ago it was $20.4 million. We added two clubs, but even if you pulled them out, the increase was significant.
Q: Beyond the two new clubs, what accounts for the revenue increase?
A: Increasing net members, dollars spent per member. Increasing personal training from about $4 million in 2001 to $11 million in 2006. That’s through margins and being careful with the expenses and bringing in the right people.
Q: How many employees do you have?
A: 650 full and part time.
Q: How have your clubs’ look and feel evolved in the past 35 years?
A: One of the obstacles that we’ve had is that some of our clubs are more than 35 years old. They aren’t designed like a lot of the facilities we design today with an open look and feel. So we have to overcome that. We have a club on 13th street in the East Village in Manhattan. We have Crunch, Equinox, World Gym and others around us there, but our club continues to do well. It’s all about the people. The general manager knows your name. The locker room attendant knows your name. I take great pride in that—that we find people who are welcoming and smiling, and if you think that doesn’t matter, well it does. A lot of our clubs don’t have the physical plant to attract people; we do that with our friendly staff.
Every club we have is in a different market in Manhattan. Our club in East Village has a different look than the more corporate clubs that we have. We try to match the club and the staff with the market we’re in. Every club we design and renovate will have a different look and feel. I think that’s great for our members that they can visit one of our other clubs and get another look and feel.
Q: What changes do you foresee for your club in the next few years?
A: We are always changing our programming. We have programs for Baby Boomers, seniors and 20-year-olds. As far as expansion goes, we are looking to expand. There are a lot of areas in Manhattan that are open. Also Long Island, Connecticut, West Chester County, perhaps New Jersey. I’m going to be careful. I know what is happening in the real estate market. In two to five years, we will see a lot of clubs up for sale. We have had no debt in 35 years and never plan on taking on any debt. We own all our buildings. The real estate market is out of whack here. We are going to be patient. I am talking to some companies about acquisitions. I’ve learned to be patient, to do things right. Some of the clubs that have opened here have done so too quickly.
Q: Isn’t the New York market a bit overbuilt??
A: It’s not overbuilt yet, but there are some companies that are building clubs now with rent that is way too high. It might be a beautiful club, but in five years, can they afford to do a renovation? I think there are some clubs that are moving too fast.
Q: How has the industry evolved over the past 35 years??
A: As the industry has become more professional, you have more professionals joining the industry. For someone 25 years ago to be a sales professional, it wasn’t considered a real job. We have five sales consultants who have been with us for more than 25 years. They love their job and the business. More professional managers have gotten into the business. More corporations are involved. Big conglomerates are getting involved in the business. That’s great for the industry. It’s sad for the mom and pop clubs because it’s harder for them to compete.
Q: How has NYHRC kept up with the changes in the industry?
A: I look at outside companies and what they are doing—Starbucks and Enterprise. I try not to follow the industry trends. I try to follow trends from outside the industry.
One of my favorite stories is about the barista at Starbucks and how he came up with Frappuccino, which is one of the biggest sellers at Starbucks. It’s all about getting feedback from club-level people. I’m a big believer in ideas coming up the chain.
Another company that impresses me greatly is Enterprise Rent-a-Car. The service is impeccable. I can’t tell you how well they do financially, but the managers are young and they are attentive. When I walked into an Enterprise on a Sunday, I was treated like gold. The way they were trained was great; the way they made people feel was great.
Q: What are the biggest issues that the industry is dealing with today?
A: To the owner, it’s don’t leverage yourself and pick real estate carefully. Don’t rush to expand. To the managers, it’s you should never settle for mediocrity. You have to have the equipment and the location, but everyone has that. You have to have the people. Too many are just settling. To me, it’s never settle.
