Life Time Group Outgrows, And Out-Pampers, Planet Fitness

In the ever-evolving fitness industry, two giants stand out: Life Time Group and Planet Fitness. While both have seen significant growth, their strategies and outcomes couldn't be more different. Life Time Group, with its luxury amenities and high-end offerings, has managed to outgrow and out-pamper its more budget-friendly competitor, Planet Fitness. This essay delves into the strategies, financial performance, and member retention tactics of both companies, highlighting why Life Time Group is emerging as the clear winner in the fitness industry.

Life Time Group's focus on luxury and high-end amenities has resulted in strong member retention and significant revenue growth. As of Q1 2024, Life Time reported an average monthly membership of almost $190, with a 16.8% revenue increase to $596.7 million, driven by increased membership dues and in-center revenue. The company also saw a 5% increase in center memberships compared to the same period last year. Life Time's founder and CEO, Bahram Akradi, highlighted that the company is experiencing the best retention rates it has ever seen, with a substantial over-performance in access membership at the end of Q1 2024, reaching 802,000 members. This success is attributed to strategic initiatives such as pickleball, ARORA, and small group training, which have led to "amazing success" in dynamic personal training and improved member engagement.

In contrast, Planet Fitness operates on a more budget-friendly model, which has also shown consistent growth. In 2023, Planet Fitness reported a full-year system-wide same store sales increase of 8.7% and membership growth of 1.7 million since the end of 2022. The company opened 165 new stores in 2023 and reported a total revenue increase of 14.4% to $1.1 billion. For the fourth quarter of 2024, Planet Fitness saw a 19.4% increase in total revenue to $340.5 million, with system-wide same club sales increasing by 5.5%. The company ended the year with 19.7 million members, posting revenue growth of more than 10% and growing Adjusted EBITDA by approximately 12%.

While both models have shown growth, Life Time's luxury focus appears to drive higher revenue per member and stronger retention rates. For instance, Life Time's average center revenue per membership increased by 12.9% to $815 in the third quarter of 2024, compared to Planet Fitness's average revenue per member, which is not explicitly stated but can be inferred to be lower given its budget-friendly model. Life Time's strategic initiatives and high-end amenities have led to a more engaged membership base, as evidenced by the increased visits per membership and higher retention rates. In contrast, Planet Fitness's model focuses on affordability and accessibility, which has allowed it to attract a larger membership base but may not drive the same level of revenue per member or retention rates as Life Time.



Life Time Group has implemented several strategic initiatives to drive its historic levels of member retention and engagement. According to Bahram Akradi, the founder and CEO of Life Time, these initiatives include "pickleball, ARORA and small group training." These programs have been particularly successful in enhancing member engagement and retention. For instance, dynamic personal training has led to "amazing success," with Akradi noting that "the momentum is strong" and "the execution is the best I’ve seen." The connectivity between members and personal training has improved, which has been a key factor in the in-center experience.

In contrast, Planet Fitness has focused on different strategies to drive member engagement and retention. Planet Fitness has developed a New Growth Model to fuel long-term sustainable store growth, which includes enhancing returns and reducing the capital requirements for opening and maintaining a Planet Fitness franchise location. This model provides franchisees with additional flexibility to build their store portfolios for years to come. Additionally, Planet Fitness has increased the new member Classic Card price for the first time in more than 25 years, which is aimed at enhancing the attractiveness of their returns for franchisees.

Planet Fitness has also made meaningful progress in executing its strategic imperatives of redefining its brand, enhancing member experience, refining its product, and optimizing its format, and accelerating club openings. These initiatives are aimed at strengthening their industry-leading position and delivering increased shareholder value.

In conclusion, Life Time Group's focus on luxury and high-end amenities has proven to be a winning strategy in the fitness industry. With strong member retention, significant revenue growth, and strategic initiatives that drive engagement, Life Time Group is outgrowing and out-pampering its budget-friendly competitor, Planet Fitness. While Planet Fitness continues to show consistent growth, its model may not be as effective in driving revenue per member or retention rates as Life Time's luxury-focused approach. As the fitness industry continues to evolve, it will be interesting to see how these two giants adapt and compete in the years to come.