A sporting chance

Hotel managers often turn a blind eye to their leisure facilities. In doing so they are neglecting a considerable opportunity to raise revenue, says Sean Thornton.

And he should know. As leisure manager of English Lakes Hotels he has recently persuaded his employers to invest heavily in their leisure facilities. And with a track record of increasing revenue at the two hotel leisure clubs he manages, they are confident he can deliver.

The industry has long been divided over the value - perceived and actual - of developing and maintaining leisure clubs. There is no escaping the fact that they are expensive to equip, staff and maintain. For example, a small club's gym equipment alone can cost £300,000 and a club with facilities suitable for commercial membership will cost at least £1.5m.

But Thornton has proved, to the delight of his boss Tim Berry, leisure director of five-strong English Lakes Hotels, that leisure facilities can generate revenue in their own right.

Putting his theory to the test, work starts shortly on a major extension to the Sandpiper leisure club at the company's Lancaster House hotel. Thornton's business plan demonstrates that an extension will generate more revenue more quickly than putting the investment to any other use.

Work will start in the New Year on the £250,000 plan to extend the leisure club. A 20m 5 7m fitness studio is to be added and the changing facilities are to be enlarged. A separate entrance to the club is to be built, which will leave room for a large reception area and an office. A further £100,000 is to be spent on fitting out the new facilities. The work is to be financed through retained profit.

The club will have to close for a month while the work is completed, but it is due to reopen in April 1998. Thornton aims to increase membership by 47% to 1,750. Marketing new memberships begins now in anticipation of the work and will be carried on throughout the closed period. Achieving this target will generate £109,000 of extra revenue.

"For each capital expenditure we looked at the pay-back period and an extension to the leisure club gives the quickest return - in just two years," says Berry.

Thornton's initiatives have been well supported by English Lakes Hotels. Berry praises Thornton's "high-profile department" and its strong and loyal team. But the group's faith in leisure has been clinched by the bottom-line figures Thornton has produced.

Thornton started at the Low Wood Hotel in Windermere in 1991 as duty manager of its leisure facility, the Low Wood Club. Within 18 months of graduating with a sport and recreation degree from Staffordshire Polytechnic, he became manager at Low Wood's sister establishment, the Sandpiper Club in another of English Lakes Hotels' establishments, Lancaster House.

In January 1993, three months after Thornton took over, the Sandpiper Club had about 500 members and was struggling financially, returning a net operating loss of £27,000 that year. But by the following year membership had reached 1,150, the club's capacity, generating a net operating profit of £15,000.

Thornton boosted membership by investing in his staff. "We introduced an extensive training programme, including NVQs. Previously the staff were trained alongside the hotel team, but leisure club staff need different skills to motivate customers." Committed and enthusiastic staff encouraged members, who in turn recommended their friends.

"Our goal is to have an enthusiastic membership who participate regularly and refer their friends," says Thornton. He knows it works because in a recent membership survey he discovered that 70% of the club's members had been referred by friends.

In the four years since, the membership level has been sustained and net operating profit has grown to £90,000 for the year ending 31 March 1997. Thornton's success in achieving this led to his promotion to a newly created post - leisure manager for the company, with responsibility for both clubs.

Thornton's magic touch was then turned on the Low Wood Club. Over the past two years it has been relaunched more at the local community rather than the fluctuating number of hotel guests in what is predominantly a tourist market.

Thornton introduced a "live" business plan. Unlike many business plans, which end up in a drawer never to be seen again, Thornton's are all accessible and are reviewed on a monthly basis. "You have to keep reviewing your goals," says Thornton, who involves all his staff in the process. "The staff review their own areas of responsibility every six to 12 weeks."

Another key step was to lose more than 500 discounted commercial memberships through a selective pricing policy. These tourist-related memberships had been sold to competitor hotels and holiday cottages. By increasing the price of commercial memberships by 85% in the first year and 25% the following year, more profitable capacity was created.

Extending the gym into an unused storeroom and subletting a treatment room to a state-registered physiotherapist allowed Thornton to make more profitable use of the club's space. A small investment of £25,000 to update equipment, which paid for itself in the first two months, completed the changes.

The results speak for themselves. The Low Wood Club's membership base grew from 1,100 in April 1995 to 1,470 members by April 1997. And net operating profit increased by 300% in two years to £130,000. Next year a squash court will be converted to a dance studio and the club will be expanded further.

Thornton recently achieved national recognition within the fitness industry by winning the manager of the year award in the small club category of the Fitness Industry Association's annual awards. The Low Wood Club was runner-up in the small club category.

"It was the high point of my career," he says. "We couldn't have done it without everyone's enthusiasm and initiative. English Lakes has invested a lot in the clubs, especially in terms of staff training. But it's nice to see investment in training is paying back."