Why this acquisition by fitness platform Cure.fit is good news for gym industry

Gyms are slowly recovering to pre-COVID level of business after a tough year. A recent acquisition has made leading players upbeat about a faster revival.

Health and fitness platform Cure.fit acquired gym aggregator Fitternity on February 9 to offer more gym partners to fitness enthusiasts. It did not disclose the deal size.

Cure.fit is a platform that offers its own gyms to users and provides other services such as online therapy under mind.fit, consultation with a dietician or lab tests at home using care.fit, and access to healthy food from restaurants listed by eat.fit.

With more people visiting gyms or fitness centres, the industry will see better recovery, says Neha Motwani, Founder and CEO of Fitternity.

"With this partnership, Cult centres (gym and fitness centres available on Cure.fit) get added to our marketplace and Fitternity members will have access to Cult centres which were not there prior to this partnership. And Cult members will get access to One pass (a pass which gives users access to gyms that are on Fitternity). And all this will help the supply side as gyms will see better footfalls," Motwani told Moneycontrol.

Helping recover revenue

Experts said sales in the last two months of 2020 were at an average about 30-35 percent of the pre-COVID level for gyms.

Cure.fit which has more than 200 of its own Cult gyms now will now have Fitternity's network of more than 5,000 fitness centres across 20 cities in India. Out of the 200-odd gyms that Cure.fit has, about 150 have reopened after the pandemic forced them to shut down for five to six months.

"With Fitternity, we will be able to further scale and expand this offering to include even more gyms. This will not just help our network grow significantly but also aid these smaller gyms in terms of evaluating and escalating the quality of their services which would translate into greater footfalls and revenue," Naresh Krishnaswamy, Head of Growth and Marketing, Cure.fit, told Moneycontrol.

Partnership perks

In addition to getting more gyms, Cure.fit will also benefit by doubling its userbase of 1.5 million  (including free users).

Also, Fitternity will be an independent platform.

New year resolution

Motwani said plans for 2021 include not just horizontal expansion but also adding more gyms in the same catchment area. "At the same time, for horizontal expansion we will look at adding more categories. We did a small experiment two years back by launching 5-star hotel offering where a One pass user, if he/she is visiting places like Grand Hyatt or Westin, could access their gyms using the pass. Similarly, we will add more such categories in One pass."

Motwani expects the transaction to speed up recovery. "We will take end of the year to get back to pre-Covid level. But we are hoping it will be fastened up with this new transaction," said Motwani.
"We were at 15 million annual recurring revenue (ARR) in sales prior to COVID-19 and we want to get back to those numbers," she added.

Last year was challenging for Cure.fit also. "Our gyms were shut and offline revenue was affected. While most of our centres are now open with new safety guidelines, we are still seeing the entire gym space slowly coming back to pre-Covid levels," said Krishnaswamy.

The online bounce back

The pandemic forced the company to lay off more than 1,500 employees last year.

For both the platforms, it was the online route that helped them stay in the business.

Motwani said that while online was here to stay and that Fitternity will scale some of its digital offerings, the company will look at some integration with Cure.fit because they have strong digital offerings.

Krishnaswamy said people were still interested in online fitness classes. "While offline gym business is slowly recovering, there is a large chunk of people that have realized that working out from home is easier, affordable, and effective." On Cure.fit, online live classes are seeing good traction among its users and top workout formats are dance fitness and yoga.

This year Cure.fit had also acquired US-based fitness tech startup Onyx in January to improve its digital offerings.

Along with focusing on online offerings, both platforms would work towards shaping up the offline fitness space in India and help it recover from the impact of Covid. And for this, making gyms more tech-enabled will be the key focus with the expectation that the first 1,000 gyms on the combined platform will see 50-100 percent more business from their existing infrastructure.