Last week, the federal government announced details surrounding the Canadian Emergency Commercial Rental Assistance (CERCA) program, and my initial reaction was: “this has to be really good news”. And it is. Sort of.
As the President of Fitness Industry Council of Canada, representing thousands of fitness clubs and studios across the country, I have witnessed and felt the challenges facing our industry. As such, we have been working hard to help our industry get through this really difficult time. It’s important that we are heard and voice our concerns about our current situation.
Since all fitness facilities closed in the middle of March, we’ve been asking the government for funding to keep businesses afloat, so that they’re able to come back to support their members as soon as possible.
As of 2019, there are nearly 6,800 clubs across the country, with more than 6 million members. We are all in the business of helping these people by keeping them healthy and fit. Upon being forced to close in March, many facilities took immediate action ranging from freezing accounts, providing loyalty credits, or converting to digital subscriptions. It has been inspiring to see how quickly our industry pivoted to continue to offer solutions for Canadian’s focused on their physical and emotional health. We know that this has been invaluable to thousands, if not millions, of Canadians who are doing their best to stay healthy, both mentally and physically. We’re so proud that we’ve been able to do that, but it has come at a cost. Even those companies that were able to pivot to offering a digital solution, revenues are still down significantly.
When we saw the initial CECRA announcement, I was cautiously optimistic that this would be an impactful solution for our industry, providing fitness clubs with what they need to continue on. And in some ways, that’s true. The federal and provincial governments worked together to provide 50 per cent rent abatement for April, May, and June, and asked landlords to provide an additional 25 per cent, with the companies themselves covering the final 25 per cent. This is definitely a great concept, and if it were that simple, I think most of our members would be happy with this initial step.
Unfortunately, it’s just not that straightforward. The funding comes through the CMHC and they will be working directly with landlords, who will then pass along the rent reductions to tenants. That puts the onus on the landlords to submit the paperwork. And, other than looking like a “good guy,” they don’t have any real reason to do this. They don’t get anything out of it. In fact, some of them look at it like they’re going to lose 25 per cent. So, what happens if the landlord doesn’t want to participate in this program? Tenants would still be responsible for all of the rent, which would put many clubs in extremely tenable situations.
In the collective opinion of the Canadian fitness industry, the process would be much better for the tenants if they could apply for, and receive the funds directly. There also is a large number of organizations that this program doesn’t address. Companies who have multiple facilities that bring in over $20 million per year aren’t eligible. People might think that makes sense because they’re “big companies,” but that isn’t necessarily the case. These “big companies” have more employees and more locations, which means more fixed costs such as rent, property taxes, utilities and other capital and operating costs. Currently these organizations are left out of the CECRA program. Changes need to be made before this bill gets full approval in the House of Commons.
Things are going to be different for the foreseeable future. When fitness clubs open, we will be facing restrictions in terms of capacity. If a studio or club is only able to operate at reduced capacity, we will need to match expenses accordingly, so we will need some help for operating expenses such as staff and rent if we have those restrictions in place. Capacity is going to be dependent on the guidance from provincial governments, based more on spacing and square footage than actual number of people. For example, a small studio will have different capacity capabilities than a larger sport club or recreation centre. This too, needs to be addressed by the government.
We will be proposing our opening strategies and protocols to the provincial governments in the coming days. Our industry has the capability to ensure proper spacing and cleaning protocols are in place and we will ensure the government understands these points. Currently in Alberta, health clubs are in the same category as night clubs and concerts. We believe we will be able to steward a much different experience that is safe and effective for our members.
We are very proud of how our industry has stepped up in the face of such adversity to take care of so many Canadians. We don’t know when we’re going to open our doors again, but want to make sure that clubs and studios are able to manage through this time until that happens. And until then, we will continue to support Canadians with their physical and mental well-being the best we can.
Scott Wildeman is the president of Fitness Industry Council of Canada. Scott is also the Senior VP of Fitness and Operations for International Fitness Holdings, which operates over 20 clubs under the GYMVMT brands.
Scott has been active in the fitness industry for 21 years, serving as a Personal Trainer, Group Fitness instructor and in various management and leadership positions. In 2015, Scott was named one of the best cycle instructors in Calgary. His company has been recognized as one of Canada’s Best Managed companies and has received the designation as the Achievers top 50 most engaged workplaces in North America.