1. INTERNATIONAL STANDARDS MEETING Promoting Cooperation, Innovation and Professional Standards for the Fitness Sector Similarities and Differences between East and West European Fitness IndustriesDeveloped vs. Emerging Markets in Europe Dr Laszlo Zopcsak Phd International Wellness Institute CEO Hungarian Health & Fitness Association President Budapest, 2013

2. INTERNATIONAL STANDARDS MEETING Promoting Cooperation, Innovation and Professional Standards for the Fitness Sector The purpose of my presentation to answer these questions: What are the reasons for lagging behind the developed markets and how to catch up? What are the similarities and differences? Do we have specific challenges? How could we find possible solutions to maintain professionalism and growth?

3. INTERNATIONAL STANDARDS MEETING Promoting Cooperation, Innovation and Professional Standards for the Fitness Sector It started with the Prague spring… …Brussels autumn - London winter – Madrid… Barcelona … During EHFA conferences I realized the HOT topics of West European (WE) Fitness Industry (FI) such as: Music licensing, member retention, set up minimum standards, Creating REPS, HK Book projects, Developing education materials, Liability insurance, etc..

4. INTERNATIONAL STANDARDS MEETING Promoting Cooperation, Innovation and Professional Standards for the Fitness Sector How can I bring West European experience to Hungary? 1. Jumped into the mission of sectoral cooperation 2. We formed the HHFA 3. Since founding HHFA we had 10 events: – ERESP promotion conference – Regular management meetings – International Scientific Fitness Conference in May

5. INTERNATIONAL STANDARDS MEETING Promoting Cooperation, Innovation and Professional Standards for the Fitness Sector The reality… Realized that it is not working to copy WE, we have to adapt Convince the market Fitness Clubs (FC) still underrepresented. Why? Few FC membership in HHFA This is a very slow process!

6. INTERNATIONAL STANDARDS MEETING Promoting Cooperation, Innovation and Professional Standards for the Fitness Sector What are the reasons for lagging behind developed markets and how to catch up? 1. Global Industry Overview 2.The phases of Fitness evolution 3. European Industry Overview 4. Similarities 5. Differences 6. Solutions

7. INTERNATIONAL STANDARDS MEETING Promoting Cooperation, Innovation and Professional Standards for the Fitness Sector Industry Overview Global Market Size & Scope Source: IHRSA 2013 Global Report, EHFA Deloitte Report 2013, Laszlo Zopcsak PhD

8. INTERNATIONAL STANDARDS MEETING Promoting Cooperation, Innovation and Professional Standards for the Fitness Sector References* Industry experts! EHFA Deloitte Report 2013 State of Research in the Global Fitness Industry 2010 HUB 2010 WHO 2011 Eurostat 2013 Eurobarometer 2010 Hungarostudy 2009 WHO Report 2011 IHRSA European HC Report 2013 IHRSA Trend Report 2013 CIA Factbook 2013 Data Leisure Company 2013 *statistics are liable to change drastically

9. INTERNATIONAL STANDARDS MEETING Promoting Cooperation, Innovation and Professional Standards for the Fitness Sector Industry Overview Global Market Size & Scope Source: IHRSA 2013 Global Report, EHFA, State of Research in the Global Fitness Industry 2010 Deloitte Report 2013, Laszlo Zopcsak PhD

10. INTERNATIONAL STANDARDS MEETING Promoting Cooperation, Innovation and Professional Standards for the Fitness Sector The phases of fitness evolution Same phases everywhere, but CEE is in earlier phase Developed - mature (leading - Germany, Norway, NL, UK) - DM Developed - struggling (Spain, Fin, Fr, Cy, Sl, It, Port, Ir) - DS Emerging - promising (Pol, Hu, Turk, Croatia) - EP Emerging –transitional* (Bulg, Serb, Baltic, Ro) – ET *(RUS, Ukraine, some former Yugoslav states excluded) Scope of services, quality of service, market size, number of clubs, sectoral cooperation, professionalism, socioeconomy - maturity

11. INTERNATIONAL STANDARDS MEETING Promoting Cooperation, Innovation and Professional Standards for the Fitness Sector The European Fitness Sector Source: IHRSA 2013 Global Report, EHFA State of Research in the Global Fitness Industry 2010 Deloitte Report 2013, Laszlo Zopcsak PhD

12. INTERNATIONAL STANDARDS MEETING Promoting Cooperation, Innovation and Professional Standards for the Fitness Sector Developed Mature market (DM) Germany, Norway, NL, UK – Germany steady growth – UK grown by 1.5%, within a year – NL fitness sector stable – 4,5 % increase in No. of members. – Norway: – 2nd highest GDP/capita 25 % of Norw. above 15 yrs member of a club Source: IHRSA 2013 Global Report, EHFA Deloitte Report 2013, Laszlo Zopcsak PhD

13. INTERNATIONAL STANDARDS MEETING Promoting Cooperation, Innovation and Professional Standards for the Fitness Sector Developed Struggling market (DS) ( Spain, Fin, Fr, Cy, Slov, It, Port) – Economic turbulence – Hardest-hit : SP, Gr, Port, – 20% decline in industry indicators – Fin, Cy, Slo, Fr. Grappling – Long-term instability Source: IHRSA 2013 Global Report, EHFA Deloitte Report 2013, Laszlo Zopcsak PhD

14. INTERNATIONAL STANDARDS MEETING Promoting Cooperation, Innovation and Professional Standards for the Fitness Sector Emerging promising market (EP) Poland, Hungary, Turkey, Croatia Uncertainty, high rental fees and overhead expenses Poland leading emerging market Turkey 271 m, 1,550 fitness facilities. Profitable prospects The level of professionalism is increasing Big gap between big cities and smaller towns No long term commitments No DDP (EFT) payment Source: IHRSA 2013 Global Report, EHFA Deloitte Report 2013, Laszlo Zopcsak PhD

15. INTERNATIONAL STANDARDS MEETING Promoting Cooperation, Innovation and Professional Standards for the Fitness Sector Emerging transitional market (ET) (Bulgaria, Serbia, Baltic states, Romania) They do not invest in knowledge No planning Lack of professionalism Old equipmnts Bank loans not available for financing No tax deduction or other incentives Membership is quite expensive, too expensive Cancellation in summer Source: IHRSA 2013 Global Report, EHFA Deloitte Report 2013, Laszlo Zopcsak PhD

16. INTERNATIONAL STANDARDS MEETING Promoting Cooperation, Innovation and Professional Standards for the Fitness Sector Comparing the EU market In billions Source: IHRSA 2013 Global Report, EHFA Deloitte Report 2013, Laszlo Zopcsak PhD

17. INTERNATIONAL STANDARDS MEETING Promoting Cooperation, Innovation and Professional Standards for the Fitness Sector Similarities - general problems in EU & worldwide 1.Economy a. EU is most Lucrative b. Downturn or recession? c. Unemployment d. Public debt e. Club closing f. Impact of VAT Eurostat 2013, IHRSA European HC Report 2013, Laszlo Zopcsak PhD

18. INTERNATIONAL STANDARDS MEETING Promoting Cooperation, Innovation and Professional Standards for the Fitness Sector Eurostat 2013, IHRSA European HC Report 2013, CIA Factbook, Laszlo Zopcsak PhD

19. INTERNATIONAL STANDARDS MEETING Promoting Cooperation, Innovation and Professional Standards for the Fitness Sector Differences between developed & emerging markets Eurostat 2013, IHRSA European HC Report 2013, CIA Factbook, Laszlo Zopcsak PhD

20. INTERNATIONAL STANDARDS MEETING Promoting Cooperation, Innovation and Professional Standards for the Fitness Sector Differences between developed & emerging markets 45 38 15 000 30 000 10% 2% Eurostat 2013, IHRSA European HC Report 2013, CIA Factbook, Laszlo Zopcsak PhD

21. INTERNATIONAL STANDARDS MEETING Promoting Cooperation, Innovation and Professional Standards for the Fitness Sector Similarities - general problems in EU & worldwide 2. Health Concerns a. Lack of PA (Eurostat) – indifference to exercise b. NCD (HUB) c. Ageing (Eurostat) d. Obesity (WHO) e. High obesity vs. low activity (fat less active) - motivation Eurostat 2013, IHRSA European HC Report 2013, CIA Factbook, Eurobarometer 2010, WHO 2011, Laszlo Zopcsak PhD

22. INTERNATIONAL STANDARDS MEETING Promoting Cooperation, Innovation and Professional Standards for the Fitness Sector Similarities - general problems in EU & worldwide Source: IHRSA 2013 Global Report, EHFA Deloitte Report 2013, Laszlo Zopcsak PhD

23. INTERNATIONAL STANDARDS MEETING Promoting Cooperation, Innovation and Professional Standards for the Fitness Sector FI specific challenges – EP/ ET Public Health 1. Mortality high middle aged men (WHO 2011) smoking, alcohol consumption, unhealthy diet, inactivity. 2. Active working years less 3. Worst health status in Europe (Hungary) 4.Population decreasing since the 1980s 5. 65 years of age or older increasing steadily 6. Lowest life expectancy at birth, EU27 by 5.1 yrs Eurostat 2013, IHRSA European HC Report 2013, CIA Factbook, Eurobarometer 2010, WHO 2011, Laszlo Zopcsak PhD

24. INTERNATIONAL STANDARDS MEETING Promoting Cooperation, Innovation and Professional Standards for the Fitness Sector FI specific challenges – Emerging - EP/ ET Public Health

25. INTERNATIONAL STANDARDS MEETING Promoting Cooperation, Innovation and Professional Standards for the Fitness Sector FI specific challenges – Emerging - EP/ ET Public Health

26. INTERNATIONAL STANDARDS MEETING Promoting Cooperation, Innovation and Professional Standards for the Fitness Sector FI specific challenges – EP/ ET Business 1. Lack of fitness management knowledge 2. High rental fees in foreign currency 3. Different mentality (Hungarostudy) 4. Attitude problems (Euro barometer) 5. Foreign (English) Language barriers 6. Fitness young sector in EM – 20 yrs behind DM 7. Normal cycle will speed up by western investments Infrastructure is OK – but knowledge, attitudes are limited Eurostat 2013, IHRSA European HC Report 2013, CIA Factbook, Eurobarometer 2010, WHO 2011, Laszlo Zopcsak PhD

27. INTERNATIONAL STANDARDS MEETING Promoting Cooperation, Innovation and Professional Standards for the Fitness Sector Attitude – How often do you exercise? Hungary Netherlands Eurobarometer 2010, Laszlo Zopcsak PhD

28. INTERNATIONAL STANDARDS MEETING Promoting Cooperation, Innovation and Professional Standards for the Fitness Sector FI specific challenges – Emerging - EP/ ET Political 1. Intersectoral activities are poorly coordinated 2. Prevention and health promotion underfunded 3. H&F organizations underdeveloped, activities substantially curtailed 4. No government incentives - extra tax for fitn. membsh. as benefit 5. HOC – Olympic sports - leisure sports – fitness 6. Eastern countries - Olympic sports vs. HEPA

29. INTERNATIONAL STANDARDS MEETING Promoting Cooperation, Innovation and Professional Standards for the Fitness Sector Why fitness clubs are underrepresented even here? 1. Vast majority of investors, owners are from different business 2. Ignore the necessity of fitness management - trainers are appointed in this position 3. Relevant stakeholders are struggling with other daily problems like marketing, financing etc. 4. A lot of work has to be done for us in this regard 5. Lack of foreign language knowledge Most of all - Business knowledge needed!

30. INTERNATIONAL STANDARDS MEETING Promoting Cooperation, Innovation and Professional Standards for the Fitness Sector What is the magic formula to create a solid fitness market in the CEE region? (For emerging markets) 1. Gather the industry stakeholders for a meeting 2. Form a sectoral association 3. Hire a part time staff to do the daily task pre-invest 4. Organize business events for managers, owners 5. Set up local register 6. Contact government authorities, get them involved 7.Repeat your effort (reps&sets) with patience, persistence, consistence until growth is achieved – EHFAs motivation crutial!

31. INTERNATIONAL STANDARDS MEETING Promoting Cooperation, Innovation and Professional Standards for the Fitness Sector

32. INTERNATIONAL STANDARDS MEETING Promoting Cooperation, Innovation and Professional Standards for the Fitness Sector The role of EHFA and the ISM in the future of the EU Fitness Industry Adapt accreditation, quality management, evidence- based proceedings to this market - IWI Launch an EHFA East and Central Europe Task Force Regular regional conferences CE FORUM Statistics on this region also – EHFA - Deloitte Programs to raise public awareness - HEPA Affiliation of EHFA accredited TPs – IWI-GRAFTS

33. INTERNATIONAL STANDARDS MEETING Promoting Cooperation, Innovation and Professional Standards for the Fitness Sector Thank You! Köszönöm! (Egészségedre! Cheers, salute)