Muscling into the fitness business
Nautilus Plus's Richard Blais is betting big on a renewed interest in health

Visiting the Mount Royal St. Nautilus Plus fitness centre at lunchtime, you'd think that Quebecers are a healthy lot. A mix of active spandex-clad co-eds, businessmen and the odd senior give the club a feel of optimism. Even out-of-shape members have determined looks that convey the impression that soon they'll have washboard abs too.

Unfortunately, the club's clientele is not reflective of the population in general. "Health is a big problem in Canada," said Richard Blais, Nautilus Plus's president and controlling shareholder. "Canadians are increasingly inactive, and obesity is on the rise. Although they are living longer, the quality of those extra years remains a question."

Blais is betting big that Canadians, will be placing renewed emphasis on their health in coming years. The new 14,000 square foot, $1.5 million Mount Royal St. outlet which opened this September, is the fifth of its multi-year six-club building program. By January it will have brought the number of Nautilus Plus fitness centres from 24 to 30.

Located in the trendy Plateau district, facing a soon-to-open Provigo, the outlet has 1,000 members after just two months in operation, half of its first year target.

The gamble is a big one. According to polling data provided by the Print Measurement Bureau the total number of Quebecers who visit health clubs on a regular basis increased to 508,000 in 2002, compared to 489,000 last year. It's impressive, but hardly enough to accommodate the increasing capacity among fitness club operators.

Blais's strategy is simple. Nautilus Plus runs large, high-end destination clubs that offer lots of extras for serious fitness and racket sport enthusiasts. Membership costs tend to be higher than the smaller neighbourhood clubs that form the bulk of Nautilus Plus's competition.

But Blais is convinced that customers will pay for better quality, and recently he's been right. Total membership in the company's centres jumped to 67,000 as of October, a 15 per cent increase from 12 months ago.

Nautilus Plus was founded when a group that included two ex-Quebec Nordiques players Steve Sutherland and Charles Constantin, began setting up Nautilus machines in racket-ball clubs during the 1980s. The group eventually went public through a $10 million Quebec Stock Saving Plan offering, a tax-shelter common during that period. (Constantin and Sutherland are no longer with the company).

But during the ensuing expansion the company took on too much debt. The bank, which was growing increasingly worried that top managers would walk out, asked Blais, who had joined the company in 1979, to lead a management buyout. The real estate division would be spun off into a separate company, and Blais, and a couple of associates would take over the fitness and racket operations, as well as the equipment and location leases.

"It was a huge step for me. I am a physical educator, not a businessman by training, and signing personal guarantee of (more than $10 million), created a lot of stress," Blais said. "I had nothing to (invest). The bank really gave me a big break and put a lot of confidence in me."

It took years of hard work and long hours to work the debt down to manageable levels, and Blais isn't resting on his laurels. But filling Nautilus Plus clubs isn't his only problem. He also has to look over his shoulder at competitor Énergie Cardio, which is on large expansion program of its own.

That expansion, includes a new location at the corner of Ste. Catherine St. and Crescent, that is scheduled to open later this week. This will bring Énergie Cardio's total outlets to 63, of which 51 are franchises, with 100,000 members said a company spokesperson.

According to Don Longwell, publisher of Fitness Business Canada magazine, who toured several clubs in both chains last year, the two companies are competing for slightly different markets.

"Énergie Cardio operates smaller clubs, aimed at local audiences, with less services but at a cheaper price," Longwell said. "It's a trend we are seeing throughout the industry." Longwell, who has followed Blais's activities for several years, labels him one of the leaders in the fitness industry in Canada, not just Quebec.

"(Blais) has a very strong interest in health issues," Longwell said. "He has also taken the lead in promoting fitness and health at the industry level."

Among Blais's initiatives was his participation in a committee of health and fitness stakeholders who submitted a memorandum that recommended a tax credit for fitness club members to Quebec's Claire Commission on healthcare reform.

"With the state of finances we can't rely on government to solve all our health problems anymore," Blais said. "Good exercise and an active lifestyle can have an enormous influence on health in areas such as reducing heart disease, obesity, and high blood pressure."

According to Blais, governments need to set the tone by encouraging preventative measures, which save the money down the line. Providing tax credits to health club members might even encourage insurance companies to provide discounts to those who work out regularly, like they do for non-smokers.

Those tax credits could also help fill Nautilus Plus clubs, which Blais wouldn't mind one bit.


Photo caption: Richard Blais, is president of Nautilus Plus, which is grabbing a significant share of Quebec's health club goers by targeting an upscale clientele who demand superior service.


Getting ahead:

o Nautilus Plus operates large, well-equipped, destination facilities that target serious, up-scale, fitness consumers.
o Blais is a fitness trainer by profession, who learnt the business from the ground up and works out in his own clubs.
o To keep a good age mix among members, young fitness enthusiasts (under 25) are given substantial discounts.
o Blais took a huge risk in 1990 by leading a management buyout of Nautilus Plus, that left him personally responsible for more than $10 million in debt.
o Although Blais is president and leader of the management group, he consults team members on all major decisions.



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