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The Leisure Media Company Ltd | Fit Tech promotion
features

HCM People: Kent Orrgren

World Class and Romania Active

We’ve been in discussions with the Romanian government for tax deductions on health club memberships and have recently been successful

Published in Health Club Management 2023 issue 4

Tell us about Romania Active
During the early stages of the pandemic a team of industry people in Romania proposed the founding of the association and as the largest operator – World Class Romania – we’ve fully supported its formation.

It took a year to incorporate and get through the legal paperwork and we finally launched in August 2021.

What are the main goals of the association?
It's about having one voice to represent the industry, bringing more awareness to physical activity in Romania.

Many Romanians are very active, but there are not enough brick-and-mortar clubs to serve the population. This creates an opportunity for growth, which is what we're trying to build with Romania Active.

How many more clubs does Romania need?
Today there are 700 clubs across the country and 4.5 per cent market penetration. We believe this could grow to 8 or 9 per cent penetration in the next five to six years.

The first step is to get it to the average market for Europe – around 12 per cent. That would treble the penetration in terms of number of clubs and members.

What else is on the agenda?
The organisation encourages networking and best practise and does benchmarking against other markets and other industries so we all benefit from this knowledge. We also collaborate with Europe Active.

Romania Active is the voice of the industry in dealings with government and the aim is to get the sector high in the agenda, so we’re part of the big discussions.

You’ve had a major breakthrough with your representation of the sector. Tell us more
We’ve been working to get tax deductions on health club memberships and have recently been successful, meaning Romania is now one of the few countries in the world with a dedicated gym, health and fitness membership deductibility law for all employees – this is a huge breakthrough.

The new law is a valuable recognition of the importance that physical exercise has for the health of the nation and the impact the fitness industry has on the health of the economy.

Romania must be one of the markets with the most potential for the sector?
Yes, there are increasing levels of affluence and a growing middle class, so two segments are growing fast – low-cost and premium. Romania has one of the fastest-growing health and fitness markets in Europe.

The latest research shows the sector is expected to see a 30-35 per cent growth in memberships in 2025, adding an estimated 250k – 300k members and the overall market is expected to grow by +45 per cent over the next five years.

Market value in 2025 is projected to be between €360m and €380m, a 45 – 55 per cent increase on 2018. There’s also a growing demand for premium clubs, accompanied by higher willingness to pay. My organisation, World Class, is at the top end of the market and we had our best ever months recently, while also reaching a record number of active members at 76,000.

With the new law of fitness membership deductibility we also expect corporate wellness to grow, so we’re developing new programmes, to help companies nurture a healthy and productive workforce.

Tell us more about Romanians’ attitudes to wellbeing and health
In 2019, a study by Ipsos showed only 9 per cent of Romanians placed health at the top of their happiness scale, but by 2022, they found 64 per cent reporting physical wellbeing is their first source of happiness and 85 per cent saying they believe physical and mental health are ‘extremely important’. These are game-changing numbers.

Set against this, however, 60 per cent are not active and spend a lot of time sitting. Physical inactivity is recognised as one of the main causes of diabetes, cardiovascular diseases and obesity – the chronic diseases of the century according to Eurobarometer 525, which was published in 2022 (www.hcmmag.com/EB525).

We believe this set of factors highlights our opportunity as an industry to educate people about the benefits of physical activity.

Do you have further insights into demand?
A recent report completed by Daedalus Online and AT Kearney for World Class shows 85 per cent of the Romanians who don’t go to health clubs are open to purchasing a membership in the next six months.

These figures are encouraging and show the enormous potential for more Romanians to be active in all age groups, not only the young and healthy.

What’s the tax structure in Romania and how is this impacting investment?
The health and fitness industry is charged the lowest rate of VAT, having been reduced from 19 per cent to 5 per cent in 2018.

The tax structure generally is also appealing to foreign investors, with a corporate tax rate of 16 per cent – which is one of the lowest in Europe.

In terms of fiscal incentives, Romania generally has one of the lowest VAT rates in Europe and profits reinvested in tech are exempt from taxation.

Is this exemption helping the sector?
Yes, the tech scene is huge and well developed and there’s an abundance of digital innovation – much of it with relevance to health and fitness. This is a huge advantage for health club operators and the wider sector.

There are already some great products coming online – everything from software and CRM systems to access systems and apps. Being a tech-driven economy is also helpful when it comes to communications.

It’s not only going involving big business – there are lots of entrepreneurs in Romania and Romania Active is committed to encouraging their development.

Speaking of inbound investment, who owns World Class?
A company called Vectr Holdings which is part of African Industries Group and the management are also investors.

The company went through an ownership shift that was completed in July 2022 and so at this moment we’re preparing for future growth.

In Romania, Vectr Holdings also owns companies in agribusiness, as well as in development and real estate.

Tell us more about the business
World class is the dominant health and fitness brand in Romania, having been established 23 years ago, and the company is growing strongly.

We have 44 clubs and 23 swimming pools and we’re the largest chain, with our 76,000 members who are served by 700 employees. We’re aiming to double our total number of clubs in the next five years.

We provide members with an all-inclusive wellness experience that includes unlimited access to classes, club facilities, personal trainers, swimming pools, saunas and also spa, squash and jogging fields in selected locations. Our emphasis is on exercise and recovery for mental and physical health, as well as on creating communities to deliver social value.

Our ultimate goal is to change Romanians’ lives for the better with a diversified offering of health and fitness services. We’re also a long-term partner for Les Mills, delivering a wide range of their classes and provide a premium fitness and lifestyle club concept called W.

You’re also the largest provider of swimming?
Yes, Romania has a lack of good sports and swimming facilities and we’ve seen a strong demand for sports, health and fitness centres with pools. Today we’re the largest pool operator and swimming school provider in the country and we’re planning to build even more.

Whenever we open up a club with a pool we get a huge interest from families who want their children to learn to swim, so lessons have become one of our strongest revenue streams in a very short period of time, especially since the lockdown ended, because for a couple of years, children were not able to go to the pool and now they have to catch up.

In addition, there’s a lack of access to pools in our communities in general, and we want to be a strong contributor to community swimming. It's a very nice feeling when you have a mix of kids and families and everyone benefits.

We teach kids from an early age, giving them a lifesaving life skill. We believe this is the fastest way to change a culture and a community – by starting good habits early.

You just launched a new flagship club – tell us about it
We opened our 44th club in Bucharest on 21 April. The club is located in a new business hub in a green building with a state-of-the-art air filtration and it has the first rooftop running track in Romania, measuring 260m and offering runners a spectacular 360-degree view of Bucharest. It also has generous training areas, group fitness and cycling studios, as well as the latest equipment and accessories and a strong team of health and fitness experts – all with national and international certifications.

It’s strategically located near the University Politehnica of Bucharest and represents an opportunity for all students to adopt a more active way of life. We’ve launched a communication campaign to support those working nearby to take full advantage of the new Romanian fitness membership deductibility law mentioned earlier.

How are you continuing to drive the company's success?
We’ve always been committed to the ethos that exercise is medicine, which means we promote the benefits of physical activity and living a healthy lifestyle.

I strongly believe in building the organisation with passion, clear values and a strong team spirit. “Take good care of your employees and they will care for customers” is our mantra. Achieving success through collaboration and “walking the talk” are also important to us.

As stated by author Jim Collins in his book, Good To Great, “people are not our biggest asset, the right people are our biggest asset” and our team cohesion and the continuous development of staff has been at the heart of our development. The aim is to position the company as a top employer. Our close relationship with our members and their success stories are also a measure of our success.

All our health and fitness experts are certified in their field. Many are professional athletes, others have degrees in kinesiology or exercise science. We also have a team running our #BeHealthyKids programmes, who are specialised in working with children.

Will you expand internationally?
We’re mainly focusing on Romania, because we see so much potential here, but we’re not ruling out the option of growing internationally at some point.

And will you launch a low-cost chain?
We’re exploring the option of developing a multi-brand strategy, as we want to utilise the power of our brand and the power of our experience in the sector.

Our aim is to create awareness of the necessity for people to keep building their health and fitness every day and we’re positioning World Class as always being available for consumers – near their home, near their workplace and online. We launched our virtual workouts during the lockdown and they are still part of our premium offering.

What’s the company’s strategy for the next five years?
We’ll be investing in our premium position, aiming to improve our profit margin and member journey by delivering operational excellence.

Our educative and inspirational approach will have three content pillars: regular physical exercise, healthy eating and healthy recuperation (sleep, mindfulness and recovery) to achieve a balanced and healthy lifestyle.

Our communication will all be about the #BeHealthy lifestyle we promote.

More: www.romaniaactive.ro and www.worldclass.ro

About Romania

Romania is a developed country with a high-income economy based predominantly on services. It’s a member of the United Nations, the European Union, NATO, the Council of Europe, BSEC and WTO.

The name Romania derives from Latin, meaning Roman or ‘of Rome’ as a result of its colonisation by the Romans in the second century. Romanian is a Romance language, related to Italian, Spanish and French.

Known as the Romanian People’s Republic between 1947 and 1965, the country was an Eastern Bloc state and a member of the Warsaw Pact until the fall of Communism in Eastern Europe in 1989.

During the 2000s, Romania had one of the highest economic growth rates in Europe, accompanied by a significant improvement in living standards as the country established a functioning democratic state.

Growth accelerated as a result of government liberalisations in opening up new sectors to competition and investment – most notably, energy and telecoms.

Kent Orrgren biography

A native of Sweden, Kent Orrgren is CEO of World Class Romania and president of Romania Active.

He has held senior management positions for fitness chains in Sweden, such as SATS and Actic.

Orrgren is also chair of Nordic educational company Wellness Education and Technology, which has brands including Safe, Afpt and The Academy – an education company for instructors and PTs.

He holds an EMBA in Financial Management from Stockholm School of Economics and Marketing Management degree certificate from IHM Business School.

Sign up here to get Fit Tech's weekly ezine and every issue of Fit Tech magazine free on digital.
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In today's rapidly evolving fitness industry, where many online courses promise secret formulas for entrepreneurial success, the reality is that few provide the necessary knowledge to thrive in this fast-changing profession.
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features

HCM People: Kent Orrgren

World Class and Romania Active

We’ve been in discussions with the Romanian government for tax deductions on health club memberships and have recently been successful

Published in Health Club Management 2023 issue 4

Tell us about Romania Active
During the early stages of the pandemic a team of industry people in Romania proposed the founding of the association and as the largest operator – World Class Romania – we’ve fully supported its formation.

It took a year to incorporate and get through the legal paperwork and we finally launched in August 2021.

What are the main goals of the association?
It's about having one voice to represent the industry, bringing more awareness to physical activity in Romania.

Many Romanians are very active, but there are not enough brick-and-mortar clubs to serve the population. This creates an opportunity for growth, which is what we're trying to build with Romania Active.

How many more clubs does Romania need?
Today there are 700 clubs across the country and 4.5 per cent market penetration. We believe this could grow to 8 or 9 per cent penetration in the next five to six years.

The first step is to get it to the average market for Europe – around 12 per cent. That would treble the penetration in terms of number of clubs and members.

What else is on the agenda?
The organisation encourages networking and best practise and does benchmarking against other markets and other industries so we all benefit from this knowledge. We also collaborate with Europe Active.

Romania Active is the voice of the industry in dealings with government and the aim is to get the sector high in the agenda, so we’re part of the big discussions.

You’ve had a major breakthrough with your representation of the sector. Tell us more
We’ve been working to get tax deductions on health club memberships and have recently been successful, meaning Romania is now one of the few countries in the world with a dedicated gym, health and fitness membership deductibility law for all employees – this is a huge breakthrough.

The new law is a valuable recognition of the importance that physical exercise has for the health of the nation and the impact the fitness industry has on the health of the economy.

Romania must be one of the markets with the most potential for the sector?
Yes, there are increasing levels of affluence and a growing middle class, so two segments are growing fast – low-cost and premium. Romania has one of the fastest-growing health and fitness markets in Europe.

The latest research shows the sector is expected to see a 30-35 per cent growth in memberships in 2025, adding an estimated 250k – 300k members and the overall market is expected to grow by +45 per cent over the next five years.

Market value in 2025 is projected to be between €360m and €380m, a 45 – 55 per cent increase on 2018. There’s also a growing demand for premium clubs, accompanied by higher willingness to pay. My organisation, World Class, is at the top end of the market and we had our best ever months recently, while also reaching a record number of active members at 76,000.

With the new law of fitness membership deductibility we also expect corporate wellness to grow, so we’re developing new programmes, to help companies nurture a healthy and productive workforce.

Tell us more about Romanians’ attitudes to wellbeing and health
In 2019, a study by Ipsos showed only 9 per cent of Romanians placed health at the top of their happiness scale, but by 2022, they found 64 per cent reporting physical wellbeing is their first source of happiness and 85 per cent saying they believe physical and mental health are ‘extremely important’. These are game-changing numbers.

Set against this, however, 60 per cent are not active and spend a lot of time sitting. Physical inactivity is recognised as one of the main causes of diabetes, cardiovascular diseases and obesity – the chronic diseases of the century according to Eurobarometer 525, which was published in 2022 (www.hcmmag.com/EB525).

We believe this set of factors highlights our opportunity as an industry to educate people about the benefits of physical activity.

Do you have further insights into demand?
A recent report completed by Daedalus Online and AT Kearney for World Class shows 85 per cent of the Romanians who don’t go to health clubs are open to purchasing a membership in the next six months.

These figures are encouraging and show the enormous potential for more Romanians to be active in all age groups, not only the young and healthy.

What’s the tax structure in Romania and how is this impacting investment?
The health and fitness industry is charged the lowest rate of VAT, having been reduced from 19 per cent to 5 per cent in 2018.

The tax structure generally is also appealing to foreign investors, with a corporate tax rate of 16 per cent – which is one of the lowest in Europe.

In terms of fiscal incentives, Romania generally has one of the lowest VAT rates in Europe and profits reinvested in tech are exempt from taxation.

Is this exemption helping the sector?
Yes, the tech scene is huge and well developed and there’s an abundance of digital innovation – much of it with relevance to health and fitness. This is a huge advantage for health club operators and the wider sector.

There are already some great products coming online – everything from software and CRM systems to access systems and apps. Being a tech-driven economy is also helpful when it comes to communications.

It’s not only going involving big business – there are lots of entrepreneurs in Romania and Romania Active is committed to encouraging their development.

Speaking of inbound investment, who owns World Class?
A company called Vectr Holdings which is part of African Industries Group and the management are also investors.

The company went through an ownership shift that was completed in July 2022 and so at this moment we’re preparing for future growth.

In Romania, Vectr Holdings also owns companies in agribusiness, as well as in development and real estate.

Tell us more about the business
World class is the dominant health and fitness brand in Romania, having been established 23 years ago, and the company is growing strongly.

We have 44 clubs and 23 swimming pools and we’re the largest chain, with our 76,000 members who are served by 700 employees. We’re aiming to double our total number of clubs in the next five years.

We provide members with an all-inclusive wellness experience that includes unlimited access to classes, club facilities, personal trainers, swimming pools, saunas and also spa, squash and jogging fields in selected locations. Our emphasis is on exercise and recovery for mental and physical health, as well as on creating communities to deliver social value.

Our ultimate goal is to change Romanians’ lives for the better with a diversified offering of health and fitness services. We’re also a long-term partner for Les Mills, delivering a wide range of their classes and provide a premium fitness and lifestyle club concept called W.

You’re also the largest provider of swimming?
Yes, Romania has a lack of good sports and swimming facilities and we’ve seen a strong demand for sports, health and fitness centres with pools. Today we’re the largest pool operator and swimming school provider in the country and we’re planning to build even more.

Whenever we open up a club with a pool we get a huge interest from families who want their children to learn to swim, so lessons have become one of our strongest revenue streams in a very short period of time, especially since the lockdown ended, because for a couple of years, children were not able to go to the pool and now they have to catch up.

In addition, there’s a lack of access to pools in our communities in general, and we want to be a strong contributor to community swimming. It's a very nice feeling when you have a mix of kids and families and everyone benefits.

We teach kids from an early age, giving them a lifesaving life skill. We believe this is the fastest way to change a culture and a community – by starting good habits early.

You just launched a new flagship club – tell us about it
We opened our 44th club in Bucharest on 21 April. The club is located in a new business hub in a green building with a state-of-the-art air filtration and it has the first rooftop running track in Romania, measuring 260m and offering runners a spectacular 360-degree view of Bucharest. It also has generous training areas, group fitness and cycling studios, as well as the latest equipment and accessories and a strong team of health and fitness experts – all with national and international certifications.

It’s strategically located near the University Politehnica of Bucharest and represents an opportunity for all students to adopt a more active way of life. We’ve launched a communication campaign to support those working nearby to take full advantage of the new Romanian fitness membership deductibility law mentioned earlier.

How are you continuing to drive the company's success?
We’ve always been committed to the ethos that exercise is medicine, which means we promote the benefits of physical activity and living a healthy lifestyle.

I strongly believe in building the organisation with passion, clear values and a strong team spirit. “Take good care of your employees and they will care for customers” is our mantra. Achieving success through collaboration and “walking the talk” are also important to us.

As stated by author Jim Collins in his book, Good To Great, “people are not our biggest asset, the right people are our biggest asset” and our team cohesion and the continuous development of staff has been at the heart of our development. The aim is to position the company as a top employer. Our close relationship with our members and their success stories are also a measure of our success.

All our health and fitness experts are certified in their field. Many are professional athletes, others have degrees in kinesiology or exercise science. We also have a team running our #BeHealthyKids programmes, who are specialised in working with children.

Will you expand internationally?
We’re mainly focusing on Romania, because we see so much potential here, but we’re not ruling out the option of growing internationally at some point.

And will you launch a low-cost chain?
We’re exploring the option of developing a multi-brand strategy, as we want to utilise the power of our brand and the power of our experience in the sector.

Our aim is to create awareness of the necessity for people to keep building their health and fitness every day and we’re positioning World Class as always being available for consumers – near their home, near their workplace and online. We launched our virtual workouts during the lockdown and they are still part of our premium offering.

What’s the company’s strategy for the next five years?
We’ll be investing in our premium position, aiming to improve our profit margin and member journey by delivering operational excellence.

Our educative and inspirational approach will have three content pillars: regular physical exercise, healthy eating and healthy recuperation (sleep, mindfulness and recovery) to achieve a balanced and healthy lifestyle.

Our communication will all be about the #BeHealthy lifestyle we promote.

More: www.romaniaactive.ro and www.worldclass.ro

About Romania

Romania is a developed country with a high-income economy based predominantly on services. It’s a member of the United Nations, the European Union, NATO, the Council of Europe, BSEC and WTO.

The name Romania derives from Latin, meaning Roman or ‘of Rome’ as a result of its colonisation by the Romans in the second century. Romanian is a Romance language, related to Italian, Spanish and French.

Known as the Romanian People’s Republic between 1947 and 1965, the country was an Eastern Bloc state and a member of the Warsaw Pact until the fall of Communism in Eastern Europe in 1989.

During the 2000s, Romania had one of the highest economic growth rates in Europe, accompanied by a significant improvement in living standards as the country established a functioning democratic state.

Growth accelerated as a result of government liberalisations in opening up new sectors to competition and investment – most notably, energy and telecoms.

Kent Orrgren biography

A native of Sweden, Kent Orrgren is CEO of World Class Romania and president of Romania Active.

He has held senior management positions for fitness chains in Sweden, such as SATS and Actic.

Orrgren is also chair of Nordic educational company Wellness Education and Technology, which has brands including Safe, Afpt and The Academy – an education company for instructors and PTs.

He holds an EMBA in Financial Management from Stockholm School of Economics and Marketing Management degree certificate from IHM Business School.

Sign up here to get Fit Tech's weekly ezine and every issue of Fit Tech magazine free on digital.
Gallery
More features
Editor's letter

Into the fitaverse

Fitness is already among the top three markets in the metaverse, with new technology and partnerships driving real growth and consumer engagement that looks likely to spill over into health clubs, gyms and studios
Fit Tech people

Ali Jawad

Paralympic powerlifter and founder, Accessercise
Users can easily identify which facilities in the UK are accessible to the disabled community
Fit Tech people

Hannes Sjöblad

MD, DSruptive
We want to give our users an implantable tool that allows them to collect their health data at any time and in any setting
Fit Tech people

Jamie Buck

Co-founder, Active in Time
We created a solution called AiT Voice, which turns digital data into a spoken audio timetable that connects to phone systems
Profile

Fahad Alhagbani: reinventing fitness

Let’s live in the future to improve today
Opinion

Building on the blockchain

For small sports teams looking to compete with giants, blockchain can be a secret weapon explains Lars Rensing, CEO of Protokol
Innovation

Bold move

We ended up raising US$7m in venture capital from incredible investors, including Andreessen Horowitz, Khosla Ventures, Primetime Partners, and GingerBread Capital
App analysis

Check your form

Sency’s motion analysis technology is allowing users to check their technique as they exercise. Co-founder and CEO Gal Rotman explains how
Profile

New reality

Sam Cole, CEO of FitXR, talks to Fit Tech about taking digital workouts to the next level, with an immersive, virtual reality fitness club
Profile

Sohail Rashid

My vision was to create a platform that could improve the sport for lifters at all levels and attract more people, similar to how Strava, Peloton and Zwift have in other sports
Ageing

Reverse Ageing

Many apps help people track their health, but Humanity founders Peter Ward and Michael Geer have put the focus on ageing, to help users to see the direct repercussions of their habits. They talk to Steph Eaves
App analysis

Going hybrid

Workout Anytime created its app in partnership with Virtuagym. Workout Anytime’s Greg Maurer and Virtuagym’s Hugo Braam explain the process behind its creation
Research

Physical activity monitors boost activity levels

Researchers at the University of Copenhagen have conducted a meta analysis of all relevant research and found that the body of evidence shows an impact
Editor's letter

Two-way coaching

Content providers have been hugely active in the fit tech market since the start of the pandemic. We expect the industry to move on from delivering these services on a ‘broadcast-only’ basis as two-way coaching becomes the new USP
Fit Tech People

Laurent Petit

Co-founder, Active Giving
The future of sports and fitness are dependent on the climate. Our goal is to positively influence the future of our planet by instilling a global vision of wellbeing and a sense of collective action
Fit Tech People

Adam Zeitsiff

CEO, Intelivideo
We don’t just create the technology and bail – we support our clients’ ongoing hybridisation efforts
Fit Tech People

Anantharaman Pattabiraman

CEO and co-founder, Auro
When you’re undertaking fitness activities, unless you’re on a stationary bike, in most cases it’s not safe or necessary to be tied to a screen, especially a small screen
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Mike Hansen

Managing partner, Endorphinz
We noticed a big gap in the market – customers needed better insights but also recommendations on what to do, whether that be customer acquisition, content creation, marketing and more
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