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Dubai’s Jumeirah Village Circle (JVC) district might seem like an unlikely venue for a startup revolution, but it was here in November 2021 that the UAE’s newest fitness brand, Wellfit, opened its first club. At over 75,000 sq. ft. in size, Wellfit’s JVC branch could be described as a statement of intent in itself. Billed as Dubai’s largest indoor multi-sports venue, it covers the entire top floor of the local shopping centre, Circle Mall.
However, for Dr. Dimitri Koutsoubakis, CEO of Wellfit, the JVC branch is just the start of the story. Part of UAE-based master developer Arada’s growing portfolio of brands, Wellfit seems to be proof that an immaculately run fitness business is not just good for its members’ well-being, it’s also healthy for the bottom line as well. With membership numbers growing rapidly and per-club revenues reaching record levels for the local industry, Wellfit is aiming for an impressively high valuation in just a few years’ time. “It’s easy to say it conceptually- you could say that at the end of the day, it’s just a bunch of sports,” smiles Koutsoubakis. “But why don’t you see competitors doing what we’re doing? You have to have a rare ability to bring together a United Nations of sports and activities, and it’s not easy to bring together the disparate assets and expertise. There are operators that do this worldwide, like David Lloyd, Virgin Active, and so on, but why aren’t there more and why aren’t they proliferating? Well, I guess because it’s difficult.”
To round the experience off, there’s also a 16,000 sq. ft. gymnastics facility, a fitness shop, and a branded healthy-eating concept, Hungry Wolves. At the same time, the tail-end of the COVID-19 pandemic hardly seems like the most auspicious time to launch a fitness brand. However, Koutsoubakis argues that this timing, amongst a series of other factors, has been instrumental in the company’s results so far. “You need a perfect storm, you need a series of variables to go in your favor,” the CEO says. “It’s post-pandemic, and people want to tour around Wellfit JVC in the company of Koutsoubakis -who has a stellar record in both the fitness industry and as a professor at local business schools- quickly reveals that this is much more than just a gym. As well as all the usual spaces set aside for weightlifting and cardio machines, there are specific areas allocated for mixed martial arts (MMA), parkour, and boxing, as well as a series of hi-tech studios and padel get out of the house. They’re tired of their home exercise bikes, and they want to get into a gym and start training- that’s phenomenon number one. Phenomenon number two is that the competition has been taking some punches due to the shutdown, so it’s an opportune time to launch a new brand. And phenomenon number three– by reinventing your offering, you can put yourself in a place where you don’t have any competition.”
Backing up that “perfect storm” has been the UAE’s impressive economic performance, which has seen nationalities from around the world tread a path to the country thanks to favorable new business and social regulations. The way Koutsoubakis sees it, there is colossal potential for operators like Wellfit to capture market share in what is still a relatively nascent industry. “If we look at the UAE as a whole, penetration figures -i.e. a share of the adult population that has a gym membership– is low, at about 5-6%,” he explains. “Compare that to developed markets such as Western Europe and the US, the figure is as much as 10%. So, the opportunity is there to double that penetration, especially given the high prevalence of educated expats here in the UAE.”
Wellfit JVC branch. Source: Wellfit
A further factor driving Wellfit’s results has been what Koutsoubakis refers to as a relentless focus on member experience, aided by technology. In fact, the company has achieved a number of regional firsts in the type of technology offered, including the use of artificial intelligence (AI) and machine-learning platform Keepme to boost its sales, a move that is now being copied by other major players locally. Wellfit will shortly be rolling out usage of the Shoshabi onboarding system to its members, and extensive work is currently away on the Wellfit app, which will provide a compre- hensive suite of services on a par with any other fitness brand anywhere in the world by the end of the year.
Less than two years since the JVC flagship’s launch, Koutsoubakis is excited not just about the operator’s performance so far, but also its incredible potential for the future. The numbers so far look promising- as well as Wellfit JVC, a second megaclub in Meydan is open and undergoing refurbishment, while a third at Arada’s Aljada master development in Sharjah is set to open in the last quarter of this year. Meanwhile, membership numbers have already reached 10,000, a number that is set to grow significantly as new locations come online. “This time next year, you and I will be sitting here drinking coffee, and Wellfit will be operating five megaclubs,” Koutsoubakis declares. “I feel up to 10 megaclubs in the UAE is achievable, and then, what comes next? Will it be Saudi Arabia or somewhere else in the region? I definitely see Wellfit as an international, global brand, and Europe is in my target sights.”
This is a startling level of growth for a company that is still just 19 months old, but Koutsoubakis is happy to cite some figures from Wellfit’s most recent performance, including Wellfit JVC’s revenue for 2022, which came to AED25 million. “To the best of my knowledge, the largest clubs in the UAE pre-pandemic never achieved annual turnover of even AED20 million,” he states. “Why? Because they are gyms, and Wellfit is not just a gym. Wellfit offers a comprehensive country club experience with a wide range of sports and leisure activities that you would more normally find in the US or European markets. We sell junior memberships, family memberships, couples’ memberships. We do martial arts, we do swimming, we do athletics. So, the gym is just the tip of the iceberg, but the real action is the families and juniors. I’ll tell you right now– the secret sauce is in the junior business.”
Wellfit Meydan branch. Source: Wellfit
Proof of that approach comes from the success of Wellfit’s gymnastics academy at JVC, which, despite only launching earlier this year, is already close to capacity with over 1,000 children registered for classes. New academies focused on athletics, football, CrossFit, and swimming are shortly to open at Wellfit Meydan, a sprawling indoor-out-door complex spread over a 368,000 sq. ft. site in the center of one of Dubai’s fastest-growing residential communities. Koutsoubakis goes on to say that he expects Wellfit JVC’s revenue to hit AED35 million during 2023, a figure that he expects every large-scale Wellfit club to reach and exceed once they have ramped up to full capacity, which generally takes three years to achieve. In fact, he says that every flagship club –i.e. those with over 50,000 square feet of floor space– will generate between AED35-45 million in turnover annually.
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All of this leads inevitably to a question about valuation. Perhaps unsurprisingly given the growth numbers achieved so far, the Wellfit CEO is bullish on the company’s prospects.
“If we look at our five-year plan, our goal is to be operating five mega-clubs, with 30,000 members overall. Over a 10-year period, we’ll look to open as many as 15 megaclubs, both in the UAE and elsewhere. If we then project our revenue based on those numbers, together with the profit margins we are currently seeing and a conservative earnings before interest, taxes, depreciation and amortization (EBITDA) multiple, I’m here to say that Wellfit is on track to become a $300 million company- that’s been my ambition from the get-go.”
However, before that kind of valuation can be achieved, plenty of hard work is required. Right now, extensive refurbishment is ongoing at Wellfit Meydan, with the addition of a 200m athletics track, five-a-side pitch, renovated CrossFit and martial arts spaces, and a complete revamp of all existing studios, changing facilities, and technology. That refit is scheduled to be completed in January next year. By that time, Wellfit’s third megaclub will already be open in the Madar family entertainment district in Aljada, Sharjah. Based in a 65,000 sq. ft. building designed by Zaha Hadid Architects, Wellfit Madar boasts a number of eye-popping features, including a 200-metre running track suspended halfway up the inside of the club’s elliptically shaped walls, and an interactive sports and gaming platform for children and adults called Multiball, which is coming to the region for the first time.
Wellfit by Aljada. Source: Wellfit
Koutsoubakis is tight-lipped on the locations of the brand’s next two super clubs, but he hints that Wellfit number four is now close to confirmation in Dubai, with Abu Dhabi a likely base for Wellfit number five. The CEO is also quick to credit Arada for Wellfit’s success, revealing that the parent company has so far invested AED150 million in the startup, with further investment on the way.
Smaller Wellfit gyms are already open in two of Arada’s Sharjah communities, with a third penciled in for the developer’s first project in Dubai, Jouri Hills at Jumeirah Golf Estates. Arada has also assisted in other ways (for example, by providing a premium location in its Aljada master community), and Koutsoubakis says the relationship is working well for both parties. “We’re not a franchise– we’re not copying anyone else’s recipe,” he says. “This is not the Unilever or the McDonald’s recipe– this is our recipe. And Arada has afforded us the opportunity for complete carte blanche, and it’s very rare you get that. Arada insists on beautiful design and beauti- fully executed branding, and that’s the only area where they have had input. The Group CEO [Ahmed Alkhoshaibi] told us that the business model was ours to define, and he has been true to his word. We’ve taken the best of what worked at other places– for example, our chief operating officer Gareth Jones had worked at competing brands, and back in the day, he was a David Lloyd guy. So, you’ve got all these different elements in the DNA coming together. It’s early days, and you can’t get arrogant, but we’re delivering something that no-one else is delivering in this part of the world, and it’s working.”
