Managing the Malta-gym
The seaside resort of St Julian's, on the north-eastern coast of the Mediterranean island of Malta, is home to an international first - Hilton's LivingWell club.
When it opened in March, in the resort's new 294-bedroom, five-star Hilton hotel, its target was to have 500 members by the end of the year. It smashed this target in its first week and now has 810 members.
On an average day, 150 people visit the club, but sometimes this doubles to 300. It is not unusual for some to use it twice daily. One British woman who lives on the island is a particularly familiar face among the eight full-time and eight part-time staff. She arrives every day when it opens at 7am and never leaves before midday.
Resident membership
The membership comprises 95% Maltese or British ex-patriots, while the remaining 5% are guests of the hotel.
It is impressive that so many Maltese people use its facilities - swimming pools, sauna, steam room, squash and tennis courts, gymnasium, aerobics hall and beauty rooms - as research has found that only 1% of Maltese follow fitness regimes, compared with 6% in the UK. Also, the average Maltese wage is only £7,000 a year, and the club's joining fees are £40 per person, or £65 per couple, plus £24 per person each month, or £40 for two.
The club's general manager, Gez Oliver, who previously managed the LivingWell in Milton Keynes, expects to lose about 100 members in July and August.
"The Maltese are very conscious of their bodies but high temperatures do not motivate people to work out," he says. "When it hits 40ºC, they might prefer to go to the beach. I think we will lose members but it should pick up again in the autumn."
The LivingWell club and the Hilton hotel are both owned by the Maltese Fenech family. The four brothers and two sisters run a property company called Tumas Group.
LivingWell and Tumas have struck a deal whereby LivingWell will run the club this year for a set fee of £10,000. Once it exceeds its profit target of £35,000, it will be entitled to keep 25% of the profits at the end of the year, with Tumas keeping the rest.
The centre is currently making £10,000 each month and Oliver's conservative estimate is that it will make £50,000 this year.
A key element of LivingWell's success is that it is in a Hilton hotel. People in Malta recognise and trust the Hilton name - so much so that the club secured 200 members before it even advertised.
The hotel's general manager, Ken McLaren, has worked abroad for Hilton for the past 12 years. He expects to achieve an average occupancy this year of 67%, at an average room rate of £60. In March, Living-Well's first month, the hotel's average occupancy was 46%. By May, this figure had risen to 78% and in the peak summer months it is expected to reach 80%. The hotel's projected revenue to 31 December 2000 is £18.5m, although this figure will be for a 10-month year because it opened on 1 March.
As McLaren points out, LivingWell offers business guests or holiday-makers the opportunity to continue any fitness programme they might be following at home. Yet very few guests actually use the club.
Oliver explains: "When people book a hotel for a conference or a holiday, they want a health club because it reflects a high standard. The conversion into usage, however, is low. Holiday-makers, for example, are here to relax. They come with the intention but then they go out for a few beers and all they want to do is lie by the pool."
McLaren agrees that people increasingly want a hotel with a leisure club, even if they do not use it. "Brands and sub-brands are important. They give us something to market to a customer who is becoming more discerning and no longer looks at a hotel as being just a bedroom and a restaurant. "LivingWell gives an image of professionalism and gives us leverage over the competition."
The club is also available free of charge to the hotel's 220 staff, four of whom, including Oliver and McLaren, are British. The other two are executive chef Nigel Hitches and executive housekeeper Alison Shergold. Hitches is responsible for 32 chefs serving about 1,000 meals per day. He is paid about £3,000 a month and gets a monthly accommodation allowance of £550.
Previously executive chef at the Hilton Jerusalem and then a consultant chef at the Hilton Istanbul, he has a one-year contract in Malta. "I like flying the flag for Britain and British cooking and I enjoy life here," he says. "But I'm getting married in October and I would like to return to England one day to start a family."
Shergold, however, has worked in a string of countries including Jordan, Holland, Australia and Cyprus, and has no intention of returning to the UK. "Malta is a great place for British people who have never travelled overseas. It gives them a taste of something different but it eases them in gently."
Perhaps this is why the UK-based leisure group chose Malta, which already had 14 health clubs, as its first overseas destination. It has many similarities to the UK: the Maltese speak English, drive on the left and even have red post-boxes and three-pin plugs.
LivingWell may also have been attracted by the fact that Malta, with a population of 380,000, is the third most densely populated place in the world after Singapore and Monaco.
Last year the island, which measures 28km by 14km at its widest point, attracted 1.2 million tourists to its 246 hotels, guesthouses, apartments and hostels. This is expected to rise by 3% over the next three years.
However, Stuart Broster, managing director of LivingWell, denies that these factors had anything to do with its decision to settle in Malta. "There was no science to it. The owner was keen to have a health club and it was an opportunity. Having seen its success, we now feel compelled to open more."
And that is exactly what LivingWell plans to do, with four clubs due to open in Germany by February 2001. Last year, the group's turnover was £34.5m and this year it is projected to reach £42m.
Broster adds: "We want LivingWell to be the most recognised health club brand in the world. We want it to be the McDonald's of the industry and no one else has achieved that recognition, so it is possible."
