Frankton’s council gym is denying accusations of predatory pricing after a privately-owned competitor in central Queenstown went bust.
Pulse Fitness closed last Thursday, its director Holly Cuthbert saying it “was just not viable”.
Cuthbert emailed members to say she tried everything to stay open but the decision was taken out of her hands.
For her stranded members, Cuthbert has done a deal with CBD rival Queenstown Gym – paid-up Pulse-goers will get one month free plus the remainder of their Pulse membership honoured if they sign up.
Queenstown Gym, the CBD’s sole survivor, blames Pulse’s closure on Alpine Health & Fitness – run by Lakes Leisure, a not-for-profit owned by council.
“It was a combined effect, Alpine opening in October 2009 and the recession,” Queenstown Gym co-owner Tim O’Leary concludes.
The two private-enterprise gyms each lost about 40 per cent of members because of Alpine, he reckons – “a huge hit, enough to put Pulse under”.
O’Leary blames Alpine more than the recession, claiming: “Many memberships weren’t sold at retail prices [but at] discounted rates to encourage a mass membership sign-up.”
He regularly heard of half-price deals – “half the advertised price of about $750 for 12 months gym membership, including [Alpine Aqualand] pool use”.
In May 2009, when Mountain Scene broke the news of Lakes Leisure setting up Alpine to compete with privately-owned gyms, O’Leary’s business partner smelt trouble.
“Queenstown can’t sustain three gyms – one of us will close,” Sarah Kerby warned then.
Alpine membership is now up to about 1100 people, Lakes Leisure boss Fiona McKissock says.
She rejects O’Leary’s claims of predatory pricing.
Apart from a pre-opening $750 year-long special, everyone was paying the full annual price of $849 or in monthly pay-as-you-go increments, and community service card holders were paying $615.
“There have been no discounted specials,” she says.
Alpine appeals to Frankton, Kelvin Heights, Quail Rise and Lake Hayes Estate folk, a different type of member to the private-enterprise gyms, McKissock says.
There are three full-time and two part-time staff, and 10 fitness instructors paid per class. Six personal trainers also work out of Alpine. The gym was set up after Queenstown Lakes District Council okayed Lakes Leisure borrowing $780,000 for the fit-out.
Private-enterprise operators had earlier rejected leasing the gym space – O’Leary says the numbers didn’t stack up – so Lakes Leisure decided to get into the fitness business itself.
Ratepayers have been lumped with hefty recent increases for an “aquatic centre charge” on their rates bill.
The per household charge has jumped from $59 to $91 in two years – 54 per cent.