Yoga chains' low prices meant they had to fail, says competitor

PUBLISHED : Monday, 17 May, 2010, 12:00am
UPDATED : Monday, 17 May, 2010, 12:00am

The recent collapse of two yoga chains may be a sign of a troubled market, but the way they ran their businesses was unsustainable, says the chief executive of the city's biggest yoga chain, who believes the fitness craze is more popular than ever.

When Planet Yoga closed last week, it left about 13,000 people trying to get refunds of their membership fees. Its collapse followed that of Yoga Yoga last month, which affected more than 1,500 members.

Police stations in Central, Wan Chai and Tsim Sha Tsui - where the three Planet Yoga branches were located - have received 79 complaints.

More than 500 affected members have joined a concern group on Facebook, where discussions show they are worried about how to get their money back.

Members were required to prepay a monthly fee of about HK$300 for a fixed term of up to five years. Many welcomed this because signing such long-term deals meant they got bigger discounts. Some even bought lifetime memberships, paying about HK$30,000, according to Fong Fai, chairman of the Hong Kong Yoga Society.

But Planet Yoga's prices were too low, said Colin Grant, chief executive of Pure Group, which started Pure Yoga, the first big yoga studio to operate in Hong Kong, in 2002. Pure Yoga has about 40,000 members, about 6,000 of whom attend their clubs each day, and signs up 1,200 new members a month.

'It has to be realised that businesses that have unsustainable price points will eventually come to a halt,' Grant said. 'If we charged HK$200 a month like they did, we'd be in trouble.' Most Pure Yoga members paid from HK$800 a month, while a minority prepaid for fixed terms, with the terms capped at two years.

'For us, yoga is more popular than it's ever been,' Grant said. 'Our business is better than ever. Last week we put in an offer for a new studio in Central. We have five and we're still growing. We're renovating two of our studios this year, which will cost US$1 million.'

Unlike competitors whose prices kept going down, Pure Yoga's went up 12 per cent in the past year and had risen about 30 per cent since 2002. 'Our rent has gone up, our costs have gone up,' Grant said. 'How can our price go down?'

He said his company would not give discounts to Planet Yoga members because that would be 'very unfair' to his existing members.

But Fong, a yoga instructor for more than 30 years, feels the closures are a sign of a troubled market. 'If it's that good, those two wouldn't have closed down,' he said. 'Fewer and fewer practise yoga now. The peak of the frenzy is behind us.'

Referring to Pure Yoga, which advertises using its model/actress instructor Almen Wong Pui-ha, he said it was possible the attraction of a celebrity worked well in Hong Kong, but the effect could be waning now. He added that cheap yoga courses introduced by public estates' community centres were also taking clients away from the yoga studios.

A former Planet Yoga member, who is HK$20,000 out of pocket in membership fees, said she had no confidence in any yoga clubs following the collapse of the two chains.

'I think I won't do it in the near future, even if payments are monthly,' she said.