The Vietnamese gym market has begun to restructure as it recovers from the impacts of COVID-19, but growth has slowed. High fixed costs, including rent and labor, combined with a business model reliant on prepaid memberships, have led major chains to reduce locations or exit the market. Some companies have reportedly accumulated tax debts amounting to billions of dong.
According to data released by the Ho Chi Minh City tax authorities on September 29, several major gym operators in the area have tax debts ranging from hundreds of millions to billions of dong.
Specifically, City Gym, headquartered in Ho Chi Minh City, has tax debts exceeding 75.3 billion dong (approximately $4 million), placing it seventh on the tax delinquency list. Established eight years ago, City Gym operates nine gyms in Ho Chi Minh City and announced the closure of two locations starting September 15.
Other chains are facing similar challenges. GetFit Sports and Fitness has a tax debt of 24 billion dong. GetFit Gym and Yoga entered restructuring in September 2022 but ultimately exited the market in February of this year.
Fit24 also cited "uncontrollable unforeseen circumstances" as the reason for halting operations. After closing, it still has over 16.2 billion dong in tax debts, placing it on the list of the third tax bureau.
Smaller operators are not exempt. Healthy Common Group has tax debts exceeding 4.1 billion dong, while NuGym owes over 1.867 billion dong. Both companies are reportedly no longer operating at their registered addresses.
Additionally, closures and downsizing continue. A California brand has decided to cease operations at two locations in Ho Chi Minh City and two in Hanoi, reassessing rental conditions and investment efficiency. In June, a high-end gym chain closed its last location, withdrawing from the Ho Chi Minh City market.
Industry experts attribute the restructuring to high fixed costs and intensified competition.
Vietnam's fitness market has rapidly expanded since the COVID-19 pandemic. According to market research firm Ken Research, there were approximately 600 specialized gyms and fitness clubs in Vietnam in 2023, with thousands more when including smaller facilities. Ho Chi Minh City and Hanoi are key markets, attracting high-income clients to premium chains and specialized studios.
However, the growth in market size does not necessarily correlate with improved profitability for gyms. Large gyms must continuously bear costs for rent, equipment purchases and maintenance, and employee salaries. Premium facilities with swimming pools and saunas incur even higher initial investments and maintenance costs.
In Ho Chi Minh City and Hanoi, competition for prime locations drives up rental costs. Meanwhile, fierce competition makes it difficult to raise membership fees, leading to rapid declines in profitability if costs rise or membership growth slows.
The gym industry's reliance on long-term membership sales is also seen as a factor in the restructuring. While selling long-term memberships provides upfront cash, gyms must continue to deliver services to those customers. If closures or restructuring occur, the burden of refunds and service provision for already paid members can become a management challenge.
Furthermore, the competitive landscape for gyms has changed. Recently, more people in Vietnam are opting for activities like running, pickleball, badminton, and cycling for health management. This has intensified competition between gyms and other forms of exercise for consumers' time and spending.
* This article has been translated by AI.
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