ClassPass CEO: The Feds Need To Flex Their Muscles To Help The Fitness Industry

How Fitness Industry Can Survive COVID-19

It is not an easy time to be in the fitness business at present as gyms, fitness studios and wellness providers nationwide have been forced to close their doors and temporarily shut down service while the whole world rides out the coronavirus pandemic.

And unlike restaurant operators who find themselves in a similar position, there is just no way to box up an aerobics class and hand it off to a customer curbside.

For the fitness industry, ClassPass CEO Fritz Lanman told Karen Webster, the last several weeks have been nothing short of “catastrophic” for the industry as a whole. Every player has been left scrambling to figure out how to shut down their business, provide for their staff, and then stay alive long enough to ride out the crisis in progress.

ClassPass, he noted, has been hit hard because its platform for booking fitness and wellness appointments can’t function very well if there are no classes being offered. The company had an advantage, Lanman told Webster, because as a global firm it had a front row seat watching this unfold in Asia at the start of the year — particularly in China, which opened 2020 by shutting down.

But, he noted, that early preview of what was coming had costs as well as benefits. On the upside, ClassPass knew what was coming. On the downside, the company believed everyone else did, too.

“We're as a business a bit lulled into complacency because we are hoping that countries would respond more effectively, like they did in Singapore,” Lanman said, noting that has meant that in very short order ClassPass has had to radically realign its priorities.

Firstly, he noted, it had to keep its partners, customers and staff safe. Secondly, the company has made a massive pivot to digitizing the health and wellness platform to give its partners a way to stay alive and its customers a way to stay connected during the current interregnum. Finally, ClassPass has taken on a new role as advocate for the industry and is pushing the government to do more to make sure that fitness stays fit even during this massive downturn.

Digitizing Physical Fitness

The process of rearranging ClassPass while COVID-19 was first beginning to make itself felt in the states but before gyms and studios were being shut down en masse gave it an “in-betweener” phase in which it could start putting changes to the platform into place: waiving cancellation fees, and then letting people push pause on their subscriptions since it made little sense to keep charging people for a booking service they couldn’t use.

But more critically, he noted, the company has also labored to build a service that customers can continue to use via digitized offerings. ClassPass members can now use their credits to purchase access to these offerings in lieu of attending a physical class. It is not a perfect replacement, Lanman noted, and the company isn’t pretending that it is. There is something ephemeral about being in the room where it happens with one’s workout community that can’t quite be recreated via video chat from one’s living room.

But, he noted, working out is a communal activity for many people; it’s part of what inspires and motivates them, it is a necessary part of the experience. If customers can’t be there in person, what the company has seen is massive interest in at least touching base digitally.

“It's not the same, right?” he said. “There's nothing like being in a class physically with a community and an instructor. That ambiance, that immersiveness you can't replicate digitally. But we like to think it is the next best thing.”

And the company’s partners, he noted, tend to agree. When the digital offerings launched, 500 were signed on; by the end of the first week, ClassPass digital had 1,500 signed on and more coming every day. It is still work in progress — the instructors and groups coming onto the platform are still figuring out how to configure their classes for digital, which video chat service they want to use, how to charge for class, whether they want to broadcast from their phone or a laptop. But the ramp-up has been incredibly fast, and the ideas are being piloted in real time in front of live audiences.

Audiences, he noted, that are responding — and even donating. ClassPass has recently added a donation button to the site so that people who want to help keep their favorite instructor afloat during tough times can do it — $5 at a time, or $100 at a time. To amplify that effect, Lanman said, ClassPass will be matching those customer donations for the first million donated.

“I'm especially proud of that, given our businesses has also seen a 96 percent revenue decline as well,” he said. “It was generous of our board, I think, to approve that.”

And while ClassPass is committed to doing everything it can to keep its industry partners afloat, he said, it knows there is only so much that any individual firm can do. For the fitness and wellness firms of America to stay alive, they are going to need government scale, and a government willing to think big.

Why Thinking Big About Stimulus is Necessary Right Now

There are many efforts right now to bring relief to the fitness industry, particularly when it comes to keeping the workers and entrepreneurs who make it happen whole, paid and out of bankruptcy. It’s a good start, Lanman said, but from its position as a global player in this market, and seeing the pain worldwide, it’s not enough. The government needs to intervene, in a big, end-to-end way, if it really wants to keep the fitness industry healthy enough to make it mostly through this.

The first step, he said, is getting the pause button pushed on rent payments.

“What we have heard when we talked to partners was that their biggest straw that would break the camel's back was going to be rent,” Lanman explained. “And so, we need policy intervention to effectively force private landlords and their mortgage providers and the mortgage providers insurers and insurers reinsurers to all get onboard for a three or four month rent holiday.”

It sounds big and radical because it is, but it is what needs to be done, Lanman said, and the U.S. government is the only entity that has the reach necessary to do it. After rent relief is accomplished, there is a whole lot more that should be happening: moving faster on financial assistance; offering loan, interest or tax relief; and then post-recovery creating more incentives for employers to invest in employee health and wellness.

It is an ambitious list, he noted, but it’s what ClassPass believes really has to come next if the industry as a whole is to really recover.

Said simply, he noted, drastic times call for drastic measures. And with 90 percent of the nation’s wellness providers currently closed down, it is hard to say that times aren’t drastic.



The September 2020 Leveraging The Digital Banking Shift Study, PYMNTS examines consumers’ growing use of online and mobile tools to open and manage accounts as well as the factors that are paramount in building and maintaining trust in the current economic environment. The report is based on a survey of nearly 2,200 account-holding U.S. consumers.