Leading With Innovation

Al Noshirvani, Managing Partner, ALTA Technology Group

Why guess what the future holds when you can invent it? Few understand this better than Al Noshirvani. In 2004, he started as an entrepreneur in the tech space as co-founder of Motionsoft, a leading provider of software and financial services for the health, fitness, and wellness industry. In that role, he spearheaded many tech innovations in the industry, helping lead the global industry into adapting new digital products into their operations.

Noshirvani still serves in a thought leadership role in the tech space, but he’s branched out to other aspects of the fitness industry. He recently held the 12th annual Fitness Technology Summit, an invite-only event that features top leaders in the global industry (see page 24 for more).

Despite his long association with technology, Noshirvani has amassed a stacked resume in the fitness industry.

He’s currently the owner of Fitness Club Management, Inc., in Rockville, Maryland, which owns Method Gyms, a brand with five clubs, all in Maryland. He is senior managing director of Integrity Square, a financial advisory and early-stage growth equity firm focused on the HALO (health, active lifestyle, and outdoors) sector. And he’s a current HFA board member, where he serves as finance committee chairman.

“My core job is managing partner of ALTA Technology Group with my partner Tara Levitt,” he says. “We founded ALTA together. While I’m the owner of Method Gym, I’m not operationally involved on a day-to-day basis. We have a CEO, Andy Stromberg, who runs Method Gym day-to-day.”

He says that his ability to serve so many roles is due to the talent he works with.

“Lucky for me, I’m able to work with amazing people like Tara and Andy. To have such great people supporting me affords me the luxury of being able to do so many things.”

CBI: We just did our consumer report, and the trend lines are very positive. Is that what you’re seeing too?

AL NOSHIRVANI: Yes. I own my own gyms, and I definitely see It. I think one reason is that it got pounded into people’s head pretty hard during the pandemic and afterward that if you live an unhealthy lifestyle, you’re more likely to have a poor quality of life. People who had diabetes or were overweight suffered a higher mortality rate. That was the message.

During the pandemic, bad operators went out of business, the good operators stayed, and there was a lot of consolidation. Last year our topic at the Fitness Technology Summit was the convergence of healthcare and the health club. How timely was that? Between the GLP-1 craze and the insurance reimbursement trend, I think we hit that one out of the park, so my sense is that today’s operators are doing better. They’re almost at pre-Covid numbers, particularly as it relates to membership. There’s still some uncertainty around non-dues revenue, like personal training, but my sense is that the industry is back, and this is a great time to be in it.

CBI: Some industry people mention the barbell effect, where budget and luxury models are doing very well, but the middle operator is getting squeezed. Do you agree?

AL NOSHIRVANI: I don’t. Method Gym was an HVLP model, then we took the opportunity to really raise our game as it related to cleanliness, design, and other services and features. Then we increased our prices, so we’re right in that middle range now. We decided that we needed to provide a much higher level of service to compete. The key is that you can’t charge more and still operate like you’re an HVLP club. You have to be better at vetting your staff, have your janitorial crew out on the floor so people can see them—things like that. I understand what people are saying about the barbell effect, but it doesn’t have to be that way.

This is part of packaging, as well. Clubs who move up to a middle range are more community-oriented businesses than the budget chains. You can be recognized as part of a community much more effectively and charge in the $35 to $50 per month range.

CBI: How important do you think community is to fitness facilities?

AL NOSHIRVANI: What distinguishes you from other businesses is creating a connection to your community. To do that, you need to behave like a local business. You need to go to chamber [of commerce] meetings and local events like Saturday flea markets, and interact with other community leaders. All of those gestures are important for building a community presence.

CBI: How important is it to reinvest? How much do you put back into your club and how often?

AL NOSHIRVANI: There has to be a clear purpose. My clubs used to be World Gyms before we became Method Gyms, so we went through a full rebrand. We had to redo all of our interiors and upgrade our equipment, so we invested significantly in our facilities.

The other part of the equation is that we charge annual enhancement fees in our clubs. We survey our members and ask them what they want. Afterward, we make sure that we highlight the fact that we delivered what they asked for. We do that twice a year in April and in October. April, because that’s after the Q1 rush and you’re going into the summer, so you want to keep your members interested. Then in October because that’s when you’re getting ready for the Q1 rush that’s coming in January.

CBI: How have you seen consumer behavior change? For instance, ABC Fitness just did a report about how different generations want different experiences. How do you service that?

AL NOSHIRVANI: I can tell you about our own experiences, because one of the clubs that we acquired this year was previously owned by AARP, who was trying to get into the club business. While the club didn’t disallow members under a certain age from joining, people in their 20s and 30s didn’t want to join a club with an older population. When we took over that club, we had a real challenge, but I think that if you create programming and packaging, you can solve the issue.

This is part of your packaging, promotions, and pricing strategy. Certain things like scheduling can incentivize people of all ages. Create senior memberships that motivate people over a certain age to come in during the middle of the day as opposed to the bookends. Other factors like pricing naturally create barriers or openings for different age groups.

For example, Planet Fitness has a proportionately high number of people under the age of 30 than most other organizations, because they have their high school program every year, so that drives their numbers. We prefer people 25 years and older. We don’t really want the young, pumped-up guys in there, because they tend to push everybody else out, but these are interesting topics to bring up because there are so many different factors to consider.

CBI: Do you think it’s important for club operators and owners to reach out to the local medical community?

AL NOSHIRVANI: Yes. I have a friend who’s a bariatric surgeon who does weight-loss surgeries. I was talking to him last year about the Fitness Technology Summit, and asked him, “What are you guys doing to prepare your patients for surgery? Why not partner with gyms?” Unfortunately, the answer was, “We didn’t know we could do that. We didn’t know you guys were qualified.”

Some of these surgeons have opened up personal training facilities in the basements of their medical office facilities, and they’re putting these patients into those spaces to prepare them for surgery. It’s crazy to me that we don’t partner with them. Their costs would go down, and so would the insurer's costs. We’ve got state-of-the art facilities and qualified trainers.

We definitely have missed the boat on this, and we need to figure out how to solve it. Partnering with the medical community would be tremendously powerful.

CBI: You’re a champion of AI. I’m still not sure exactly where AI fits best in this industry. Where do you think it’s most useful?

AL NOSHIRVANI: I think it’s useful everywhere. It’s game changing. I remember listening to people a few years ago talking about Web3.0 and virtual reality, and people were buying virtual property and all of that. I thought it was all nonsense. AI is the complete opposite. The easiest appli- cation is in marketing and messaging, so I think that that’s a big part of where it can help, but there are so many great tools.

Understanding the different kinds of AI is critical. AI is a big term, and it comes in lots of different flavors. It’s important to distinguish between AI and generative AI. Those are two very different things. For instance, AI will tell which members are in danger of leaving, but generative AI will tell you what to say to them.

Using AI is easy, but building products with AI is not so easy. It’s difficult to do, because you have to find very specific use cases, but the most obvious ones are just using ChatGPT, the simplest form of generative AI. For instance, you just type that you want a personal training program that will prepare you for the New York Marathon next year, and it’ll give you a day-by-day set of exercises to perform. More people are going to be using AI for these types of use cases in the future.

CBI: You’re also a champion of advocacy, and even featured a Washington, D.C., Fly-In at your 2023 Fitness Technology Summit. Why do you think it’s so important to support HFA advocacy?

AL NOSHIRVANI: It’s a topic that’s near and dear to me, especially now that I’m on the board. I’ve been communicating with a lot of potential nominees for the next board coming in, and I’ll tell you that advocacy is clearly the shining light that everyone is focused on. It’s important that we also recognize that advocacy is not the only thing the association is here for. I think we shouldn’t lose sight of the fact that we’re here to promote communication, networking, education, and research.

As important as advocacy is, one of the things I am worried about is what I call PHIT fatigue [PHIT is the Personal Health Investment Today Act]. We need to focus on the wins that the HFA is getting on FTC regulation that recently passed and other legislative issues. These are important. As important as PHIT is, we can’t lose sight of the other wins that are substantial for us.

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This article originally appeared in the November 2024 issue of Club Business International. View the full digital version of the issue online.