26th January 2021 – (Hong Kong) The COVID-19 epidemic in Hong Kong has been severe. The fitness centres were ordered to suspend business for more than 100 days last year. They were ordered to suspend business for the third time in December.
Recent legal filings show that both Physical Fitness and Goji Studios have been sued for rent arrears by the respective owners in recent months. Among them, all branches of Goji Studios have been sued for rent claims by the respective owners in 2020. The group has been sued for nearly 20 times, and each time the amount of rent arrears was more than HK$2 million. Pure Fitness, another large fitness centre operator also admitted that due to the impact of the epidemic and the suspension order, it has recently laid off some Hong Kong employees.
Meanwhile, Physical Fitness branch at Phase 2, Tai Hing Gardens, Tuen Mun was sued by the owner, Hang Lung Properties, on 14th January this year, seeking a one-month rent of nearly HK$350,000. Looking through the records, the Tuen Mun branch was also sued by the landlord in May, August and December 2020. In addition to the Tuen Mun branch, the Kornhill, Cheung Sha Wan and Sheung Shui branches of Physical Fitness were also sued for rent arrears in May, August and September last year.
The Cheung Sha Wan branch was sued in May and August last year. The rent arrears amounted to nearly HK$2 million.
In addition, the Kornhill branch was also sued by the owner, Hang Lung Properties, for rent for HK$1.8 million in May.
Goji Studios, Mong Kok branch was also used by Hang Lung Properties for a month’s rent of over HK$2.6 million on 14th January 2021. In 2020, all Goji Studio branches were sued by respective landlords nearly 20 times, and half of the court filing records were related to the Mong Kok branch. Goji Studios responded to a local media that each of its centres occupies more than 10,000 square feet, and the monthly rent of the seven clubs totals more than HK$10 million.
Although some landlords are willing to provide rent reductions or allow late payment, in 2020, its centres have been closed for more than 100 days, with zero income during the period, and the group had to continue to pay the salaries of hundreds of employees. Goji Studios also pointed out that there is no retrenchment staff at this stage.
Another premium fitness centre operator, Pure Fitness has recently laid off its staff. The company admitted that it was affected by the epidemic and the suspension order, coupled with insufficient government funding and the owner’s failure to reduce rents by a corresponding amount. The group comprehensively reviewed the company’s business and long-term development and the lay-off has affected around 40 Hong Kong employees according to sources.
However, it is noteworthy that all fitness centres received three rounds of subsidies under the government’s Employment Support Scheme (ESS). Up to now, 80% of the industry players that have applied for ESS have not received the third round of funding. The operators think that it is necessary to expedite the approval of funding to provide timely assistance to the industry.