Case | HBS Case Collection | July 2005

24 Hour Fitness

by John R. Wells and Elizabeth Raabe

Abstract

In late December 2004, Mark S. Mastrov, CEO of 24 Hour Fitness, reflected on how far the company had come in 20 years. From its humble beginnings in San Leandro, California, in 1983, 24 Hour Fitness had grown to become the largest privately owned health club chain in the world. In 2003, the company operated 305 clubs in 16 of the U.S. states and 21 in overseas locations. It had three million members, 16,000 employees, and generated $1 billion in revenues. Going into 2005, Mastrov faced many opportunities. Should the business focus on domestic market expansion or devote more resources to international expansion? If he decided to expand into the Northeast, how should the company enter against entrenched competition such as Bally Total Fitness? Would a major acquisition make sense or would it threaten the company's culture? And how should he fund such an acquisition?

Keywords: Global Strategy; Competitive Advantage; Competitive Strategy; Mergers and Acquisitions; Capital Structure; Health Industry;

Citation:

Wells, John R., and Elizabeth Raabe. "24 Hour Fitness." Harvard Business School Case 706-404, July 2005.