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Harvey Kong

Hong Kong gym chain Physical announced on Friday that it would shut down after 38 years in business, citing a need to restructure its business.
The closure followed a demand by the Mandatory Provident Fund Schemes Authority to settle about HK$3 million (US$384,600) in outstanding contributions for 740 employees, with the pension regulator warning that it would take legal action if the chain failed to do so.
The Post breaks down the chain’s financial woes and what customers can do to protect themselves.
1. What is going on with fitness chain Physical?
Physical Fitness and Beauty, which opened in 1986, announced on Friday that it would shut down, citing a need to restructure its business.
“Although Hong Kong’s economic environment has gradually improved since the Covid-19 pandemic four years ago, some landlords of certain branches still maintained high rents,” the chain said on its website.
It added that a new investor was negotiating with the landlords of various branches to continue renting spaces for the centres.
On its website, the fitness chain said that it had as many as 23 branches across Hong Kong, but by September of this year only 14 locations were listed.
Signs of trouble for the chain emerged earlier this month after the pension authority demanded it settle about HK$3 million in outstanding contributions for 740 employees.
The authority also revealed that two employees had lodged complaints about unpaid contributions in July and August, respectively.
2. Are there other fitness chains in financial trouble?
Physical is not the only major fitness chain to experience financial trouble this year.
In August, three companies associated with popular gym chain Pure Fitness were accused of failing to pay the rent and management fee for a branch in Admiralty by landlord CP (SH) Limited. About HK$13.59 million for five months’ rent, management charges and other miscellaneous fees were owed.
In a statement, Pure said that it had been having “landlord discussions over the last few months” as it pushed for rental reviews during what it called a challenging economic cycle.
In a response to the Post last month, the company said ongoing legal proceedings would not affect the normal services and operations of Pure Group branches.

Throughout the pandemic, the Hong Kong government ordered the temporarily closure of gyms, along with other venues such as cinemas, bars and party rooms as it battled waves of infections.
In 2022, international brand Fitness First announced the closure of its eight branches across Hong Kong amid the “prolonged challenges” brought on by the coronavirus pandemic.
Fitness First’s closure followed that of Goji Studios in December 2021, which shut its four remaining branches in the city pointing to “unrealistic rents” and social-distancing regulations in 2020 that crippled the industry.
3. What contributed to Physical’s financial troubles?
Physical had hinted that high rents were a reason for its troubles.
But a sector leader suggested the chain’s practice of prepayment of a big lump sum of membership fees might be partly to blame too, with customers now preferring fitness centres that charged by month.
“Even if it closes down, the most you lose is just a monthly fee. When you have to pay HK$20,000 to HK30,000 in advance, you will be at a total loss if it ceases operation,” the veteran who asked to remain anonymous said.
He added the industry was also affected by the shrinking middle class.
“We could really feel the city’s population is shrinking amid the emigration wave. Most of those who left are the middle class, which are the potential clients in our sector,” he said.
4. How can consumers protect themselves?
The Consumer Council has suggested that existing Physical gym members could wait for the new investor to announce arrangements and carefully read through the new terms and conditions of their contract.
It added that if customers do not agree with them, both companies would have the responsibility to issue a refund.
For customers who did not wish to keep their membership and wanted a refund, they might only be able to get their money back if they paid using a method that featured a refund mechanism, such as a credit card, it said.
In the case of a credit card, consumers should contact their issuing bank and fill out the relevant forms to ask for their money from the chain’s bank on their behalf.
The council also warned that if the chain could not change hands successfully and was forced to close, consumers would then be considered unsecured creditors. In this case, they may not have a chance to claim their unused services or products, or receive a refund.
It warned residents that prepayments carried risks, so they should think carefully before they made a decision. If consumers must do so, they should reduce the amount paid, so they could minimise their losses, it said.
“At the same time, consumers should also properly keep all relevant records and important information such as price quotations, contracts or receipts,” it said. “This would help provide evidence in case of any arguments arising in the future.”
Additional reporting by William Yiu


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The Post breaks down the gym’s financial woes and what safeguards are available to its members


The Post breaks down the gym’s financial woes and what safeguards are available to its members.


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Explainer | What led to Hong Kong’s Physical gym chain closure and how clients can protect themselves

The Post breaks down the gym’s financial woes and what safeguards are available to its members

1. What is going on with fitness chain Physical?