Dreamworld Eye The Weight Loss Market

by Bridget Carter (The Australian Journalist)

DREAMWORLD owner Macquarie Leisure Trust is eyeing the weight-loss market and might invent its own Jenny Craig-style diet program to complement its recently launched fitness centre business.
"We are looking at setting up a product ourselves," the trust's chief executive, Greg Shaw, said.
Mr Shaw said the trust had an existing market through its Goodlife Health Clubs, three of which opened last year.
The company's healthcare portfolio has expanded, with revenue increasing to $51.83 million in the nine months to March (up from $20.88 million) and earnings climbing to $18.91 million from $7.75 million in the previous corresponding period.

The group's recent update to the market showed earnings at the trust's main revenue earner, Dreamworld, fell 4.8 per cent for the nine months to March compared with a 5.8 per cent decline for the half-year.

Mr Shaw believes the health-club sector is lucrative and he expects the Government will offer future funding and incentives to encourage people to lose weight and drive down health-related costs linked to obesity.

The number of overweight Australians is poised to overtake those of healthy weight, and the obese are not far behind, according to the latest National Health Survey, with 25 per cent of adults now officially obese, up from 19per cent in 1995.

The moves come after other overseas parties acquired weight-loss brands, including Nestle, which acquired Jenny Craig from a private equity consortium in 2006 for $US600million.

Macquarie Leisure would also try to target corporate gym memberships, Mr Shaw said.
Meanwhile, Mr Shaw expects the bowling centre business will continue to perform well, with a number of corporate firms recently opting to take their staff bowling in an effort to cut costs rather than put on private functions. Macquarie Leisure's Australian-based bowling business reported steady earnings of $25 million for the nine months to March.

Mr Shaw said the standout performers were bowling centres at Strathfield, the first of a number of centres where the new role-play combat game laser tag had been introduced as an attraction, Darling Harbour, Villawood -- all in Sydney -- and the recently opened centre at Joondalup in Perth.

Macquarie Leisure had recently secured a new flagship bowling site, which was expected to open early next year at Rooty Hill RSL Club in Sydney's west.
The group was selling some of the freehold sites in a sale and lease-back scenario.
"There are a range of capital management initiatives we are looking at to reduce debt," he said.
The trusts's current debt was $300 million and would be reduced to below $230 million by September, he said.
Entertainment businesses that target the lower- to middle-income bracket would perform well in the current economic climate, Mr Shaw said.
"Sections where people don't have a lot of net worth, but do have a lot of disposable income," he said. "I think that is where the spending is a bit more concentrated."
With respect to the leisure market in the current environment, Mr Shaw said not only did managers have to be clever about managing the cost base, but also had to rethink how the product was marketed to the consumer.

He said the group shied away from ownership of anything heavily regulated, such as pubs and clubs involving gaming and alcohol, and also had decided to steer away from childcare.

Mr Shaw said Macquarie Leisure's marina business was holding up reasonably well, with property held in prime locations around Sydney Harbour. The marinas' earnings increased 6 per cent on the previous corresponding period to $9.21million. Mr Shaw was also bullish about the cinema business, although he said there were currently few acquisition opportunities.
"Movies are doing pretty well," he said. "It is cheap entertainment. In difficult times, people just want to escape. They just want to go out and have a good time."
The group has also gained a one-year extension for $50 million of a $100 million debt facility to September 2010. The total Australian debt facility is $250million while terms have been agreed for a new $US10 million facility.