Lakes Leisure's proposal will be presented to the Queenstown Lakes District Council at its full meeting in Wanaka tomorrow, with the recommendation in support of the construction of a "versatile room" at the northern end of the Alpine Health and Fitness centre to be used as an RPM studio.
In her report to the council, Lakes Leisure chief executive Fiona McKissock said the centre proposed to construct a mezzanine floor, costing $332,000, within the gym area, to address demand by members.
The board of directors had considered the business case and approved the project, while the property subcommittee had given its consent to a variation of the lease to enable it to proceed.
Ms McKissock said the centre had experienced "exceptional support" since opening in October 2009. Membership had reached 1500, which had "far exceeded" forecast levels.
However, the high level of membership and the upward trend in casual use had created "challenges and opportunities".
"With current membership numbers the gym is completely full at peak times and members are being turned away from peak time group fitness classes."
All group fitness classes had proven popular, but RPM had been the most in demand. The class sees each participant ride a stationary bike with an instructor leading the class in different techniques - for example, sprints and hills.
Classes had been held in the group fitness studio, but as RPM's popularity had grown, so had logistical issues and constraints. All group fitness classes were held in the same room, so bikes had to be wheeled into position and then stored either along the walls of the fitness studio, or in the foyer.
Alpine Health and Fitness began with 12 RPM bikes, and it now owns 30 bikes.
Fifteen scheduled RPM classes were held a week, which were still being booked out, Ms McKissock said.
The report said it was essential to invest in the centre to meet demand, provide a high level of service and further consolidate the business to sustain and improve its financial performance.
The Lakes Leisure board had resolved to support the initial $332,000 investment, which was calculated to have a 41% return.
The board intended the project to be funded by the Alpine Health and Fitness Centre surplus - derived from membership revenue - and would, therefore, require no additional funding or security from the council.
"Included in the capital grant for 2011-12 is a sum of $310,000 for debt repayment. The proposal requires council to approve a variation to the purpose of a portion of the capital grant from debt repayment to capital expenditure of $292,000. The original budget included $40,000 for capital improvements."
Ms McKissock said the funds were available and were being held pending the council's decision. The project did not qualify as a "major transaction" under the Companies Act and, therefore, did not require shareholder approval.
"However, in line with our statement of intent, Lakes Leisure works to maintain a 'no surprises' relationship with QLDC as shareholder."
