Keeping Customers Happy

Business Matters

Keeping Customers Happy

East Bank Club grows by adapting to members’ needs in big ways

More than a health club

When Daniel Levin submitted his first plans for what would become East Bank Club, lenders scoffed. In 1976, his real estate development firm, The Habitat Company, acquired control of three acres of former railroad land along the Chicago River. He planned to put apartment buildings at the north and south ends of the property, connected by a health club in the middle.

At that time, the land was not in a safe area of Chicago. Empty lots and abandoned industrial buildings invited vagrancy and crime, giving the neighborhood a bad reputation. No financial institution thought it would work for a residential development, so the planned development program could not proceed.

Refusing to give up, Levin adjusted his plan, dropping the residential buildings to build a much bigger health and social club that would redefine fitness facilities and transform the surrounding neighborhood.

“There was a need for a club that would be much bigger than anything that existed,” Levin says. “I felt the need because in Habitat’s apartments, we had swimming pools, a few bikes and very little other fitness equipment. It was anonymous in the sense that people came down, swam or biked, and went back to their apartments. There wasn’t a social aspect because there weren’t enough people to create a community. So we decided to make our health club so big that it would attract the critical mass necessary to create a social environment.”

Levin built a big vision for East Bank Club as the city’s premier facility for fitness, wellness, socializing and dining. But with his big vision came big financing hurdles.

“It was very difficult to get financing; the club didn’t fit in any category because it wasn’t an office building, it wasn’t an apartment building, it wasn’t a factory, it wasn’t a retail center,” Levin says. “It was a health club, and the potential of financing health clubs was difficult, and certainly for one the scale of the proposed East Bank Club.”/p>

Finally, Levin secured financing and East Bank Club opened in December 1980. As soon as construction started, he was already making enhancements to meet the needs demonstrated by interested members.

“In the course of building the club, we made changes because we realized that we needed to make changes in our plans for various uses and the facilities desired. Since the club opened, we have made many more changes and will continue to make changes to accommodate the new preferences of members. The club just keeps evolving.”

By investing in constant improvements through state-of-the-art equipment, superior member service and ever-increasing amenities, East Bank Club strives to deliver a first-class experience that sets a standard of excellence.

“One of our slogans is that nothing has to be broken in order to make it better,” Levin says. “We don’t say, ‘If it’s not broken, don’t fix it.’ The attitude we have is, ‘Don’t wait for it to break. Keep making it better.’”

Adding what members want

East Bank Club opened with 10 tennis courts, quarter-mile indoor and outdoor tracks, two swimming pools and small facilities for weights, racquetball, squash, food and drinks. Today, the 450,000-square-foot facility looks much different, as does the surrounding neighborhood.

Chicago wind and weather limited the popularity of track and tennis courts on the deck. And members requested more space to sunbathe. The club decided to eliminate the tennis courts and track on the deck, making room for a much larger open deck and an outdoor grill and other additional amenities. The club also later added a second and much larger outdoor pool, creating a rooftop resort where members can enjoy the 60,000-square-foot sundeck from more than 500 lounge chairs. Today, East Bank Club still has seven indoor tennis courts, three racquetball courts and one squash court.

“Some of our decision-making process is based on what’s happening in the industry, and even more is what we learn from our members,” says Levin, who uses a third-party service to poll members biennially for feedback. “We saw things happening at other clubs, but the members made it clear to us that, for example, they wanted a sundeck that could serve their needs in the summertime. They wanted larger pools because the small pools were not adequate for serious swimmers.”

“Another example is East Bank Club’s growing cardiovascular room. The club opened with just a few bikes and rowing machines, and no treadmills, which were only found in doctors’ offices for stress tests. And there was only a very small 800-square-foot weight room. In the last 20 years, Levin says, the market for exercise equipment has exploded, and with it, the demand for variety has increased, enough to now fill a 25,000-square-foot cardio space and a 7,000-square-foot weight room.

The club also boasts a 7,200-square-foot performance center for functional and high-intensity training, a 60-bike indoor cycling studio, two regulation-sized basketball courts, volleyball and soccer, a 90-foot long indoor driving range with a simulator, Pilates and yoga studios.

But East Bank Club’s services aren’t restricted to fitness. The club keeps expanding amenities, making the facility more of a full-service destination than just a gym.

“We wanted to serve our members in a variety of ways so they would more likely spend hours at a time here with their friends,” Levin says. “Different members have different needs, and the more we can do to accommodate more needs, the members — and the club — are better off.”

The food options have expanded indoors and out, as the casual dining grill quadrupled in size. The club also added a gourmet deli, a juice bar and a fine dining restaurant called Maxwell’s at the Club. Other convenience services include dry cleaning, car wash and detailing, a full-service salon and spa for men and women, a daycare and a business center.

“We happen to have a facility that’s big enough that we were able to take tennis courts away and put other things in,” Levin says. “We happen to have quite a big building with over 450,000 square feet of space, and we can keep doing a lot with it to accommodate new services and exercise facilities. We want to be the best experience people can have in a health club.”

Growing with the city

Constantly adapting to members’ needs drives steady growth. According to gross revenue, it consistently makes the industry’s Top 100 List as the highest-ranking single club facility. With nearly 700 employees — and more during the summer — East Bank Club serves more than 11,000 members, who have included the likes of Oprah Winfrey, Billie Jean King and then-professor Barack Obama.

With annual revenue of $58 million, the club spends about $2 million on capital improvements each year as part of its budgeting process.

“Even today, with the industry being substantial, it’s still not easy to get long-term financing for a health club,” Levin says. “Chains with hundreds of clubs can get financing because of the large number of clubs they have in different locations. But it’s unusual to be able to attract a financing source when it’s only one club, because it’s vulnerable to whatever happens in this area.”

Fortunately, as East Bank Club has grown, the surrounding River North neighborhood has transformed — perhaps revitalized, in part, by Levin’s developments. As the city naturally expanded beyond the central downtown business district, it brought more residents and workers toward the club. Levin says the revitalization likely started less than a mile away from the club at Presidential Towers, a four-building apartment complex he developed through The Habitat Company.

“People say that Presidential Towers changed the whole West Loop,” Levin says. “I think it was going to happen anyway, but Presidential Towers was an important factor in motivating a lot of changes. Now there are office buildings and apartment buildings, buildings have been rehabbed, and the whole neighborhood has changed. We’ve benefited from the growth of downtown Chicago and all the new buildings.”

In that way, Chicago’s growth has fueled the growth of East Bank Club by supplying people who can afford membership at the club.

“We could not build East Bank Club in the suburbs. The market just wouldn’t support it,” Levin says. “Because of our size and the size of our membership, we are able to do all kinds of things that other clubs simply can’t afford to do. We are very lucky to have our location in downtown Chicago.”

East Bank Club now relies on FirstMerit Bank as a lending partner to ensure that it can afford to continue making improvements for members.

“They offered us a more attractive package than the other banks did, with a longer maturity period and enough money to do all the capital work we wanted to do and still have a handsome amount to distribute to investors,” Levin says. “We were delighted to work with FirstMerit to customize the loan so it worked for them and it worked for us. Our investors were happy, and we were able to spend millions of dollars to continue to upgrade the club.”

Maintaining service through growth

As the city has grown and shifted, so have East Bank Club’s membership demographics. In 1994, only 18 percent of members were 55 or older. Now, with people living longer and staying active, that age group is 40 percent of total memberships.

Meanwhile, Chicago’s downtown business and residential growth has brought more families toward East Bank Club’s location. More than 1,200 children under age 5 are members with their families.

“It’s always a challenge dealing with the guidelines we need to control activity in the club,” Levin says. “We have to accommodate the parents and the children, and find a way to harmonize servicing the families with children and the adults without children.”

Part of that is scheduling services, classes and programs appropriately to serve both adults and children.

Providing the right programming is only one element in creating a great experience.

“It’s also very important how our employees treat the members,” Levin says. “When they come here, they want to be treated with respect, appreciation and friendliness. From East Bank Club, they expect the same level of service as a five-star hotel, so it’s terribly important to train, and retrain our employees.”

As such, East Bank Club regularly invests in employee training. Years ago, the club created a series of service training videos for staff, and those will be updated this year. The videos were modeled after programs from Disney and Four Seasons but customized to capture the club’s character and service standards.

Besides training, the club’s leadership creates a culture that encourages employee development by bringing in motivational speakers and honoring employees of the month and year.

“The culture of the club comes from our employees and how they treat the members,” Levin says. “If our members don’t have a positive experience, they won’t stay, and they won’t recommend it to their friends.”

Word-of-mouth referrals serve as the main source of new members at East Bank Club, which has a retention rate of more than 80 percent. As a result, the club spends less than 1 percent of its budget on advertising, focusing instead on improvements for existing members.

“We’re dedicated to doing the best job possible to serve members, while still honoring our investors with returns on their investment,” Levin says. “It’s always a balance, but frankly, we believe that by making service to our members the primary obligation, that translates into better results for our investors.”

East Bank Club by the numbers:

East Bank Club Infographic


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