Cost of using One Leisure centres in Huntingdon, Ramsey, St Ives, and St Neots which are managed by Huntingdonshire District Council, will rise by 8.7 per cent from January 1.
A report, prepared by Gregg Holland, interim head of leisure, confirming the increase is expected to be approved by the council’s Cabinet on November 15.
He says a key priority is for One Leisure “to reduce the deficit to the council and look to achieve a break-even position”.
Mr Holland says competitor analysis and the “experience of officers” should enable One Leisure to remain competitive and “manage our business sustainably.
“It is important to note that over the previous five years there has been no price increase across the leisure provision which was driven through the previous administration”.
Mr Holland says: “The key reason for the submission of this proposal is to support the commercial sustainability of One Leisure and thus the council.
“Since 2017/2018 One Leisure has operated with a significant deficit position and thus a direct cost to the council.”
Moving forward, he says, and part of the 2023-2024 budgeting process One Leisure is planned to operate at a deficit of £274,907.
However, the price increase should offset this position and reduce the annual deficit.
“It is important to note that over the last five years One Leisure has operated at a total cost to the council of £1.42m,” says Mr Holland.
“It is forecast to cost £1.28m over the next four years from 2023 – 2027.
“As an example, if an eight percent price increase was adopted over the next three years thereafter from 2024 – 2027 then this would generate potential revenue of £874,000.
“It would therefore then reduce any operating deficit over that period to £414,000.
“It is One Leisure’s ambition to ensure the service is break-even and no cost to the council.”
Mr Holland also points out that following the submission and approval of the One Leisure budget for 2022 – 2023 utility costs have significantly increased.
The council accepts that with the tariff prices, energy costs will increase by £530,000 which is an 88 per cent increase on original 2022- 23 budgets.
Unbudgeted wage rises for 2022-23 will also add a further £80,000 to this year’s running costs.
“At the time of the writing the 2022 – 2023 budget for One Leisure there were no inflationary increments applied to general operating costs,” says Mr Holland.
“Therefore, and as evidenced due to economic uncertainties all contractors and suppliers to One Leisure and across the leisure industry have substantially changed their own pricing tariffs thus affecting the financial operation and sustainability of One Leisure.
“Having reviewed the One Leisure cost base and upon receiving direct feedback from our contractors’ costs have increased in the region of 10 per cent.”
Cabinet will also have before them two other options: a do-nothing policy and at the other extreme a 12.8 per cent rise in prices.
Mr Holland says a possible option of continuing with no price increase
Increasing One Leisure pricing by an average of 8.7 per cent is expected to generate potential revenue of £194,000.
Another option, of increasing prices by 12.8 per cent, would see extra potential revenue of £483,000 but this is not being recommended.
Councillors will hear that pricing “is an extremely sensitive topic both nationally and within our local communities.
“However, through our research it is noticeable that all operators have increased their prices due to the continuing costs of utilities and operating costs”.
The council cannot be certain from the competitor benchmarking exercise they undertook how our local competitors may react.
But the report adds: “There is supporting evidence other leisure operators that both utility costs and operating expenditure have increased dramatically and as identified these operators have introduced price increases to offset these rising costs.”
The report concludes: “We recognise that there are some budget alternatives within the district.
“However, experience has taught us that our better quality and customer service is valued significantly more.
“With the cost-of-living crisis set to increase however it is an area that may need further thought and development.”
“Competitor analysis shows a significant number of direct alternatives around gym and fitness provision, so the pricing points of these activities are the most sensitive and ones that are at greatest risk when prices are raised
“On the other hand, delivery of swimming activities sees us with minimal competition.”
