The founders of XtraClubs believe they’ve cracked the economics of turning sauna and cold plunging from an indulgence into an everyday habit.
Anthony Simonetta was on a health kick, looking for a sauna. The co-owner of a digital marketing agency wanted somewhere he could go two or three times a week without spending $150, and he couldn’t find such a place.
“It hit me like a bolt of lightning,” he tells Forbes Australia. “It felt like a massive gap in the market.”
So he and brother James, along with childhood friend Simon Hamilton, decided to build such a place, then set themselves a target to build 199 more.
Less than three years later, they are opening their fifth XtraClub this weekend at Parramatta in Sydney’s west, with number six due in Canberra later in the month. They have started scoping real estate in Melbourne, Newcastle, Adelaide and the US.
The Australian market for sauna, spa and cold-plunge has expanded rapidly in recent years, led by Tim Gurner’s members-only Saint Haven which has five venues in Melbourne and one in Sydney, starting at $130 a week. Soak Bathhouse, now operating six venues across the Gold Coast, Brisbane, Sydney and Melbourne, is building a more accessible, social-bathing model. Other multi-site operators include Nimbus Co, specialising in infrared saunas and contrast therapy, and Navia Bathhouse, which is expanding its communal bathing concept from Byron Bay into Melbourne.
James Simonetta recently went to the US and did saunas every day for three weeks to see what opportunities were there. “The American market is very similar to what the Australian market was before we launched,” he says. “It’s mostly single-session locations rather than membership. And those single sessions cost between like US$50 and US$150.”
Whereas XtraClubs’ prices range from $AUD19.95 to $AUD54.95 per week.
So how did they bring budget to bathing and baking?
Do the hustle
The Simonetta brothers were running the digital marketing business, Hustle Agency, focussed on web and app design for lead generation across platforms. So the first thing they did when they decided to build a sauna business was to generate heat with a website. “We have a team of designers, marketers, developers – a great growth engine of people that know how to build companies,” says Anthony.
“[They] built a great landing page that really demonstrated our intent and made the promise very clear: to make sauna, ice and steam an affordable luxury; you could come anytime, stay as long as you wanted, as often as you wanted.”
“It was a hype, but now it feels like just a part of health hygiene – routine maintenance for your body and your mind.”
Anthony Simonetta
The brothers took a bathtub to Bondi and Manly beaches, asking forgiveness not permission, to offer free ice baths to passersby. Early adopters signed up with a $25 first-week membership fee [which will remain the same price for life]. This is before they’d even found a location.
They put it out as a poll. Whichever area got the most people to pay the $25 got the first location. Bondi won.
XtraClubs launched there in April 2024.
Their childhood friend, Simon Hamilton, a Lendlease alumnus, came in as co-founder to project manage the builds. They were going to deliver a product that had the look and feel of the expensive places but automate the heck out of it to make it cheaper.
Saturation
“You can see here today, we’ve only got one staff member on,” says Anthony at the Zetland outlet in Sydney’s inner south. There’s towels and herbal teas, the same as the Soak Bathouse 900 metres away. But with memberships ranging from $19 a week – for off-peak-only access – to $54 a week for anytime plus a friend, it compares favourably to Soak’s $39.95 for a single off-peak visit.
Soak also offers massages and large luxurious baths with lots of indoor plants. But XtraClubs is never going to try to compete in that space.
The key to being able to operate at a lower price is that the club was built with full automation in mind. James says XtraClubs entry into the market has forced the competition to offer discount intro packages.
“But it’s hard for them to compete. Although their fit out is not that much better than ours, they’re still charging these high prices because that’s how they were built to operate. That’s their business model.
“We built with a with a very clear business model in mind, so that’s how we achieve the price point.”
XtraClubs claims $6 million in annual revenue and membership at capacity at all their clubs, though decline to give membership numbers.
“Capacity looks like consistently achieving 200 to 300 reservations a day,” says Anthony.
They won’t be expanding into other fields like hyperbaric chambers or sound therapies, says Anthony.
“We’re very focused on the three things that we do exceptionally well, and that’s how we believe we’re going to build a great business.”
The founders initially set themselves a target of 200 XtraClubs in 10 years. That may prove ambitious, Anthony Simonetta concedes, but the company has already trademarked the brand globally and begun laying the groundwork for expansion into the US and UK.
That expansion will require outside capital, with Simonetta expecting to be seeking outside investment in the next 12 months.
The founders do not fear wellness fashions shifting. “Sauna and cold plunging has been around for millennia, like for centuries,” says James. “Especially Scandinavia, even in Turkey, Morocco … Roman bathhouses, bathhouses in Japan. So we’re not too worried about that.”
“I mean we’ve been doing it for two and a half years, I’m not sick of it,” says Anthony. “It was a hype, but now it feels like just a part of health hygiene – routine maintenance for your body and your mind.”
Anthony says that he achieved the health goals that he was aiming for when he came up with the idea for XtraClubs – dropping 30 kilograms – but that’s not where he’s felt the upside.
“The biggest thing for me has been the mental benefits. The recovery is definitely there, especially when I’m doing three weight sessions a week … but given how busy I am, we are, when I come here, I feel renewed in body and mind, and that has been the biggest thing for me because stress is the thing that takes you down in your health journey.”
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