Efficiently managing the flow of people in service environments is crucial for smooth operations and enhancing the overall perception of service quality and experience. In a fitness facility, inefficient space use and a poorly arranged equipment layout can result in overlapping movement paths, crowding around machines, and unnecessary detours, all of which can diminish the workout experience. This study investigates spatial congestion and equipment accessibility at a compact gym in the Philippines. Observations indicated that overlapping movement, clustering near high-demand machines, and underutilized equipment hindered workflow and limited the gym’s capacity to deliver a smooth customer experience. To address these issues, discrete-event simulation (DES) was employed, complemented by other Industrial Engineering tools such as facility layout optimization, utilization analysis, and congestion metrics. Data collection involved observing time, recording equipment usage, and tracking movements to generate actionable insights. Movement path analysis using spaghetti diagrams was employed to visualize traffic flow and identify high-density intersections within the gym space. Simulation results revealed that poor equipment placement and sequential usage patterns contributed to significant congestion. Two layout alternatives were tested. The alternative plan, which included repositioning high-demand machines, removing underutilized bikes, and adding a multifunctional Cable Crossover Machine, turned out to be the most effective. This approach resulted in a 37.04% reduction in congestion, whereas the other alternative achieved only a 19.75% reduction in congestion. The study demonstrates that combining DES with other IE tools enables effective modeling of complex service systems such as fitness facilities. Beyond fitness facilities, this approach can be applied to other intricate systems to optimize facility layout, reduce space congestion for greater comfort, and enhance user satisfaction.