(Yicai Global) June 13 -- As the first direct overseas investment by Fosun International Ltd. [HK:0656], the famous French holiday company Club Mediterranee SA [OTCPK:CLMDY] has stepped up its pace in developing its Chinese market.
"Our two new resorts will start trial operations in Anji, Zhejiang and Changli, Hebei during October-November under a completely new vacation brand 'joy view,' which is created to meet the specific needs of the Chinese market," Henri Giscard d'Estaing, Club Med chairman and president, told Yicai Global yesterday.
"Our pace of expanding China operations has been slow in the past few years. But we will accelerate our pace now," he said. Chinese consumers' demand for tourism has changed greatly in recent years as they prefer staying with their families at one place for relaxation to visiting several destinations in one trip, Giscard d'Estaing told Yicai Global, adding that Club Med plans to have 20 resorts in China by 2020.
Its accelerated market expansion is related to its growing earnings. Club Med's operating profit jumped 35 percent annually to USD49.3 million (EUR44.1 million) last year. The number of visitors during the winter of 2017 (from November 2016 to April 2017) also reached its highest level in 10 years.
However, for Club Med, which used to focus on the overseas markets, demand in China is more diversified. The all-inclusive vacation package concept Club Med advocates is still not mainstream in China. Compared with leisure travel, most Chinese prefer sightseeing travel.
"We thereby need Fosun to give us advice on site selection, location, partner and sales channels that fits the Chinese market," Giscard d'Estaing told Yicai Global. Resorts under the 'joy view' brand will incorporate some of the traditional elements of Club Med, such as the GO system and related activities. However, they will be smaller than traditional Club Med resorts and closer to big cities and will target short-distance travel. It will take just two to three hours to drive from first-tier cities such as Beijing, Shanghai and Guangzhou to such resorts. They will also be more flexible in pricing and will not necessarily adopt an all-inclusive pricing method to accommodate Chinese travel habits.
Joining Fosun does not just mean increased understanding of the Chinese market, Giscard d'Estaing noted, adding that Club Med is also seeking to work more closely with Fosun's other businesses to produce synergies as with Cirque du Soleil, which Fosun also acquired, Fosun Property Holdings Ltd. and Shanghai Laomiao Gold Co. After years of pursuit, Fosun clinched 92.8 percent control of Club Med with a EUR939 million tender offer in 2015.