Club Med to target Chinese market under new owners

Fosun, the Chinese conglomerate which has won a bidding war for Club Méditerranée, is banking on China's growing affluent class and a shortage of high-end resorts on the mainland to anchor the French holiday's group's growth.

The company has made it clear that Chinese tourists, with their increasing appetite for high-end travel both at home and abroad, are crucial to the holiday group’s future. Club Med has said its goal is to attract 5 to 10 per cent of potential mainland visitors to four and five star holiday resorts – or some 200,000 customers.

Local tourism analysts say it is not just the sheer volume of the newly affluent Chinese population that matters. The shortage of quality resorts available in China, has led to pent-up demand for the kind of product that Club Med offers.

“Club Med in China is trying to exploit the weakness of the current domestic tourism market. The model of Club Med has a large growth potential in China ... partly because services provided in Club Med [an all-inclusive holiday resort] prompt tourists to stay longer and boost their spending,” says Yan Yuejin, a tourism property analyst at E-House China

The China Tourism Academy estimates that tourism within China last year generated three trillion renminbi in spending, up nearly 16 per cent on the year earlier period.

Club Med currently has three properties in China, a ski resort in northern China, a holiday village in the scenic Karst mountains near Guilin, and a recently opened beach resort on an island near Macau in southern China. The aim is to make China the group’s second largest market.

Fosun demonstrated its commitment to winning Club Med by repeatedly increasing its offer, during France's longest takeover battle to date, to a level which rival Andrea Bonomi eventually declined to top. The group, which is China's largest private conglomerate, raised its bid five times from an original offer of €17 per share in May 2013, to €24.60 per share last December.

Fosun says the French company's "one-stop, one-price model" is right for the country. "Club Med is very suitable for a Chinese lifestyle," says Fosun chairman Guo Guangchang, because "Chinese society is organised around the family unit".

Club Med said recently that as well as developing "classic" holiday villages in China, a new kind of resort would be developed for the mainly wealthy Chinese customers who do not have holiday homes, but wish to spend long weekends in a natural environment, "while at the same time remaining close to big towns and cities". – Copyright The Financial Times Limited 2015