China's Fosun Looks to Club Med Resorts Recovery After Profit Warning

25.08.2023 - 14:15 / skift.com / Thomas Cook / Matthew Parsons / Club Med

Chinese conglomerate Fosun International is hoping its vacation business segment will pull it out of a slump.

Fosun, which owns the Club Med chain of resorts and the Thomas Cook brand, issued a warning on Jan. 20, saying profit for the year ended Dec 31, 2022 is expected to decrease by 80 percent compared to the year before.

It also revealed revenue was expected to climb 10 percent on the prior year in the preliminary assessment. It will likely publish the results in March.

Fosun blamed the “recurrent outbreak of Covid-19 pandemic in 2022 and the turmoil and downturn of the international capital markets, resulting in high business costs and an increase in floating losses in secondary capital market investment.”

However on Monday the company said its domestic Club Med resorts were mostly exceeding pre-pandemic levels, with occupancy in some properties fully occupied. It attributed the recovery to easing of restrictions, and demand for travel due to the Spring festival.

From Jan. 21-27, average occupancy rate at Club Med Lijiang for six nights was 95 percent, and the average occupancy Club Med Guilin 90 percent. Club Med Joyview Anji and Club Med Joyview Qiandao Lake also topped 95 percent. Average occupancy rate of its ski resorts in Beidahu, Yabuli and Changbaishan was 85 percent.

During the New Year vacation, South China Sea resort Atlantis Sanya saw average occupancy rate reach 97.4 percent, with “business volume” exceeding pre-pandemic levels.

“In 2023, I believe that the family-oriented consumer sector that Fosun is engaged in will gradually see an increase in demand, and our offline retail and tourism businesses will be among the first to snap back,” said Guo Guangchang, chairman of Fosun International.

A Fosun-led consortium bought Club Med in 2015 for about $968 million. It recently played down reports it was looking to sell it to reduce debts.

Earlier this month it sold off stakes in four industrial companies for almost $1 billion.

Fosun is also doubling down in Europe with its Cook’s Club lifestyle hotel brand. It is opening a property in Rhodes, Greece, in May, marking its 10th hotel. It opened two earlier this year.

The Hong Kong-listed company acquired the Thomas Cook brand in November 2019.

Fosun’s tourism business sits in its “Happiness” segment of companies.