Club Med Aims to Shift Upmarket With New Resorts and Ad Campaign

25.08.2023 - 13:49 / skift.com / Sean Oneill / Justin Timberlake / With New / Club Med

Club Med has had more re-inventions than Justin Timberlake. But the all-inclusive brand run by Chinese conglomerate Fosun International thinks it can finally bring the sexy — and profit — back to its 70 getaways that arc from Bali to China’s Hainan Island to the French Alps and Florida.

Marketing will help, it thinks. On April 4, Club Med revealed a refreshed brand identity to customers and travel agents and its ambition to become “a more premium, family-friendly, and eco-conscious experience.” More on that below.

But first, let’s get some financial context. Back in 2018, Fosun Tourism Group —the unit that houses Club Med — sold shares in the company. That transaction gave the tourism unit an implied market capitalization of $2.4 billion. Today its market capitalization is only $1.59 billion — a third less.

Last November, Bloomberg News reported that Fosun International was contemplating whether to sell Club Med.

But this week, Fosun Tourism co-president Xu Bingbin told CNBC that Club Med is “definitely not for sale.” He did say, however, that his company is opening to finding “partners” to help grow its business.

Fosun Tourism released its 2022 financials last Thursday, reporting global Club Med sales of $1.75 billion, returning to 99 percent of what they were in 2019.

On the downside, Club Med has long generated profits as skimpy as a string bikini. Its 2022 operating profit was about $110 million (€98 million), compared to approximately $57 million in 2018.

On the bright side, the company’s resorts have, on average, recovered 99 percent of their pre-pandemic business volume — and that’s before China’s domestic and outbound international travel have fully rebounded.

Yet debt remains something to watch. As of June 2018, the tourism division of Fosun had approximately $700 million in net debt. As of December 2022, its net current liabilities were about $480 million, or 56 percent of its total assets.

As context: earlier this month, the larger Fosun conglomerate sold off stakes in four non-travel businesses for almost $1 billion, as Skift reported. That was nearly the price Fosun paid — about $968 million — to become the majority shareholder of Club Med in 2015.

In the past decades, Club Med has strived to go upmarket. To use the words of the Los Angeles Times, it’s aimed to go from “socialist tent camp to sex haven to high-thread-count sheets.” Back in 2016, Club Med’s leadership told Skift Global Forum about plans to move upmarket and target affluent millennial families.

But fine-tuning a six-decade-old brand with many hard assets is costly and time-consuming. The company said last week that 97 percent of its resorts are now “premium.” It recently said it would be “phasing out” properties below