Fosun still backing Club Med for expansion

Insight Comment We keep saying this but it bears repeating. In the short-term companies like Club Med are still going to suffer as things return to normal - or as normal as they’re ever going to get. But over the next few years and longer, leisure travel, especially the resort market, looks well placed.

Club Med owner Fosun Tourism Group is still planning its aggressive expansion of the resort company with an aim to significantly increase its global footprint over the coming years.

Fosun bought the company in 2015 after beating off competition from Italian tycoon Andrea Bonomi, and has retained lofty ambitions for the brand that have not been dampened by the pandemic.

Back in 2019 Fosun outlined a couple of key initiatives it wanted to focus on, such as: Enhancing upscale and premium offerings, rebalancing its global portfolio, growing its ski operations and upgrading its digital efficiency.

“With the stable financial position and strong momentum of recovery, we are well prepared to continue the [strategies],” Fosun said in its half-year report.

Club Med currently has sales and marketing operations in more than 40 countries and regions, It operates 63 resorts, of which 35 (including a cruise ship) are in EMEA, 12 resorts are in the Americas and 16 resorts are in the Asia Pacific region, including 7 resorts in China.

Of these resorts, 14 are owned, 39 resorts are leased, and 10 resorts are under management contracts.

“In early 2021, we laid out a plan to open 16 new resorts by the end of 2023 of which eight resorts are in China. This plan was implemented on schedule in the first half of 2021,” Fosun said.

The company added: “By 30 June 2024, 12 existing resorts worldwide are planned to complete renovation. By 2024, together with new opening and renovation, partially offset by the closure of obsolete resorts, we anticipate an increase of annual capacity by approximately 26% compared to that of 2019.”

Resort Growth

Fosun’s confidence in Club Med’s growth prospects has been mirrored by other hospitality firms and investors.

Marriott is placing a big bet on the sector having made a number of deals in recent years and Hyatt has just announced the planned acquisition of Apple Leisure Group.
Leisure travel is seen as being one of the most resilient travel subsectors in a post-pandemic world, prompting much investor interest.

Hospitality Insights’ most recent Hospitality Investor Sentiment Assessment showed the resort sector had jumped up a place in investors’ preferred location type.

Fosun Results

Fosun Tourism Group saw its pre-tax losses double to £209.8 million for the six months to the end of June.

As with almost every other travel and hospitality business, Fosun has been severely hampered for the last 18 months with many of the countries it operates in bringing in travel restrictions.

Club Med reported a 64.2% fall in business volume to £153.9 million.

Club Med President Henri Giscard D'Estaing is speaking at IHIF on Wednesday 1 September in a session entitled Reinventing Travel and the Resort Company.