Club Med CLUB MED Definetely GROUP 13 Section
Club Med? !? ! CLUB MED Definetely GROUP 13 – Section B Andrea Tellarini Gabrielle Ng Matthias Kuhn Vassilis Kykrilis Masato Shirai
History Founder Mission Maiden project: project Dream Team: Team Gerard Blitz To provide a sanctuary for those looking for escape from the stresses and demands of “modern” life. The ultimate goal was to create a utopia. Early enthusiasts likened the experience to a “Robinson Crusoe” adventure. 1 st Village – “Alcudia” in the Balearic Islands off the coast of Spain (1950) Gerard Blitz (inspiration) & Gilbert Trigano (engine)
History 1963 - Trigano became CEO 1968 - Expansion into North America (Fort Royale in Guadeloupe) Club Med flourished, in sync with philosophy of the times 1970 s • • • Jumbo jets increased global tourism Expansion into Africa, Americas, Caribbean, Asia and South Pacific “Sea, sex and sun” image established
History 1980 s to 1990 s • Peter Dickson’s “Theory of Competitive Rationality” • Entry of serious competitors: Jack Tar Village, Super. Clubs Organization, Sandals • Smarter consumers: more selective, less attracted by appearances, more concerned with value, authenticity, comfort and individuality • New management under Philippe Bourguignon to revitalize Club Med’s flagging image
Activities Core Business - Resorts - • All-inclusive resorts • 140 resort villages in over 35 countries • Having natural beauty • Providing many activities • Separated from urban civilization • Operating cruises besides resorts About 80% of the revenue Other businesses • Tour operating (Jet tours) • Sport facilities (Gym) • Licensed products • Med world About 20% In essence, they are selling relaxing time…
Industry Analysis Market Volume 1200 Steady growth in the long-term Million 1000 800 700 m in ‘ 00 1500 m in ‘ 20 (Long-term Projection) Iraq war, Terrorism to tourists and SARS in 2002/2003 600 400 September 11 in 2001 200 Deep depression in the short-term 280 m in ‘ 80 1980 2000 2020
Industry Analysis -Depression- Air Hotel Customer demand behaviors • Demand decreased • Reduced capacity and cut jobs • Restructured routes and destinations • Demand decreased • Providing lower rates and special offers • Nearby destinations • Shorter stays • Pursuing the lowest prices
Industry Analysis - customer trends - Benefits Value Short-term customer trends by recent disasters Long-term customer trends as commodities Technical Quality • Short-haul destinations • Shorter stays • Customized holidays • Holidays as an experience Necessity of flexibility Timing Quality • Shortened time from reservation until leaving Same as left Service Quality • Traditional channels still keeping strengths • Convenient Orders on the developed web • Image of safety • Differentiated brands Reputation Quality Relationship Quality Price - • Lower prices • Difficulty of enclosing customers Same as left
Industry forces BARRIERS TO ENTRY MEDIUM Some partners are required but service is simple. SUPPLIERS MEDIUM The number of Both Suppliers and travel agents is many. RIVALRY HIGH Many players with relatively low differentiation CUSTOMERS Very HIGH Customers have a lot of choices and switching cost is low. SUBSTITUTE PRODUCTS MEDIUM/HIGH Amusement parks, games and hobbies are substitute, but well differentiated. The degree of competition is HIGH in total.
Financials Revenues by issuing zone and by business FACTS ISSUES • Resorts (Core business): 79. 6% • Impact of world insecurity • Europe: most profitable • Remaining lack of focus • Heavy past investments Other businesses: Club Med World, Club Med Gym
Key Figures Revenues by issuing zone and by business Losses are entirely attributable to « Other businesses » Other businesses: Club Med World, Club Med Gym
Competition ► Club Med offers unique focused products Yet Club Med competes agains more mainstream competitors (Hotels and T. O. ) ► Competitors offering the same product as Club Med are FEW but. . . ► Local players are important because GM travel within their own geographic zone (Asia 99%) ►
Competitors In spite of its very unique signature concept, Club Med competes against other players (global and local) Hotels, Carribean, US market Jack Tar Village All inclusive Closest competi tor, US market For couples Super. Clubs Sandals Club Med Yes yes yes GO – GM concept No go no yes Global no no no yes Upper class no yes yes no no no yes yes no yes 5 12 11 140 Diverse activities Village Fam. and couples Nb resorts
Strategic Issues All-inclusive price Activities Competitors It was not as widely accepted as it had been in the past Many were included in the price but not used by vacationers They offered the same activities but did not include them in the initial price This allowed competitors to offer lower prices and take away potential vacationers from Club Med
International Expansion Club Med found it difficult to maintain beautiful resorts in countries that suffered from economic and ecological disaster Effects in one area where Club Med is based often indirectly affect other Club Med resorts as well Club Med revenues from successful resorts had often been used to compensate losses of other resorts During 90’s Club Med faced hard financial time due to rundown properties, reputation for mediocre food and amenities
Old Fashion message During 90’s Club Med faced hard financial time due to RUNDOWN PROPERTIES REPUTATION FOR MEDIOCRE FOOD AND AMENITIES BACKLASH AGAINST THE SEXUAL REVOLUTION INCONSISTENT MESSAGE FILTERED THROUGH ADV AGENCY IN DIFFERENT COUNTRIES Club Med concept had become outdated
Global Environment Since 2001 Club Med has experienced an exceptional global environment hostile to tourism (September 11 th attack, new consumer concern such as safety and well being) ECONOMIC RECESSION New reservation habits (internet expansion, on-line booking, last minute bookings)
Changing face Renovation Flexibility of Rooms New Village Design Technical updates Financial result less sensitive to the business cycle Ensure growth by winning market share Key innovation for the future Eliminating loss making activities, optimizing the offer, optimizing the operating profitability Expanding indirect distribution channel, using the product to leverage the brand Total all inclusive holiday
Renovation Program Club Med launched one of the fastest, most intensive renovation programs in recent hotel industry history TECHNICAL UPDATES • Rethink its original moniker as “an antidote to civilization. ” • Club Med should still be an escape from civilization — but one that has phones in the rooms and, in the 3 - and 4 -Trident villages, televisions in the rooms. NEW DESIGN - REVAMPING THE VILLAGE • Experience of a village filled with small, local restaurants • More aesthetic attention was paid to the bar • Reassessed the traffic flow of the villages
Renovation Program FLEXIBILITY OF ROOMS • Better materials • Clear and bright colors played against white to achieve a more ethnic and a happier look • Two beds that could be attached to form one king-sized bed • Enclosing a balcony • Rooms could be enlarged included creation of a small “children’s room” attached to the adult guestroom.
Renovation Program New look, consistent all over the villages Club Med did not depart from the easy, accessible resort aesthetic that set it apart from the “marble and gilding” sort of resorts Maintained the perception of an escape from the city style, keeping a simple look but with good quality materials
Financial results less sensitive to business cycle Club Med deployed some strategic priorities to focus on profitable activities and to optimize the offer and operating profitability. Eliminate loss making activities • Club Med Montreal was closed in April 2003 • 6 Club Med Gym were sold in 2003 • 11 Club Med Gym will be closed during 2004 Optimize the offer Optimizing operating profitability • Concentration of customer preference Reducing fixed costs by: • 4 - Trident village • Cutting non-village workforce • Up-grading 3 -Trident Village • Outsourcing task with no added value • Managing contacts (i. e. Coral Beach)
Ensure growth by ensuring market share EXPAND INDIRECT DISTRIBUTION • Update on new sales outlets • Sales people training • Agency Sales focus USE THE PRODUCT TO LEVERAGE THE BRAND Attract Consumers Create New Needs A BRAND PRODUCT INNOVATION Leverage Customer Relationship Sell Succesfully SERVICES MARKETING SUPPORT
Use the product to leverage the brand WORLWIDE BRAND • 97% in France • 87% in Belgium • 1, 200 Club Med sales people worlwide to support distribution • Pioneer in Trade Marketing • 93% in US • Ongoing training for travel agents HIGH SPENDING IN ADV • A highly effective booking system BEFORE, DURING AND AFTER PROGRAM 3 NEW CONCEPTS • Continuous customer support • “Free. Style” in Europe • Club Med Trip Planning • “Riad” in Marrakech CLUBMED AND AMEX / FINAREX CARD BOOKING BONUS • Payment Card • Advantages for early bookers • Loyalty Program • Makes prices more flexible outside the high season • Easy payment terms • Spa village in Phuket
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