As an important force to promote consumption-driven economic growth, the cultural and tourism industry has been actively recovering under the two-way promotion of policies and markets.
Club Med, as a world-renowned leisure and resort brand with a history of 74 years, has become a global leisure and resort brand integrated with China's business wisdom after being acquired by Fosun in 2015, and has also become the ballast stone for Fosun Tourism, a young company, to successfully resist the cycle in the past few years.
During the 2024 Spring Festival holiday, Club Med's total revenue in China (including domestic and outbound travel) increased by 48% compared to the same period in 2023[1], thanks to the accelerated recovery of inbound and outbound travel. Among them, the turnover of domestic resorts exceeded the same period in 2019 before the epidemic by about 40%, and the average occupancy rate reached 83%; The turnover of outbound travel has increased by more than 13 times compared with the same period in 2023, recovering to more than 60% of the same period in 2019 before the epidemic, and the turnover of outbound travel for overseas ice and snow resorts has exceeded the same period in 2019.
In terms of product lines, benefiting from the "8+1" ultra-long holiday of the Spring Festival this year and the high popularity of ice and snow, the seven-day average occupancy rate of the two long-term destinations of Lijiang and Guilin and the three ice and snow resorts of Beidahu, Changbaishan and Yabuli exceeded 90% and reached full capacity on many days, among which the seven-day average occupancy rate of Lijiang Resort reached nearly 99%.
Milestone interviewed Xu Bingpu, Global Partner of Fosun, Co-President of Fosun Tourism and Culture, and CEO of Club Med China, to talk about the growth code of Club Med and the sustainable development of the resort market.
Behind the three journeys: how to seize strategic opportunities
As a world-renowned resort brand, Club Med's relationship with China began in 2003. At that time, China had just opened up the outbound travel market for groups, and Club Med had a unique vision and opened an office in Shanghai. Relying on the two first-tier cities of Shanghai and Beijing, the brand is rooted in the hearts and minds of Chinese consumers. China has become one of the global source destinations for Club Med, and Chinese consumers have begun to move to Club Med Global Resorts.
In 2010, Fosun Group decided to invest overseas and screened different industries, precisely because it saw that the global tourism industry was developing at a GDP growth rate significantly higher than that during the economic take-off period, so tourism became Fosun Group's first choice to go overseas. At a time when China's outbound tourism market was just beginning to take off and leisure travel had not yet become a trend, Fosun Group invested in Club Med and joined forces to establish its first ski resort in China, Club Med Yabuli Resort.
At the point in 2010, Chinese consumers were still receptive to seaside resorts; However, skiing and ice and snow tourism are still relatively new in China, and their consumer groups are too segmented. Club Med leveraged its global strengths, experience and resources to open its first snow resort in China, which was a pioneering and pioneering initiative at the time. It was in this year that Xu Bingpu joined Fosun Group, and he recalls that Club Med quickly opened up its brand awareness in China.
After two and a half years from 2013, Fosun Group finally completed the tender offer and privatization of Club Med in 2015. The Group immediately decided to implement an effective transformation strategy, including: First, to implement a high-end and global strategy in development - through the expansion of high-end production capacity, enhance the company's ability to resist cyclical and inflation, and help build Club Med into a high-end leisure lifestyle brand. In terms of development, we will carry out global strategic layout and development, and achieve balanced development of mature markets and emerging markets. The second is digital reform to improve digital marketing capabilities and direct sales rates. The third is to improve operational capabilities, including optimizing the procurement system, updating the global pricing system, etc., so that the profit margin has been greatly improved.
From 2015 to the pre-pandemic, the second phase of the strategic reinvention defined the development strategy and direction of Club Med, and laid a good foundation for its future rapid development in China. Xu Bingpu used a set of data comparison to confirm this conclusion: first, after shutting down low-end products and opening new high-end production capacity, Club Med has achieved 100% of the world's mid-to-high-end, and the unit price of customers has increased from about 150 euros per person per night in 2015 to 220 euros in 2023, with a growth rate of nearly 50%, which has directly brought revenue growth and has also greatly improved profitability and brand image.
From 2020 to 2023, Club Med, along with the global tourism industry, will also usher in an extremely difficult and challenging critical period.
For the first time since 1950, Club Med resorts around the world closed in early April 2020. It wasn't until late April, when China's Anji resorts reopened to guests, that they slowly began to recover. We face enormous challenges and pressures. Fortunately, at that time, we were relatively well prepared, responded to the global epidemic very quickly, and received support from ** and Fosun Group, etc., and successfully weathered the difficulties. Xu Bingpu said that despite the great challenges, Club Med bucked the trend and sought good development projects, and quickly took off very well after the pandemic - both revenue and profit have recovered to 2019 levels in 2022.
Who would have thought that vacations themselves are also an ability to travel through cycles. An industry insider said with a smile when studying the development history of Club Med: "As long as the track is well chosen and the strategy is used well, it is a pig on the tuyere." The so-called passing through the cycle is actually a kind of keen insight into the market and the ability to act and make decisions in a timely manner. ”
In the era of national leisure and vacation, how does the brand plan its layout?
China is shifting from an export-led and investment-led economy to a consumption-led economy, with unprecedented emphasis on cultural and tourism consumption.
According to the China Leisure Development Report (2023-2024), as people's lives return to normal, both local leisure and remote tourism have grown rapidly, with the average daily leisure time of urban residents, rural residents and retired residents increasing compared to 2022. 91% and 1455%, the average annual total leisure time, also increased. 39% and 1455%;Judging from the development trend, the leisure time of urban and retired residents will increase to a certain extent, and the leisure time of rural residents will continue to increase, and the rate will be higher than that of urban residents and retired residents.
This also means the arrival of a new era of national leisure. Taking advantage of the trend, China's leisure and vacation industry is also constantly upgrading and innovating, and various leisure and vacation formats are in full bloom, such as the rise of new consumption formats such as camping. In this process, the competitive landscape of China's leisure and vacation market is also changing, such as the homestay industry has entered the stage of quality improvement and has begun to move towards high-end; Traditional hotel groups have begun to enter the resort market in a big way, international hotel groups such as Marriott and Hyatt have started to expand the all-inclusive market, and local resort hotels such as Narada and New Century Senbo have attracted much attention.
In the face of such a diversified and highly competitive leisure and vacation market, how can vacation brands plan their layout? In an exclusive interview with Milestone.com, Xu Bingpu focused on the analysis and interpretation of product innovation, operation characteristics and project expansion.
The first is to open up new product lines and expand from a single product line to four product lines.
Club Med Exclusive Collection, a luxury collection under Club Med, and Club Med, which offers the iconic "Exquisite All-Inclusive" resort experience, will continue to expand its presence in the Asia-Pacific market. For example, in Northeast China, around Beijing, Xinjiang and other regions, we will increase the number of ice and snow resort projects in the Hainan market, and will also focus on the expansion of projects in the Hainan market; Opened the fifth snow resort in Hokkaido, Japan; Refocus on the Southeast Asian market, not only as a major destination, but also as a major source of customers, and speed up the pace of deployment.
The Club Med Exclusive Collection has extremely high requirements in terms of customer positioning, unit price, room hardware requirements, privacy, and scenic resort requirements. The product line is also constantly upgraded in the actual operation process, and there are three modes: exclusive collection space, exclusive collection, and club med 2 cruise ships. This also allows it to bring a 60% increase in the unit price of customers on the basis of high-end product lines, which can reach the ** range of 360-380 euros. The product line is currently in the process of finding a location in China.
Compared to Western customers, China's target audience is unique. Take the holiday as an example, foreign guests have a longer vacation, a book, a drink, and a sun umbrella can spend a long week of vacation. Chinese consumers generally don't have that long vacations, and they may prefer short, high-frequency vacations, as well as some attractions to explore, and new consumption vacation models such as staycations have emerged during the pandemic. These have created new opportunities for us to develop and innovate in China. Xu Bingpu pointed out that as early as 2017, the company began to plan to provide a short-distance vacation experience Club Med Joyview Mediterranean Neighborhood; In 2023, a new product line providing urban resorts will be launched in Nanjing and Taicang - Club Med Urban Oasis.
Mediterranean Neighborhood, a product line developed specifically for the Chinese market; The resort is located within a 2-3 hour drive of China's first-tier cities, providing short-distance vacations and business MICE experiences in the surrounding area. The experience is flexible, with the option of "breakfast included" or "all-inclusive". At present, 3 resorts have been opened in Anji, Beijing Yanqing and Qiandao Lake. Over the years, this product line has been recognized by more and more consumers, for example, Anji Resort, which opened in 2018, has three times the operating profit in 2023 compared to 2019.
As a new product line attempt, the Mediterranean Ark of the White Sun means "the ark of vitality in the corner of the city", aiming to tailor a comfortable and exquisite holiday within the radius of daily life for urban people who are eager to take a break from their busy daily life. Both projects in this product line are open at the end of 2023, and after a few months of trial operation, the market has performed well - Nanjing Xianlin Resort RevPAR (average actual operating revenue per room available for rent) has ranked first among all competitors in the Nanjing market; Taicang Resort's 5-day pre-sale of 86 million yuan has received much attention, and the GOP (operating gross profit) of the first New Year operation has been corrected.
From the perspective of project expansion, after the completion of the product line polishing, the Mediterranean Neighborhood and Mediterranean Ark series will become the focus of China's large-scale replication and development.
When talking about the development of the four product lines, Xu Bingpu emphasized: "It seems that they are different focuses to expand, but they must be connected. Because our goal is to hope that consumers will choose different products from Club Med for different holidays. We want to connect it with membership and CRM systems to maximize the value of our customers' lifetimes. ”
Second, the iconic "exquisite all-inclusive" is the highlight of the brand and the blessing of operation.
Back in 1950, at the very beginning of the brand's creation, Club Med pioneered the concept of an all-inclusive resort. The "all-inclusive price" covers a wealth of content: a variety of room types, an international happy housekeeper Go. Kids' Club Babysitting, Fine Meals, Sports & Activities, Evening Entertainment.
Industry analysts pointed out that from a global perspective, the demand for "all-inclusive" resorts is soaring, and consumer demand for high-quality experiences and stress-free vacations is growing, and luxury and high-end all-inclusive resorts will continue to exist; This model has proven to be a new growth opportunity for traditional hotel groups; The Group's hotel brands are aggressively entering the all-inclusive resort segment through mergers and acquisitions, strategic alliances and brand extensions, which also indicates investor optimism.
Over the past few decades, all-inclusive has been widely promoted around the world, and different brands have tried to enter the space. Despite the large number of parody followers over the past few decades, it has not yet been surpassed. To this day, people still prefer to associate it with Club Med when they refer to "all-inclusive".
Club Med has met many replicators over the past 70 years, but none of them have succeeded in replicating the 'all-inclusive' globally. Because we are a global company, we emphasize diversity and values, and we use global rotation Go Management mechanism, which creates a unique recruitment training and employee mechanism of the brand; The construction of the global system and the accumulation and inheritance of talents have led to today's Go The size of the team, which is not an easy model to replicate. Xu Bingpu said that the "all-inclusive" has developed and matured in the European and American markets, but it is relatively new to the Chinese market, and it is Club Med that has brought the "all-inclusive" into the Chinese market.
In the author's opinion, the distinctive "all-inclusive" model not only constitutes the brand highlight of Club Med, but also supports its operation. For example, the Kids' Club has attracted a wider range of family and parent-child tourists, and the rich and colorful activity experience has also attracted travelers with the same hobby, which is more in line with today's leisure and vacation trend of immersive experience, like an operating "traffic cube"; The flexible combination of "all-inclusive" and "room with breakfast" makes the short-distance travel products of the Mediterranean Neighborhood more flexible.
Third, the opening of the village and the expansion of customers are carried out in both directions, which is both the source and destination of tourists.
For Club Med, "outbound travel" and "inbound travel" can establish a multi-channel link between brands and consumers, increase the supply of high-quality products and promote the domestic and overseas resort markets.
For example, Club Med entered the Chinese market, and Chinese guests quickly radiated to the Southeast Asian market. Today, Club Med has 10 resorts in China, which is the brand's second largest source of customers outside of France. In March 2023, Club Med opened a new office in Chengdu, linking Shanghai, Beijing and Guangzhou to better develop the local market and maintain high-quality development at the "speed of China".
For example, the Southeast Asian market has developed relatively slowly in the past 10 years, mainly from China, Japan, South Korea and other markets, and in the three years of the epidemic, niche tourist destinations such as Sabah, Malaysia have sprung up, the number of customers has skyrocketed, and the local middle class is also expanding rapidly, which has made Club Med redefine the Southeast Asian market and accelerate its plans to set up in the region.
*: China Tourism Academy released the Report on the Development of China's Outbound Tourism (2023-2024).
Club Med expects to open 17 stores worldwide in the next three years, nearly half of which will be located in Greater China. Behind the acceleration of development, in fact, it is also an important support for the surge in customer visits. It is expected that by 2026, there will be more than 500,000 customers in China, which is expected to surpass France to become the largest source of customers for our brand. Xu Bingpu said that opening more new resorts will require more guests, and Club Med will continue to increase the development of core regional markets.
We have been emphasizing that Club Med is a company with French roots, but at the same time a global one. Maintain Club Med's 'all-inclusive', go Characteristics, diversified culture and other characteristics, which is a fundamental part of our ability to achieve brand differentiation; At the same time, for the Chinese market, we will also make some localization adjustments and flexible expansion. Xu Bingpu emphasized that Club Med has always adhered to this principle in terms of products, operations and development.
Longing for a vacation, where is the next outlet?
According to the comprehensive leading data on the demand side, the accumulation of kinetic energy on the supply side and the positive signals released by the policy side, industry researchers have positive and optimistic expectations for the tourism economic situation in 2024 - it is expected that the number of domestic tourism trips and domestic tourism revenue will exceed 6 billion and 6 trillion yuan respectively in 2024, and the number of inbound and outbound tourists and international tourism revenue will exceed 26.4 billion passengers, $107 billion.
*: China Tourism Academy released the "Analysis of China's Tourism Economy Operation in 2023 and Development in 2024**".
At the same time, tourism investment institutions and market players also give convergent predictions on the trend of the tourism industry: tourists define tourism, rather than tourism defines tourists; The integration of culture and tourism is a new scene, and the host and guest share a new life; Digitalization is not a strategic choice, but an essential element of survival; Closer, closer, closer, more, more, more, closer, more,
"Longing for a vacation" will be an expectation of a better life in 2024. So, for the vacation industry, what about the next outlet?
First, the high-end brand will lead the quality era of the resort industry.
China as a whole is still in the initial stage of leisure and vacation, which is more determined by the economic foundation and vacation conditions. For example, many resort hotels still follow the urban hotel model in their business models, and the in-depth excavation of vacation resources is far from enough, and the supporting related services need to be upgraded.
However, with the continuous cultivation of world-renowned resort brands such as Club Med, and the strong participation of more hotel groups, China's resort industry will surely usher in qualitative improvement and enter the era of quality. At the same time, the joining of large groups and head brands will further promote the industry as a whole to enter the era of brand chaining, and show an "upward" development trend.
As Xu Bingpu said, "the high-end brand directly brings a significant improvement to high-end products". Data shows that in 2023, high-end production capacity will account for nearly 100% of Club Med's total production capacity.
Second, consumption segmentation will drive the resort industry to create trendy products.
Different from the business travel market, the personalization of leisure and vacation consumption is more prominent, as a vacation product provider, we must carefully study the segmentation needs of the target customer group, and create a real "yearning vacation" with professional and customized services. This also means that creating trendy products around the target customer group will become an important breakthrough.
China's ice and snow tourism trips from 2016 to 2023, data**: China Tourism Academy.
For example, in 2023, which has entered the "post-Winter Olympics" era, China's ice and snow tourism consumption has continued its previous high growth trend. "Erbin" has brought fire to the ice and snow economy, and it has pushed the public's enthusiasm for ice and snow tourism consumption to a climax. According to the China Tourism Academy, the number of ice and snow leisure tourists in China will exceed 400 million in the 2023-2024 ice and snow season, and the revenue of ice and snow leisure tourism is expected to reach 550 billion yuan. Under the trend, major brands are also focusing on upgrading and creating ice and snow products and services.
Taking Club Med as an example, the "exquisite all-inclusive" model not only includes **& children's graded ski lessons and ski tickets exclusively provided by authoritative certified ski instructors, but also covers three meals a day, international cuisine, all-day soft drinks, snacks and drinks, etc.
Strike while the iron is hot, Club Med will accelerate the opening of snow villages in 2024, especially in some ski resorts. For example, Hokkaido, Japan, which has a long snow season and a wide range of customers, already has four snow resorts, and will further expand as an ice and snow destination in the future.
Third, the resort industry is moving towards comprehensive operational specialization in the new cycle.
Regarding economic growth in 2024, many institutions give different **. According to the Chinese Academy of Social Sciences, China's GDP growth is expected to be around 5% in 2024, which may be lower than in 2023. This also means that the wine and tourism industry, which is affected by the fluctuations of the economic cycle, will have to enter the deep water area of the stock era, and the refined operation under the "mutual competition" model will promote the resort industry to move towards comprehensive operation specialization.
This kind of operational specialization is not only reflected in the polishing and innovation of its products and service models, but also in the integration of some new technologies and new marketing into the group's strategic level to consider reducing costs and increasing efficiency. A typical case is digital marketing, and now more and more hotel groups are focusing on the construction and operation of direct sales channels.
Direct sales, on the one hand, can save channel costs, on the other hand, it enables us to grasp first-hand customer information, so as to do better and more accurate customer marketing. Xu Bingpu told Milestone that the proportion of direct sales in Club Med China is as high as 44%, and the one-year repurchase rate in the membership system is as high as 12%.
Write at the end
China's resort industry is in its infancy and is ushering in an explosive period, but the market challenges are also huge. For the healthy development of the industry, it is necessary to find some exemplary brands that have gone through the cycle, summarize and refine their successful experience, and develop industry rules to guide the industry towards the future.
As a leading global leisure and vacation brand that has gone through 74 years, Club Med's ability to navigate through the cycle is worth learning from: first, it can continue to innovate in the opportunity area, seize the opportunity of vacation, and open up new areas such as "all-inclusive" and digital marketing; Second, we always insist on creating unique value for customers in the profit area, and obtain higher profits for the brand by maximizing the customer life cycle through diversified product lines and differentiated operations; The third is to always adhere to the principles in the safety zone, such as the development strategy of internationalization + localization, carefully selected site selection, etc., to ensure that the brand moves forward steadily on the track of rapid development.
Note: [1] 2023 Spring Festival holiday: January 21-27, 2023.
2] 2019 Spring Festival holiday: February 4-10, 2019.