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Club Med?!?! Definetely

Club Med?!?! Definetely. CLUB MED. GROUP 13 – Section B Andrea Tellarini Vassilis Kykrilis Gabrielle Ng Masato Shirai Matthias Kuhn. History. Founder. Gerard Blitz.

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Club Med?!?! Definetely

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  1. Club Med?!?! Definetely CLUB MED GROUP 13 – Section B Andrea Tellarini Vassilis Kykrilis Gabrielle Ng Masato Shirai Matthias Kuhn

  2. History Founder 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. Mission Maiden project: 1st Village – “Alcudia” in the Balearic Islands off the coast of Spain (1950) Dream Team: Gerard Blitz (inspiration) & Gilbert Trigano (engine)

  3. History 1963 - Trigano became CEO 1968 - Expansion into North America (Fort Royale in Guadeloupe) Club Med flourished, in sync with philosophy of the times 1970s • Jumbo jets increased global tourism • Expansion into Africa, Americas, Caribbean, Asia and South Pacific • “Sea, sex and sun” image established

  4. History 1980s to 1990s • Peter Dickson’s “Theory of Competitive Rationality” • Entry of serious competitors: Jack Tar Village, SuperClubs 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

  5. Activities Core Business - Resorts - Other businesses • All-inclusive resorts • 140 resort villages in over 35 countries • Having natural beauty • Providing many activities • Separated from urban civilization • Operating cruises besides resorts • Tour operating (Jet tours) • Sport facilities (Gym) • Licensed products • Med world About 80% of the revenue About 20% In essence, they are selling relaxing time…

  6. Industry Analysis Market Volume 1500m in ‘20 (Long-term Projection) 1200 Steady growth in the long-term 1000 Iraq war, Terrorism to tourists and SARS in 2002/2003 800 700m in ‘00 Million 600 Deep depression in the short-term 400 September 11 in 2001 200 280m in ‘80 1980 2020 2000

  7. Industry Analysis -Depression- Air • Demand decreased • Reduced capacity and cut jobs • Restructured routes and destinations Hotel • Demand decreased • Providing lower rates and special offers Customer demand and behaviors • Nearby destinations • Shorter stays • Pursuing the lowest prices

  8. Industry Analysis- customer trends - Long-term customer trends as commodities Short-term customer trends by recent disasters 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 Benefits • Traditional channels still keeping strengths • Convenient Orders on the developed web Service Quality Value • Differentiated brands • Image of safety Reputation Quality Relationship Quality - • Difficulty of enclosing customers • Lower prices Price Same as left

  9. Industry forces BARRIERS TO ENTRY MEDIUM Some partners are required but service is simple. CUSTOMERS Very HIGH Customers have a lot of choices and switching cost is low. SUPPLIERS MEDIUM The number of Both Suppliers and travel agents is many. RIVALRY HIGH Many players with relatively low differentiation SUBSTITUTE PRODUCTS MEDIUM/HIGH Amusement parks, games and hobbies are substitute, but well differentiated. The degree of competition is HIGH in total.

  10. Financials Revenues by issuing zone and by business FACTS ISSUES • Impact of world insecurity • Remaining lack of focus • Heavy past investments • Resorts (Core business): 79.6% • Europe: most profitable Other businesses: Club Med World, Club Med Gym

  11. Key Figures Revenues by issuing zone and by business Losses are entirely attributable to « Other businesses » Other businesses: Club Med World, Club Med Gym

  12. 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%)

  13. Competitors In spite of its very unique signature concept, Club Med competes against other players (global and local) Hotels, Carribean,US market Closest competitor, US market For couples For couples Jack Tar Village SuperClubs Sandals Club Med All inclusive Yes yes yes yes GO – GM concept No go no yes Global no no no yes Upper class no yes yes yes Diverse activities yes yes yes yes Village no no no yes yes yes no yes Fam. and couples 5 12 11 140 Nb resorts

  14. Strategic Issues It was not as widely accepted as it had been in the past All-inclusive price Many were included in the price but not used by vacationers Activities They offered the same activities but did not include them in the initial price Competitors This allowed competitors to offer lower prices and take away potential vacationers from Club Med

  15. 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

  16. 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

  17. Global Environment Since 2001 Club Med has experienced an exceptional global environment hostile to tourism (September 11th attack, new consumer concern such as safety and well being) ECONOMIC RECESSION New reservation habits (internet expansion, on-line booking, last minute bookings)

  18. Changing face Flexibility of Rooms New Village Design Renovation Technical updates Financial result less sensitive to the business cycle Eliminating loss making activities, optimizing the offer, optimizing the operating profitability Ensure growth by winning market share Expanding indirect distribution channel, using the product to leverage the brand Key innovation for the future Total all inclusive holiday

  19. 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

  20. 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.

  21. 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

  22. 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 • 4 - Trident village • Up-grading 3-Trident Village • Reducing fixed costs by: • Cutting non-village workforce • Outsourcing task with no added value • Managing contacts (i.e. Coral Beach)

  23. USE THE PRODUCT TO LEVERAGE THE BRAND Attract Consumers A BRAND Create New Needs PRODUCT INNOVATION Leverage Customer Relationship SERVICES Sell Succesfully MARKETING SUPPORT Ensure growth by ensuring market share EXPAND INDIRECT DISTRIBUTION • Update on new sales outlets • Sales people training • Agency Sales focus

  24. WORLWIDE BRAND • 97% in France • 87% in Belgium • 93% in US • HIGH SPENDING IN ADV • 1,200 Club Med sales people worlwide to support distribution • Pioneer in Trade Marketing • Ongoing training for travel agents • A highly effective booking system • BEFORE, DURING AND AFTER PROGRAM • Continuous customer support • Club Med Trip Planning • CLUBMED AND AMEX / FINAREX CARD • Payment Card • Loyalty Program • Easy payment terms • 3 NEW CONCEPTS • Spa village in Phuket • “FreeStyle” in Europe • “Riad” in Marrakech • BOOKING BONUS • Advantages for early bookers • Makes prices more flexible outside the high season Use the product to leverage the brand

  25. QUESTIONS?

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