June 7, 2016 / 5:41 PM / 3 years ago

Club Med back on expansion path with China's Fosun - CEO

PARIS, June 7 (Reuters) - A year and a half after being bought by Chinese group Fosun, holiday company Club Med is expanding again and plans to open three to five resorts a year from 2018, its chief executive said on Tuesday.

At a time when French rival AccorHotels is trying to limit Chinese shareholder Jin Jiang’s push to raise its stake, Club Med CEO Henri Giscard d’Estaing said it was happy to have a “stable and powerful shareholder”.

“It is us who wanted to have a Chinese partner because we were anticipating that China would become the number one tourism market and it would not have been wise to go at it alone,” he said on the sideline of a news conference.

Fosun Group, China’s largest private conglomerate, took control of Club Med in January 2015 after a fierce battle lasting nearly two years with Italian tycoon Andrea Bonomi, the longest takeover fight in French corporate history.

“The takeover battle slowed us down. The good news is that we are catching up. Our goal is to open between three and five villages per year from 2018,” Giscard said.

Fosun, owned by billionaire Guo Guangchang, paid 939 million euros ($1.1 billion) for Club Med, the pioneer of all-inclusive resorts which started on the Mediterranean island of Mallorca in 1950. It was a hefty price for a loss-making company, which last paid a dividend in 2000 and whose customer base was shrinking.

Club Med was too dependent on Europe, home to 70 percent of its revenue and slow economic growth, while Fosun offered it a chance to accelerate a strategy focused moving more upmarket and expanding abroad, notably in the booming Chinese market.


Today, Club Med operates 67 holiday villages worldwide, with some 75 percent of its resorts labelled premium or luxury compared with 72 percent in 2014 and 62 percent in 2012.

Last year, China became its second largest market after France with more than 120,000 Chinese clients, or double the 59,000 when Fosun bought an initial 7 percent stake in 2010.

Club Med now has four resorts in China, in Yabuli, Guilin, Zhuhai Dong’ao Island and Sanya, and expects to open a fifth there by the end of 2016, Giscard said.

France, however, remains Club Med’s biggest market with 24 villages and 330,000 visitors a year.

During the takeover battle the Bonomi camp criticised Club Med for focusing too much on China but Giscard said: “Our ambition is to invest in France and to continue adding value to France as a destination.”

Club Med plans to invest more than 300 million euros in France, together with property partners, over the next five years, including to open three new mountain villages.

The company had close to 1.25 million clients in its 2015 financial year which ended in October, up from 1.23 million in 2014, while its revenue rose 4 percent to 1.4 billion euros.

In the first half of its 2016 financial year, Club Med had more than 600,000 customers, a year-on-year rise of 6 percent, while earnings before interest, tax, depreciation and amortisation climbed 36 percent to 100 million euros.

$1 = 0.8814 euros Editing by David Clarke

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