Shifting Upmarket With New and Refreshed Properties
In the past decades, Club Med has strived to go upmarket. To use the words of the Los Angeles Times, it’s aimed to go from “socialist tent camp to sex haven to high-thread-count sheets.” Back in 2016, Club Med’s leadership told Skift Global Forum about plans to move upmarket and target affluent millennial families.
But fine-tuning a six-decade-old brand with many hard assets is costly and time-consuming. The company said last week that 97 percent of its resorts are now “premium.” It recently said it would be “phasing out” properties below its “four tridents” rating system, which make up less than 20 percent of its system.
One example of the new Club Med is its just-opened $200 million Club Med Tignes. It’s a 430-bed property with modern construction and design using local stone and larch wood materials and brightly colored furnishings and murals. Room-plus-airfare packages run $3,500 a person in peak season. Packaging prices opaquely and wholesale deals with airlines help make the economics work.
This month, the company said it had completed a renovation worth about $11 million (more than Є9 million) on Club Med 2, a five-masted ship with 184 cabins and a Mediterranean aesthetic.
In May, Cook’s Club lifestyle hotel brand is debuting a property in Rhodes, Greece, marking that premium brand’s 10th property.
Given all the renovations and new products, Club Med executives believe the time is now for marketing to help update consumer perceptions.
Club Med this week launched an ad campaign meant to convey the shift. The campaign emphasizes “L’Esprit Libre” and aims to capture the sensation of “utter disconnection and enjoying a carefree lifestyle where every detail of your vacation is taken care of.” Its imagery emphasizes the group’s 20-odd luxurious “Exclusive Collection” resorts.
“The campaign is on-trend with the general ‘premiumization’ of travel that we seem to be observing, where many brands across categories seem to want to capitalize on a seemingly higher capacity and appetite for luxury in the U.S. and around the world,” said Makarand Mody, associate professor of hospitality marketing and director of research at Boston University School of Hospitality Administration. “In effect, the hope of this campaign would seem to be to tell guests: ‘Hey, we’re going to charge you more from now on.'”
“Are these decisions based on long-term customer research rather than on what seems to be the zeitgeist of the time?” Mody said. “Expanding into luxury with an asset-heavy model is going to be capital-intensive. Unless there is a sustained customer appetite for paying more for these experiences consistently, thin margins might only get thinner. I wonder about the extent to which these brand evolution decisions are research-based.”
Tapping into the Chinese Market
After France and China, the brand’s most important markets are Brazil, Canada, the U.S., Belgium, and Britain. On the plus side, it has few competitors. In France, its main rival is Voyageurs du Monde and the operations of German giant tour operator TUI Group.
Worldwide, tapping into Chinese visitors is an emerging opportunity. At its overseas resorts, Club Med has already dispatched 80 Chinese-speaking organizers to its overseas resorts, mainly in Japan and France, to provide better service. By August, it plans to more than double the number of Mandarin speakers to cover nearly all of its resorts.
One of Club Med’s main plays in the domestic Chinese market is its short-stay product, Joyview.
“On the back of the mature business model of Joyview, the company accelerated expansion around major cities and is exploring a three-gradient quality vacation product system for long-distance, suburban, and intra-city tours,” said a recent analyst report from investment firm Auerbach Grayson.
Elsewhere, resort development hasn’t gone seamlessly. Club Med last month canceled a plan to open Snowbasin Resort in Utah, which would have been its first U.S. ski resort.
More broadly, in February 2022, the brand predicted it would open 17 resorts worldwide through 2024. But some observers wonder if, in reality, it would only open about a dozen by then.
Doubling Down on a Sustainability Pitch
This week Club Med said it would be “accelerating its ongoing sustainability efforts dedicated to responsible tourism like the elimination of single-use plastics, energy management, and cultural preservation.” The notion is that an emerging set of consumers, especially in France but also in China, express concerns about the carbon emissions released by their travels and stays.
But not everyone believes sustainability can be a long-term differentiator as a brand. High-net-worth individuals are often more likely to say in surveys that they seek travel experiences that are mindful of environmental impacts, and it may just become a standard that all luxury operators need to embrace.
“To me, sustainability seems to be somewhat at odds with ‘being completely carefree’ while on vacation,” said Mody of Boston University. “All-inclusives and, relatedly, cruises, which offer a similar proposition on sea, offer you ‘unlimited’ access to everything — an excess, which seems to me to be at odds with the mindfulness that sustainability requires. As a consumer, I have never been able to reconcile the two.”
Sean O'Neill, Skift