Club Med: Making a Comeback

Club Mediterranee (Club Med) is a corporation in the all-inclusive resort market that manages over 140 resort villages in Mediterranean, snow, inland and tropical locales in over 40 countries. It was founded by a group of travelers, headed by Gerald blitz, in 1950However over the years they realized that all-inclusive system does not work anymore. People are not willing to spend large amounts of money for vacations. Its competitors have been able to customize travel packages for each customer.

Even though it seems easy for Club Med to do the same but because it has so many resorts all over the world the currency devaluation and political boycotts are causing Club Med problems with these decisions. These external factors are reducing the company’s ability to increase sales and gain new customers. The Club Med style can be best described by the sense of closeness found among the managers. Because they are all former village chiefs they know the company’s everyday operations. The difference between Club med and other hotels is that, it is much simpler.

Even the room decorations are simple and spares. Also its distinguished feature is that it is a place where one can “escape”. However in 2004 they introduced a new strategy that gave consumers a differentiated product that was more chic and luxurious, especially in the Americas. Until 1986 Club Med had a very strong position in the all-inclusive resort market. If one wanted to go to a resort but use another company it had to pay 50-100% more. Internet accounts more than 20% of its sales.

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Finding a labor was never a problem for this resort either. In 1986 competition began because other companies adopted its style. The only difference was that Club Med’s service included drinks. In 2004 it reverted to and all-inclusive deal. In 2005 it declared the Alps area that attracted thousands of tourists. Jack Tar Village is one of the competitors of Club Med. It operates mostly in Caribbean. Its resorts are positioned as more glamorous and modern. Another competitor is SuperClubs Organization, which operates 4 resorts on Jamaica.

Those resorts have the reputation for being uninhibited and sexually oriented. The activities that Club Med and their competitors offer is similar but the way it is offered may be different. The original mission statement includes the idea that the company’s goal is to take a group of strangers away from their everyday lives and bring them together in a relaxing and fun atmosphere in different parts of the world. They create brand loyalty by asking the consumers to join the Club Med Club, they send them newsletters, discounts, thus making people feel special.

Each resort is accommodated with all the necessary facilities like, sailing, volleyball, tennis and basketball fields and so on. There are no phones, TVs radios; this is done in order to separate individuals form civilization so that they could relax. Club Med organizes everything to encourage social interaction between guests. Everything is included in the price except bar drink and items purchased in the small shops. There are different activities every day. After 1996 Club Med does not have as large of a sales increase as it had anticipated.

It is due to economic and ecological disasters in countries where Club Med has resorts. It has a signed contract with the government of the country it enters stating that the firm will increase the tourism in the area. And the government instead will provide the financial aid to help maintain the new resort facilities. However the joint ventures have not proven to be profitable. After September 11, 2001 Club Med had to close down 15 of its villages. It only reopened 6 and opened 4 new ones.

Tsunami in south East Asia devoured most of its coastline and Club Med properties in Malaysia, Phuket and so on. Happenings in one area where it is based often indirectly affect other resorts as well. Club Med fell on hard financial times through much of 1990s. In 1998 Philippe Bourguignon was brought in a new chairman to stem the decline. He instigated $500 million three year rescue program. Unprofitable villages were closed. Thanks to the new chairman Club Med is making a comeback. Attendance is rising and company made a modest profit last year.

Even though they still have problem their revenue rises and it seems to be on track to success. In 2005 it reported a net revenue of $3 million Euros, compared to its $4 million loss year before. In 2202 a new chairman was appointed. Henri Giscard d’Estaing knows the brand recognition the company has and uses hat for the benefit. Club Med plans to enter China, U. S, France and so on. U. S. is Club Meds Number 1 target. It plans to open 3 new resorts around U. S it spends large amount of money on advertising, renewing facilities and adding new ones.

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