Kerry Medina | April 12, 2012 11:45 PM ET
Xavier Mufraggi, CEO of Club Med North America
For Paris-based Club Med, 2011 was a year of triumph and profits for the fiscal year, including Club Med North America. Indeed, the company’s North American division had not turned a profit since before 9/11. After renovating its resorts in the Caribbean and Mexico, as well as investing $25 million in Florida’s Club Med Sandpiper Bay to transform the property into Club Med’s flagship premium sports resort complete with the first L’Occitane Spa in North America, guests from across the globe are flocking to these family-friendly all-inclusive retreats. We spoke with Club Med North America CEO Xavier Mufraggi about the reasons for Club Med’s success and its plans for the future.
How is Club Med’s business overall? Last year was really a milestone for Club Med, especially here in the Americas. We realize this is still a very challenging environment for tourism. We’re still in a recession and the political environment in the Middle East is tough, while Japan also continues going through difficult times. But Club Med had its best numbers in a very long time, and in North America we had our best post-9/11 results. We actually made a profit in North America and did so at a time when the economic environment here is still very challenging. We’ve spent the last five years optimizing, repositioning and re-launching our products -- and last year we were able to reap the fruits of that labor.
What strategies have helped you turn Club Med around? The two main elements to which we attribute our success are the decision we made in 2004 to go from midscale to upscale. In the last five years we spent $1 billion on all of our properties worldwide to create an upscale product. Cost cutting is one way of showing positive numbers, but by repositioning our brand and investing in our properties we didn’t need to cut costs to regain growth and deliver on our guest promises. The second element was repositioning Club Med -- especially in North America -- to the family market. So now 65 percent of our guests are families while 25 percent are couples and 10 percent are singles. Focusing on one target market also helped us to be more efficient in our marketing.
To what do you attribute Club Med’s profitability overall? We’ve been profitable because we attract so many markets, so that when one is down we have others to compensate. So this year, the China boom compensated for Japan and we can also attract Brazilians to properties when Americas and Europeans aren’t traveling because Brazilians’ peak travel seasons are the reverse of those in America and Europe. We’re an independent company, but the only way for a small company to be efficient is to be a worldwide player, so we want to be recognized internationally and we can have up to 10 languages spoken on property to cater to this. Now we look at every country around the globe and we look at their vacation calendar, including when they have vacation when others don’t, so we’ll invest specifically in that market. Brazil is a perfect example since its high season is January-February and also November. It’s also cheaper for Brazilians to fly to the Dominican Republic to vacation because of the currency value.
What’s ahead for Club Med as far as international resort development? In 2015, we plan to have a total of five properties in China. We have one ski resort there now, a resort opening in Guilin in August and three more to come. Two years ago we had 15,000 Chinese clients. This year, we expect to have 75,000 Chinese clients, and by 2015 we expect to have 250,000. We already have 20 resorts in the Alps and we’re looking to open one or two more and at least another property or two in the Middle East, which could be in Oman, Israel or Turkey. We’re considering a second property in the Maldives and possibly one in Vietnam. We’re also opening a fourth property in Brazil, which will debut in late 2013 or early 2014. In Europe, we’re looking at Spain and Portugal. Canada could be another option in North America, particularly for a ski resort.
Kerry Medina is executive editor covering hotels and resorts for TravelPulse.com.
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