med is a successful chain of all inclusive, club / hotel style resorts. The
company first started by a group of friends in 1950s, as a nonprofit sports
association, but by 1985 Club Med is a publicly own company on the Paris stock
exchange, Club med had 108 resort villages throughout the world and in 1986 it
already became the 9th largest hotel chain in the world. The success
of the hotel chain is based on the lack of competition in the market back in
the days, as well as the “true formula”.
According to the company, the true formula saves customer a lot of money
that it would take more than 50 percent extra for the customer to duplicate the
experience on their own. ‘
Med’s “true formula “involves bundling the group portion of its vacation
package with transportation, the volume discount makes the air plane tickets a
club med also utilizes its passionate and dedicated staff members (GOs) and
family spirit with in the organization to deliver a unique experience to all
important fact is that in recent years more companies try to copy what club med
is doing or enter the same market.
Strength & Competitive
large numbers of visitors, Club med can obtain discount due to their large volume
purchases, which results that the bundle of the package is usually a lot
cheaper compare to customer going on vacation on their own. In exhibit 7, the industry profit before
tax for air transport industry is 2 % and for club med is 11%. This again
proves the leverage club med has when bargaining with airlines which give them
great benefits regarding pricing and costs.
of hotel resorts are having trouble finding the staff members, not the case for
this company, according to the case study there are more than 35000 GO (staff)
application for only 2000 positions. The abundance of the applicants gives
company pick and choose the right people for the position. Not only with the quantity,
the quality of the service is also great. In the case study, a lot of customer praises
the energy of the staff members, even under difficult conditions or horrible weather,
those GOs always be able to put a smile on the customers’ face.
In Exhibit 5 we see the there
are many growth potential and l believe Asia is club med biggest opportunity.
The estimated potential for growth for Europe middle east is 75 percent but the
estimate potential for Asian countries like Japan, Hongkong and Taiwan are at
shocking 1800%-154% percent. Club med’s expansion to Asian will be its biggest
opportunity. Asia is not only the most populous continent but also with a
booming economy where consumers are looking for a new way of enjoyment and new
way of vacation. In Asia, white collars tend to work extreme long hours, the
concept of a get-away resort where you can forget about your stressful daily
routine and just have fun would suit the Asian market. The culture of the club
med would be very attractive to the Asian white collars. If club med is able to
capitalize the market, tailor and design their resorts according to the local
preferences it would be a huge success.
Threat and Competitions
Jack Tar: a resort company operated in Grand Bahama,
Montego and Puerto Playa. The facility of this resort is more advanced compare
to club med. Jack Tar has 12 tennis courts, beauty salon, shopping mall,
swimming pool, casino and a bar with unlimited drinks and cigarettes etc. This
resort is known for the its first-class hotel like facility (rooms)as supposed
to club med’s simple and spartan room design.
Couple l: located in Ocho Rios, was the first couple
only resorts despite a slow start it has gain popularity in the industry.
Hedonism ll: a 280 hotel roos resort in Negril Bay in
Jamaica. Although there are other many activities available it is known for its
nude beach and sex oriented theme.
Couple 1 and Hedoism is not too big of a threat,
because their target consumers and target markets are different. Jack Tar is
their biggest threat competition wise, as Jack Tar advertise specifically
against club med, criticising its spartan room conditions and stating that club
med is not truly inclusive if they make the customers pay for drinks and
The biggest external threat l see so far is the
unpredictable political issues. Government a lot of times will provide benefits
package including tax breaks and joint venture which helps maintain the
facility for club med. However, just as stated in the case study sometimes
governments fail to deliver there promise due to unknown circumstances, those
circumstances will deeply undermine club med ability to deliver consistent
service which is a big threat to the success of the organization.
Staff Member: The constant rotation causing a high
turn over rate among staff member, which results high rehiring and retraining
Not truly inclusive when customers need to pay for
drinks and cigarettes might results in discontent and inconvenience.
Club med promotes trust and family spirit therefore
there are no room keys for the resorts as this might encourage theft and make
customer feel uneasy about their belongings.
Spartan room: Unlike other resorts Clubm med’s room
are spartan but clean, however it can be frustrating to the customer whom
demand privacy and looking for one single room for themselves.
HIGH STAFF TURN-OVER RATE THE MOST CONCERNING ISSUES.
Staff members(GO) and their turnover rate is one of
the most important problem to the company. The turnover rate for recruit for
first seasons are 46% percent, l believe that this has a lot to do with
constant rotation of the staff members. In club med every six months, the staff
members would rotate to different villages to form a brand-new team. It still
takes a lot of time for the new members to adjust to the new facilities,
environment and customers. Lots of the staff members might not be used to the constant
change of environment. Furthermore it also stfile the relationship building
between employees and customers. Relationship building between the GO and GM
are very important, with limitation on the rotation system it allows GO to be
more familiar with the village as well as the customer and build that unique bond
This would increase the service quality, reduce
turnover rates and therefor even reduce the cost because the firm is able to
put more resources on the development of the existing members’ and less on the
rehiring and retraining costs.
Political issues: Due the employment opportunities
club med brings to the local market a lot of time they would get benefits or subsidy
from the local government; Club med must carefully assess the government ability
to deliver the promise before entering the region. It is important to have customized
back up plan for the different issues each village might face.
New customer: New customer are very valuable, as new
customer tend to tell on average ten other people about their experience, 65
percent of the people decide to come to club med based on friend recommendation.
According to case study the club estimate this contribution margin at 60
Exhibit 4, the current ratio for the
club med is =Current Assets / Current Liabilities=
91079/60154=1.514, it is above 1 and below 3. The ratio is below 3 shows that
club med is using and investing its assets effectively. The ratio is above 1
shows us that club med has the capability to pay off its obligation and is in
very good financial health.
In exhibit 2 it is not hard to see that Club
Med sales revenue and return on sales number are increasing in a stable pace.
Shows that almost every year there is improvement, that customers are still
In exhibit 7 in
both lodging and air transport industry club med profit before tax profit
exceed the industry average which shows that the way they doing business is
working very well.
In exhibit 11 and exhibit 10 the company did an extensive survey on how the customer feel about the
various services provided by club med. The season which survey took place was
when the weather is terrible and the facility is in the worst condition of the
year. However, on average still more than 85 percent of the respondent checked
‘good, very good, excellent’. This survey alone speaks value of the service
quality and culture of club med.
The culture of the organization
The culture and the atmosphere of the club is about
social interaction it is attractive to customer and can serve as a great
competitive advantage. The idea of a family spirit culture which promotes
social interaction is amazing to many uptight white collars. The group
activities, the room designs of no telephone and pairing roommates, the random
seating during lunch and dinner hours. All those activities promote social
interactions, bringing people closer together, transform complete strangers to
close friends. The concept of this resort is special, most customer come back
not for the facility but for the experience this is a big competitive
The concept of this resort is special, it is like a
summer camp for the grownups, providing them with a chance to make new friends and
escape from their stressful city life.
club med has a culture of dedication and commitment, that they are committed to
serve the GMS and make sure that their stay will be memorable. Club med also
promote the family spirit, connecting not only customers but also the staff
members, those unique bonds ensure repeat customers and word of mouth
Overall the club has been a huge success, the theme of
social interactions and the culture of employee’s commitment has been the
reasons why customers continue to visit club med. Club should not change any
key concepts, but continue to take advantage of its reputation, invest in its
staff (Go’s) and tailor the resort design according to different local or cultural
We will see a lot more of all-inclusive resorts in the
market , it might be easy for competitor to replicate the business model of
club med, but they cannot copy 30 years of reputation and customers, loyalty
However, here are some of the small adjustments club
med can make:
It is preferable if club med include the drinks and cigarettes
in their all-inclusive package so that customer would not have to bring money
to the place. Furthermore, Club med can also change it marketing strategy a
little bit as most of its promotion is through word of mouth and club med might
lose potential customers whom just don’t have any friends whom visited the
place before. It is also more ideal if club med can add room keys for members
to prevent the ongoing theft problems within the village.