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Tuesday, November 26, 2019

CEIBS Executive Forum Offers Refreshing Take on All-inclusive Travel

November 26, 2019. Shanghai – CEIBS students, alumni and other guests gathered at our Shanghai campus this evening for the latest edition of the CEIBS Executive Forum 2019 series and to welcome Club Med APAC Markets CEO Mr. Xavier Desaulles for a talk on the Evolution of Family Travelling in China and the Impact of Digitalization of Travel.

During the event, Mr. Desaulles offered a refreshing take on the concept of all-inclusive family vacations in a world where so much emphasis is placed on individual travel, unique experiences and customisation.

“Our business is based on scale and you’ve got have a big number of guests to make the model work,” he told the audience. “But, that has always been the model to make it work and to make it profitable. A small Club Med doesn’t work. A hundred to a hundred-and-fifty rooms won’t work. We will never be a boutique hotel. That isn’t who we are.”

With resorts at nearly 70 destinations around the world, Mr. Desaulles further explained that being more than a hotel company takes a wide range of talent to make the premium all-inclusive formula work.

“Doing all-inclusive is quite difficult. There are a lot of barriers to entry to deliver a full on experience. You need to be good at hospitality, at creating experiences and at creating shows,” he said. “You need to be good at a number of experience markers, which we believe is a great barrier to entry. Our competitors are very good at delivering incredible service on the room or the food, but they are not equally good at this all-inclusive concept.”

Since entering the Chinese mainland in 2003, Club Med has experienced the speed of change in the country’s tourism market first-hand. Presented with the prospects of roughly 140 million Chinese travellers per year, Mr. Desaulles said that the company is increasingly looking to China as the market of the future.

“It’s fair to say that the hospitality business model is about footprint. [Some of our competitors] have one hundred or two hundred properties in China and this is how they make themselves known,” he stated. “We only have seven [resorts], so we know that we have to do two things. First, extend our reach and our footprint here in China to make the brand known. We also need to get closer to the source markets – tier one cities, in particular.”

One way the company is getting closer to its customers is by experimenting with the concept of drive-to destinations, such as its Club Med Joyview resort, located in Anji in Zhejiang Province, a few hours by car from Shanghai.

Nevertheless, getting close to your customers isn’t in itself enough to succeed. As Chinese travellers become more sophisticated and demanding, Mr. Desaulles noted, the company has had to work hard to demonstrate the value of the experience on offer at their resorts.

“It’s one of the biggest challenges we have to face, explaining in a rational way the [all-inclusive concept]. When you say a room, it’s very simple, you know what you’re buying,” he said. “That’s about sixty percent of the price, so it’s the other forty percent you need to explain. Theoretically, it’s the three meals, the shows – it takes money. Some of the shows we do every night, and a number of other hospitality providers would charge for it.”

While emphasising that Club Med welcomes everyone to their resorts, Mr. Desaulles added that businesses should not shy away from standing for who they are, especially when it comes to appealing to their core segments.

“When you’re a challenger abroad you need to pick your battles. We have limited means in terms of marketing, so we need to be focused by tapping into the most bankable segments – families, upper-income families, and families that have a double incomes,” he said. “This is our target market and the one which is the most resilient in [what is otherwise] a very volatile industry – one with high costs, high volatility and small margins.”

With a strong focus on families and tier one cities, Mr. Desaulles said that the company’s aim is to make Club Med the best choice for families for a holiday. In conclusion, he also offered some deeper insight into the importance of this mission.

“At the end of the day we lead such busy lives that what is important is that during this short span of the year [we have together] we can reconnect as a family,” he said. “More than fifty percent of the memories that are created during your family time are created during vacations. So imagine the importance of your vacation in your family legacy and your family time.”

For more on upcoming CEIBS Executives Forums and other events, please visit our events page here.

Michael Thede
Cameron Wilson