On this picture taken on October 12, 2016 a general view shows the Club Med resort in Sanya. Almost two years after being bought out by Chinese investment fund Fosun, the vacation resort French group Club Med tries to import its recipes on a promising Chinese market, where a growing upper middle-class now discovers the concept – still very latest in Chinese society – of holiday resorts.
Nicolas Asfouri | Afp | Getty Images
Club Med is “very optimistic” about China’s reopening, an executive from Fosun Tourism Group told CNBC Monday, adding that the posh resort chain is “definitely not on the market.”
Xu Bingbin, its co-president told “Squawk Box Asia” in an exclusive interview Monday that “Fosun Tourism Group is certainly one of the core businesses of Fosun [International], and Club Med is certainly one of the core businesses of Fosun Tourism Group.” Fosun Tourism Group is the leisure arm of Chinese conglomerate, Fosun International.
Bloomberg reported in November that Fosun International is exploring “strategic options” for Club Med as a way to scale back debt.
“We are literally pleased to see if … partners in several parts of the world may give synergy for us, but definitely Club Med isn’t on the market,” said Xu, who can also be the CEO of Club Med China.
While there’s been a “significant demand for outbound travel” since China’s reopening, there’s still some catching as much as do, Xu acknowledged.
“Thus far, the air capability from our major sourcing market [China] to major destinations isn’t yet there.”
Xu added he foresees the height of outbound travel to occur this summer, together with increasing per capita spending of its “goal clients.”
Uneven recovery across markets
There was a powerful rebound in Club Med’s business from the Americas and EMEA from the second half of 2021, but operating profit in Asia-Pacific remains to be “far below the pre-Pandemic level,” Fosun Tourism Group said in its 2022 earnings release.
That is as a result of remaining travel restrictions in Asia Pacific countries and Covid-19 resurgence in China, the corporate said.
The tourism group posted its 2022 earnings last Thursday, reporting $2 billion in revenue — a year-on-year growth of 48.8%.
Xu added that it had recovered 99% of its pre-pandemic business volume in 2019.
Hong Kong-listed shares of Fosun Tourism Group rose 0.93% while shares of Fosun International were 3% lower on Monday, marking the bottom levels it’s seen since December.
Club Med said the lifting of pandemic-related restrictions “accelerated its recovery” within the EMEA and Americas regions.
Business volume within the EMEA region increased by 116% year-on-year and grew by 89% within the Americas in comparison with a yr ago, the corporate said.
While business volume for Club Med in Asia Pacific grew by 110% year-on-year — which indicates “quick recovery” — growth in mainland China recorded only a 2.3% increase, based on the earnings report.
Xu said he remained “optimistic” that domestic business will see stronger rebound, given China’s easing of pandemic restrictions.
“Actually [during] Chinese Recent 12 months, we achieved 30% [more] than 2019 for our domestic business … our business is admittedly taking off and we’re gaining market share,” he told CNBC.
Fosun Tourism Group also owns travel agency Thomas Cook and other tourism destinations in China, reminiscent of Atlantis Sanya on Hainan Island and Lijiang FOLIDAY Town in Yunnan Province.
