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Club Med has shown that an all-inclusive model can help you stay afloat in difficult times. But can it get Indians to understand this pay-once philosophy? Amish Mody finds out

For most people, going on holiday without the need for money or credit cards would be a bizarre and perhaps terrifying experience. But that is exactly what Club Méditerranée (commonly known as Club Med) has been convincing people to do in Europe since 1950.

Now, the company has set its sights on Asia, and India, it says, will play a significant role in its plans. The company launched its Indian sales and marketing office in Mumbai last September.

But how will it convince Indian travellers, as well as travel agents, that ‘all-inclusive’ does not mean ‘time-share’ with all its negative associations?

The task will not be a quick and simple one, admits Henri Giscard d’Estaing, chairman & CEO at Club Med, and the man who has been responsible for returning the business to profit after the slump following the World Trade Centre attacks in New York in 2001. But he thinks now is the perfect time to be trying to do exactly that.

“The combination of happiness and efficiency through our all-inclusive offer is most relevant in the current times of gloom and recession,” he says. “Customers never needed Club Med as much, as we help them budget a relaxed holiday.”

Indeed, Club Med was launched after the Second World War to offer some escape from the daily turmoil for the local population. Similarly, people today could be looking for exactly the same thing and the way to do it is to focus on its upmarket holiday village positioning, says d’Estaing.

Club Med was one of the first in the world to offer premium all-inclusive holidays. After a one-off membership fee and an annual subscription fee, members pay a single payment for their holiday and can then forget about the cost.

The packages include travel costs, accommodation, food and drink, including some alcohol (wine, beer and soft drinks), bar and snack goods, baby and child groups, sports and leisure activities and nightly entertainment.

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While this model can put some people off initially, it tends to create very loyal customers who return year after year. D’Estaing says it is this loyalty that has allowed it to drive growth even during the slowdown.

“Our global average occupancy is currently pegged at 70% while our studies indicate that other hospitality brands are enjoying an average occupancy of only 50%,” he explains. “The secret to Club Med’s commercial success is that 30 to 40% of our customer base are repeat customers who enjoy the Club Med experience.”

With 80 resorts across five continents, a global customer base of 60 million people and with 1.4 million customers joining every year, that loyalty goes a long way.

But achieving the same in India will not be easy nor fast. “We understand that sales will be slow in the initial period and we have learnt this from our experience of launching the China sales office,” says Olivier Horps, VP marketing Asia Pacific and general manager commercial Greater China, Korea, India & South East Asia, at Club Med.

But from 1% today, Horps thinks within five years India will be contributing 10-15% of Club Med Asia’s revenues.

And if China is a good yardstick, he may well be right. China contributed 10% of the total revenue of Asia Pacific last year, and next year this is expected to touch 15%. The other contributing markets for this region are Japan and Australia. “The Chinese market has exhibited the largest potential and India’s potential comes close to this.

Though we have started slow with only 1,000 customers last year, we expect to grow exponentially in the coming years,” says d’Estaing.

There are major differences between countries though so replicating the Chinese model in India, for instance, will not work. “Our sales strategies in Asia are very regionalised and we need to adapt it for different countries,” says Caroline Puechoultres, president & CEO – Asia Pacific, Club Med.

The company’s dependence on the travel agency network across Asia varies dramatically, for instance. While in China Club Med is sold completely through travel agents due to regulatory restrictions, in Korea travel agency sales contribute 50% of its total revenue in the country, in Hong Kong this figure is pegged at 40% while in Singapore it is 25%.

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