Big plans in the Bay and beyond

Sebastien Portes, General Manager Hong Kong and Macau at Club Med

An ambitious expansion for all-inclusive hospitality operator Club Med, with a new segment specifically for the Mainland market, two brand-new properties to open in October, and an aim for 30 properties in Asia within the next three years, explains Sebastien Portes, General Manager Hong Kong and Macau at Club Med. Shooting to become the leader in premium ski holidays in China and partnering up to prepare for the Olympics, the group is linking together properties for multi-destination tourism across the Greater Bay, China and Asia.

How many properties is ClubMed currently operating in China?
Now we have four. There is one in Sanya, one in Guilin and two in the northern provinces which are ski resorts. They’re Yabuli, next to Harbin, and Beidahu, next to Changchun. We will open two new resorts on the first of October and our new segment – that is called Club Med Joy View.
It’s a new segment dedicated to China and the objective is to build some properties within driving distance from the Tier-1 cities, starting with Beijing, Shanghai and Guangzhou. The idea is basically to offer a kind of short experience of Club Med very close to the big cities, a weekend escape, a nature escape, so either on the countryside or at the seaside.
It’s really aimed at targeting those people willing to escape the city; most of the stays will be just two days, one night, which is much shorter than what we usually do in Club Med. And during the week, it will be mostly used for MICE [meetings, incentives, conventions and exhibitions] purposes, seminars, conventions and so on.
And for the very first time we will introduce a new pricing model, in which we will sell the room only – with breakfast, exactly similar to the hotel business.
And the all-inclusive – which is what I would say is the DNA of Club Med – would be only an option in these properties. Again. we are competing with a new set of hotels which are just normal, city hotels.

Where will they be and when can we expect them?
These two new properties will be opening on the first of October under this new segment name: Club Med Joy View.
One will be in Anji, which is next to Hangzhou, and which actually will be interesting for Macau people because they have direct daily flights to Hangzhou. So this property will ve one hour from Hangzhou Airport. The second property is called Golden Beach; it will be three hours driving distance from Beijing. And these two projects are new properties, so it’s new buildings, brand new when opening on the first of October.
Obviously, the dimension and the pace of the developments have accelerated since we were acquired by our Chinese shareholder Fosun. It was back in May 2015, so obviously they are very ambitious, they don’t invest directly in the properties, but they find the investors for us. And it opens a lot of doors; currently, we are receiving one development project per day, meaning an owner will give an existing property to the management of Club Med, or build a property with us.
And this is the pace now of development of Club Med; it’s really fuelled by a lot of people coming proactively to us.

Is the buegeoning middle class in China a primary target?
Today, we’re targeting the top 5 per cent wealthiest households in China, so we’re still aiming at affluent Chinese people. Obviously, with Club Med Joyview we have widened the scope to the top 12 per cent, more or less, highest incomes in China. So it’s not yet what we’d call middle, it’s upper-middle class, but yes, this is the move obviously that we need to make and fast because we are not alone in identifying this as a massive opportunity.
So, globally speaking for Club Med this middle-class, upper-middle Chinese middle class is by far the most strategic target. Club Med Joyview will aim at recruiting these people close to their home so that they just have a taste of Club Med for one weekend, and obviously then it will be an ambitious marketing and loyalty strategy to circulate them within our portfolio, starting with our premium all-inclusive resorts in China, then premium all-inclusive resorts in Asia and then moving forward in Europe and America.

How are you managing the MICE element?
It will be basically split – the weekend will be FIT (fully independent traveller) leisure people, mostly families, and the weekdays will be mostly occupied by groups. But for the very first time with Club Med Joyview we will have a higher mix of clientele; we expect similar to the hotel industry, we expect around 40 per cent of the business coming from MICE, and 60 per cent coming from FIT.
So, there will be more mixed, while in our current premium all-inclusive resorts we do have rather 85-15 per cent split, 85 leisure, families and 15 per cent being the MICE business. We already do the MICE business, but it’s indeed a narrow part of our clientele today and Club Med Joyview aims at also recruiting new types of MICE business – conventions, exhibitions, one-day seminars, weddings – so we will tap into a lot more MICE opportunities and MICE segments than we were able to do with our distant destinations.

How will travel agencies figure in all this?
Indeed, the objective for us is to avoid as much as possible the cannibalisation of our existing clientele; we don’t want this clientele to go from four days holidays in our premium resorts down to just one weekend.
There are two strategies – one in the leisure part will be almost only online distribution through our own website and through some OTAs (Online Travel Agencies) in China and from a marketing standpoint, we’ll work on really original marketing as opposed to the really national marketing we are making for the premium resorts. We’ll really activate the catchment area around the resorts, which is roughly three to four kilometres around the resort.
We’ll really activate regional marketing to make sure that we capture new segments, a new audience around these Club Med Joyview resorts, while doing more ambitious national strategy on our Club Med premium resorts.

How about partnerships?
We have projects, that are still confidential, that are takeover projects so that might go fast, of existing properties currently managed but in other international brands, and that we might take over in one to two years - in Guangdong or even closer to Guangzhou/Shenzhen. It’s a matter of a few months before we, I think, get an agreement on at least the first property.
We’re still extremely motivated in settling in this southern province. We do have a lot of projects identified here but that don’t match the level of quality Club Med is expecting in terms of minimum area – so we are talking about five to six hectares minimum, very nice seaside if it’s on the seaside, very nice natural landscape if we’re in the countryside. We’re still looking into very exclusive properties, that’s why out of all the [propositions] that we receive every day we have to make tough selections.
And of those identified as potential Club Med very few of them will actually become Club Med; it’s a matter of connectivity to the big cities – it needs to be two to three hours maximum driving distance. And we aim at having a mix of clientele, not only depending on one city. The great thing about this region here is that we have at least four big sources of revenue in a very close area – Guangzhou, Shenzhen, Hong Kong, Macau and Zhuhai – it’s a massive source of travellers that have average incomes higher than the average in China, so it’s a very interesting target for us.

What percentage of clientele in China is from the Mainland?
In China, we currently have around 85 to 90 per cent that are Mainland Chinese in our China properties. That would be true for Guilin, Sanya and Yabuli [ski resort]. But we do aim at diversifying the clientele. The main resort where we want to diversify is Sanya; it’s obviously the most famous travel destination within China. There is an existing massive Russian market travelling there.
Hong Kong, Taiwan and Korea are also quite well represented thanks to the international brands that have settled here recently. And we are aiming at increasing the business from Europe, from Singapore, from Australia – where we do have a big client base.
But obviously we can only do so by combining a visit to this Sanya property together with a visit to Hong Kong, a visit to Guangzhou. What we’re trying to develop is some city-stops concept that is basically three days, two nights in Hong Kong, Shenzhen, Guangzhou. The client would stop for a city escape and then connect with Sanya to have a beach retreat.
[Thus] it starts with Sanya. Guilin is already a well-known international destination, so the same will apply for Guilin. We want to use Hong Kong as a hub, possibly also Guangzhou, and then offer an extension stay in Guilin.
And the last part is the ski business, which is very interesting.
Right now, the ski properties in China are 99 per cent Chinese, but this will transform massively in the few years to come. With China hosting the Olympic Games in 2022 it will become an international ski destination, with fantastic facilities, properties, ski domains. It’s still very limited the offer there, six domains have been identified as having the international standard, with numerous slopes, different ski lifts, some premium accommodation, only six key domains are identified with international standards today. We expect maybe 30 to 40 of them by 2022. So it will become an international destination.
Here, Club Med is very clear: we want to be the leader in the premium ski holidays in China. That’s why we already have these two properties and we’re the only international brand with two ski properties in Northern China. We signed a deal for a third one which is called Thaiwoo, three hours driving distance from Beijing, which will be an Olympic site. This one will open in December, 2019. We’ll have at least three ski properties and very actively looking for more.
But again the criteria is – we need a good ski domain, minimum 20 kilometres of slopes, good natural snow condition – which is not always the case around Beijing – so that’s why we’re rather setting in Northern China – Heilongjiang and Jilin Province’s more natural ski conditions – but we’re very, very aggressive and ambitious in the ski business.
We believe this is most probably for Club Med the biggest source of growth in the three, four years to come.

Is Club Med partnering directly with the Olympics?
We are in discussions with the CSA – the Chinese Ski Association – to see whether we could host the training of their national teams, to train on our properties. And we have the same kind of project with the Hong Kong Ski Association and the Australian Ski Association.
So, yes we try to link to this Olympic moment, which will obviously help grow the ski business very quickly in China. We’re already at the early stage of discussion, but there is interest on both sides. At least with CSA and Hong Kong Ski Association, we have active discussions.

Hong Kong has a ski team?
It’s very niche and actually they are building the team, so we’re helping identify some talent and recently hosted in France a qualification of one of the possible athletes. She made the slalom with us, so that we can assess her potential and she’s been integrated within the Hong Kong ski team thanks to Club Med. These are young talents, a young girl of 14, she’s just joined the national team.
They have an ambitious plan, they want to build their own team for 2022. We will, I hope, announce a more ambitious partnership by the end of this year with the Hong Kong Ski Association, as we do want to have a closer partnership together.

Are seaside properties also aiming at competitions – is the brand overall aligning itself with sport?
Yes, so we do already have global partnerships for most sports. For tennis we have a global partnership with Babola, we help in organising some events; for skiing it would be a global partnership with Rossignol, and for Golf also we have a global partner. We have this relationship, but it’s more suppliers for all the material that we offer to our guests as part of our all inclusive deal. We are exploring more ambitious events, with some of the partners.
One of these global partnerships that is now developing is with Lacoste, the French fashion brand, [with whom] we have very strong plans – we are targeting the premium segment, very much into tennis and golf, and they have very ambitious development plans in Asia. So this partnership has already been launched in Europe and it includes some sports events around golf and tennis mostly.
Some Lacoste champions, golf and tennis champions, organising some training for our clients, during a team week. And this will come in Asia starting in February 2018, most certainly with a golf and tennis event organised with Lacoste in Bintan, next to Singapore.
Which will be interesting for Macau clients as they also have direct flights via Tiger Air; it’s a very easy connection and when you land in Singapore you have a 45-minute ferry connection to Bintan. The Lacoste partnership will be the next big thing in terms of organising some events, co-branded events in our resorts.

What plans are afoot, particularly for 2018?
The big new property opening.
There are these two properties around Beijing and Shanghai, Club Med Joyview, and the next big thing is the opening of our new ski resort in Hokkaido, Japan, which is called Tomamu’ it’s opening on 8th December 2017, so in a few months time. It will be the second ski property in Japan, twice the capacity of the existing one. It’s 1,200 beds, compared with 600 beds in Sahoro [Japan] today.
Altogether we’ll increase the capacity to 1,600 beds in Hokkaido, Japan. In line with our ambition to become the leader for the premium ski holidays in Asia and globally, so that’s why we’re investing so much into new ski properties. This one is the next big thing that will be a bi-seasonal resort, opening until the beginning of April and then during the Summer season, Tomamu being a very well-known Summer destination in Hokkaido, with a golf course, hot springs, etc, will also be a game changer for the Summer season.
And then in Southeast Asia the next project after this one will be in Sri Lanka, [on the] southwest coast, an hour and a half from Colombo, which will be a new property – what we call a greenfield – a new building, and this one will open in Winter 2019, the opening date has still to be clarified exactly.
And this is quite interesting, as well. It will be a totally new property for Club Med, obviously a beach resort but still connected to a lot of cultural activities, excursions. We’ll develop a new type of clientele there, most probably also connecting with our Maldives resorts for honeymooners, so that they can combine a cultural tour od Sri Lanka, one or two nights in our property in Sri Lanka and then connect with the Maldives for a more exotic getaway.
And then moving forward to 2020 we have a new property in Lombok, next to Bali, and a new property in Hainan, next to Haikou and the new ski property in China, Taiwoo, next to Beijing. This, together with all the new Club Med Joyview properties, [means] we aim at having around 30 properties in Asia within three years time.

Is Club Med interested in operating its own private jet fleet?
It’s not the strategy in Asia. We are partnering with airlines in Europe, so we charter some flights in Europe. We charter some flights in Asia; in Taiwan [we] partner with China Airlines to connect with Ishigaki [Japan] to connect with Sanya. For most other countries we would partner with some existing airlines to charter some flights.
Having said that, we don’t expect to launch a Club Med airline at all!