After returning to pre-pandemic levels of activity and profitability as early as 2022, Club Med saw record results in 2023, due to the successful transformation of its business model, and its strategy based on 5 pillars and 2 product priorities.
After returning to pre-pandemic levels of activity and profitability as early as 2022, Club Med saw record results in 2023, due to the successful transformation of its business model, and its strategy based on 5 pillars and 2 product priorities. This structural profitable growth dynamic continues with record bookings for 1H 2024.
Results highlights:
- Business Volume of Club Med amounted to 1,981m. euros, representing an increase of +17% compared to 2022 (1,699m. euros), and +16% versus 2019, based on upgraded, but reduced Resort capacity of 2,3% compared to 2019
- Record Resorts operating income amounted to 174m. euros, an increase of +64% compared to 2022, and of more than +70% compared to 2019.
- Net result amounted to 99m. euros, including 40m. euros non-Recurring
- Recurring EBITDA1 represented 389 euros
- Resort capacity increased by +6% compared to 2022 with 97% upscale or very upscale capacity (+10pts vs 2019).
- More than 1,5 million customers vacationed at Club Med, a steep increase of +16% compared to 2022, mostly thanks to the rebound of Asia in 2022 after continued Pandemic restrictions.
- The average room occupancy rate reached 70%, increasing by +3.4 points compared to 2022.
- Recurring Free Cash-Flow2 doubled compared to 2019 and amounted 100m. euros. The net debt amounted (189)m. euros near to its pre-pandemic level (178)m. euros.
- Successful transformation of Club Med’s business model:
– Its operating margin was 9.5%, compared with 6.2% in 2019, an increase of +50%, thanks to the strategy of moving upmarket and the overall optimization of the business model (from distribution to operations).
– In a context of strong inflation, continued move upmarket and accelerating growth in ski vacation, further growth in the average daily rate which amounted to €220, and increased by +8% compared to 2022.
– Finalization of the upmarket Resorts portfolio: by mid-2024, 100% of the Resort portfolio will consist of Premium and Exclusive Collection Resorts. - Record performance of the current first half 2024 bookings at +14% as of 03/02/2024 compared to the same period of 2023, which was already at record level.
Henri Giscard d’Estaing, President of Club Med, stated: “After returning to its pre-pandemic level as early as in 2022, Club Med reached nearly 2 billion euros in Business Volume for the first time in its history. The increase of 50% of its operating margin, close to 10%, and its record net profit demonstrates the success of Club Med’s new business model, whose transformation started in 2004. 2024 will mark the successful finalization of the move upmarket of our resort portfolio. In its 74-year history, Club Med has never had such a desirable portfolio of Resorts, either new, recent, or renovated. With a new strong increase in bookings for first half 2024, Club Med is well on track to become a French world champion and the most desirable lifestyle tourism brand, offering a life changing experience to its employees and contributing to sustainable tourism.”
I. Successful transformation of Club Med’s business model
Club Med’s record business performance in 2023 is the result of the transformation of its business model towards an upscale, glocal and happy digital offering, initiated in 2004. In 2023, 97% of the Resort portfolio consisted of Premium and Exclusive Collection Resorts and will achieve 100% by April 2024. As a result of the evolution of capacity toward Premium Resorts, the average daily rate was 220 euros, growing by +8% over the year of 2022, and almost +30% over 2019.
TheResortsoperatingincome margin increased by +50% compared to 2019, owing to several optimization factors:
- On the commercial side, the distribution costs ratio compared to the Business Volume has been improved by +1,3 points from 2019 compared to 2023 which contributed to the increase in operating margin.
- On the operations side, the upscale positioning positively contributed to Club Med performance as the costs increased less than the progression of the mix-price.
As a result, the Resort profit margin (GOP), before real estate costs, gain +2 points from 2019 to 2023.
In 2023, Club Med continued to strengthen its upscale positioning with the opening of 4 new premium & Exclusive Collection Resorts:
- Exclusive Collection Space La Rosiere, in the French Alps, 43 Suites connected to the Premium Resort Club Med La Rosiere;
- Club Med Kiroro Grand in Hokkaido, Japan;
- and 2 Club Med Urban Oasis, Taicang and Nanjing Xianlin, a unique product created specifically for Chinese urban family tourism.
In 2024, Club Med will reveal 4 new Resorts for premium holiday experiences:
- Club Med Vittel Ermitage and Club Med Serre Chevalier in France, completely transformed to offer an upscale experience.
- And 2 Resorts in China: Club Med Joyview Heilongtan and Club Med
II. The success of a strategy based on 5 pillars
Club Med’s strong performance demonstrates the relevance and success of its strategy, based on 5 pillars:
- Premium with Club Med spirit: The rebound in travel showed that the high-end family holidays sector is the first to recover and is more resilient when facing the effects of markets cycles.
- Become the Hospitality employer of choice: As the tourism industry was facing difficulties in recruiting and attracting talent, Club Med’s ambition is to offer its teams a “life-changing experience” through personalized management, training and fast-track career paths.
- Glocal: Combining a global approach with a local focus in terms of markets, products, and destinations, to achieve sustainable growth and diversify regional operational risks.
- “Happy Digital”: Continuing the digital transformation to improve the customer experience and teams’ efficiency in resorts and offices, by investing heavily in digital and technology now focusing on data and AI.
- “Happy to Care”: Aiming to take care of the environment and communities, with the implementation of numerous actions of responsible tourism: BREEAM eco-certification for the construction of Resorts and Green Globe certification for the daily management of Club Med Resorts.
III. Today, Club Med operates 68 Premium & Exclusive Collection Resorts and continues its development with a focus on 2 strategic products lines playing a crucial role in its business model.
- Mountain: Since the opening of its first mountain Resort in Leysin, Switzerland, in 1957, Club Med, the pioneer of all-inclusive vacations, has also been a leader in mountain-based holidays. Today, Club Med operates 25 Resorts located in the heart of the most beautiful summits in the French, Swiss and Italian Alps, as well as in China, Canada, and Japan. In 2023, Club Med saw the business volume of its Mountain Resorts increased by +33% compared to the year 2022 and amounted to 523m. euros. It represented 32% of global group business volume. Mountain Resort’s average daily bed rate was 285 euros offering the best price-quality ratio due to its all-inclusive value proposition, with an unrivalled on or off ski experience, a large range of activities for families, and due to the massive investments to enhance its mountain portfolio. In 2023, Club Med Mountain Resorts welcomed 355,000 customers (+26% on 2022) from all over the world, including Brazil, Europe, and Japan.
- Exclusive Collection: Club Med Exclusive Collection is Club Med’s luxury range, the most premium Resorts of Club Med portfolio. In 2023, this portfolio consisted of 20 properties including: 5 Exclusive Collection Resorts, 10 Exclusive Collection Spaces, 4 Villas and Chalets, and 1 Sailing Yacht, the Club Med 2, representing 11% of Club Med global capacity. In 2023, the business volume of Exclusive Collection amounted to €294 M, up +18% compared to 2022. Its average daily rate amounted to 315 euros, representing +40% more of the average ADR of the group. 139,000 customers were welcomed at Club Med’s Exclusive Collection properties, marking a +17% increase over 2022. The growth is mainly due to the newly opened Exclusive Collection Resort in Val d’Isère, the Exclusive Collection space at Club Med Tignes, and the success of the recently renovated Club Med 2 sailing yacht.
IV. In 2023, all 3 geographic areas achieved profitable growth
- Activity in Europe continued to grow. The Business Volume of Europe stood at 1,195m. euros and increased by +7% and by +11% compared to 2022 and 2019 respectively, despite a sensitive geopolitical and inflationary context. The capacity of Resorts in Europe increased by +4% compared to 2022 (-10% vs 2019), with an increase of +12 points of its upscale capacity. The number of clients amounted to 615,000, +3% more than in 2022. The average daily rate in Europe was 239 euros, increasing by more than +8% over the year 2022, due to the inflation, the growth of capacity of Premium and ski Resorts. The success of the newly opened Resorts in the Alps in December 2022: Club Med Tignes and the first Exclusive Collection Mountain Resort, Club Med Val d’Isère, also contributed to the upscale capacity and growth in European Business volume. In 2023, France remained the largest market worldwide of Club Med, with a Business Volume of 743m. euros, accounting for 37.5% of global Business Volume; increasing by +5.4% compared to 2022, and +9.8% compared to 2019, with 10% less capacity due to Resort’s portfolio upscaling.
- After a strong recovery in 2022 driven by revenge travel, the Americas (North & South) continued to show a very significant growth in 2023. Business volume of the Americas region amounted to 478m. euros and increased by +23.5% as compared to 2022, and by +62.7% compared to 2019. The number of clients is up by +5% compared to 2022, and of more than +20% compared to 2019. The North America region benefitted from Canada becoming a strategic market after the successful opening of its first mountain Resort, Québec Charlevoix in late 2021, its overall “halo effect” on the business, and the development of the Ontario market. During 2023, Brazil became the second worldwide sales market in terms of Business Volume due to a solid momentum in domestic travel and vacations in the Alps.
- After 3 years of massive impact by the pandemic, Asia saw its business volume almost doubled year-over-year, taking a full advantage of revenge travel. In 2023 in Asia, Club Med saw its Business Volume increased by +96% compared to 2022 and recovered to 101% of the same period in 2019, despite Chinese outbound business still far from pre-pandemic level. The number of clients is up by over +50% compared to 2022 and exceeding the pre-pandemic level by more than 5%. This increase is due to several reasons: the “Revenge Travel” phenomenon in Asia-Pacific, a strong momentum in domestic travel in China (+26% Business Volume compared to 2022) with growing capacity (+10% compared to 2022), and the success of the new Club Med Kiroro Peak, the third mountain Resort in Hokkaido, Japan, opened in December 2022.
V. Very encouraging booking trend for the first half of 2024
The trends for the first half of 2024, driven in particular by continued growth in demand for the Mountain vacation in Club Med, and the “revenge travel” phenomenon in Asia, reflect a new phase of growth, compared to the same period of 2023, which has already seen historical figures.
Bookings for departures in H1 24 (as of March 02, 2024), are up +14% compared to H1 23, evolving differently in various geographical areas:
- +7% for Europe;
- +11% for the Americas showing a continued increase in demand for Club Med vacations;
- +51% for Asia thanks to the “revenge travel” phenomenon following the reopening of several destinations and markets in Southeast Asia, the gradual recovery of the tourism sector in China.
1 The Recurring EBITDA is defined as the Group EBITDA restated from its exceptional items defined as any exceptional, one-off, non-recurring or extraordinary items not part of Group’s resort core-model activity.
2 Recurring Free Cash-Flow does not consider disposals and exceptional charges.
Vicky is the co-founder of TravelDailyNews Media Network where she is the Editor-in Chief. She is also responsible for the daily operation and the financial policy. She holds a Bachelor's degree in Tourism Business Administration from the Technical University of Athens and a Master in Business Administration (MBA) from the University of Wales.
She has many years of both academic and industrial experience within the travel industry. She has written/edited numerous articles in various tourism magazines.
