In November, Club Med opened its first holiday village in China: a ski resort in the northeastern corner of the country, 180 km from the closest major city, Harbin. With 18 ski runs, Club Med Yabuli offers the all-inclusive perks for which the company is famous, like gourmet buffets, spa facilities and nightly entertainment. It’s just the first of several new Club Med resorts planned for China. With the country’s burgeoning middle class, and an anticipated tourism boom, the French tour operator is staking its fortunes there.
As Club Med spent last year climbing out of the recession—its net losses were $20 million in 2010, compared to $71 million in 2009—China was a bright spot. Sales increased by over 40 per cent in 2010, with 32,000 Chinese tourists vacationing at Club Med resorts. Club Med’s year-end report predicted a much stronger 2011, largely due to success in China. Last year, it partnered with Fosun, the country’s largest private conglomerate, and now a major shareholder; Club Med plans to open four more Chinese resorts by 2015.
The ski industry in China is still “very immature,” notes Justin Downes, a Canadian based in Beijing and president of Axis Leisure Management Ltd., which consults on the resort industry in China. Today, “if the owners of these properties are breaking even, they’re doing well.” But with about five million skiers in a country of over one billion, there’s room for growth. “The industry’s about to quadruple,” Downes says. Sun Mountain Yabuli—the larger ski resort that encompasses the new Club Med—was China’s first luxury ski destination. More are under development, like Secret Garden, a massive ski and golf resort slated to open in 2012. Developers are using Whistler, B.C., as the model.
Competition for Chinese tourist dollars might be getting stiffer, but the all-inclusive resort model that Club Med pioneered should do well in China, predicts Graham Kwan, chief executive officer of Character Capital Inc., and former CEO of Melco China Resorts (now Mountain China Resorts), which operates Sun Mountain Yabuli. “They’re looking for simplicity, and they’re looking for luxury,” says Kwan. In China, the Club Med brand is synonymous with both. With the ski industry still in its infancy, Club Med’s other amenities—spa visits, swanky restaurants—will help draw in non-skiers and family groups. Chinese tourists “like to travel as a multi-generational group,” adds Downes. “Pushing family fun will be successful here.”
Following the North American model, Yabuli is also looking to sell resort-side real estate to bring in four-season revenue, Kwan says. It’s the first five-star ski resort to offer resort home ownership in China, and Club Med’s village adds “another level of confidence,” he says, which should boost real estate sales.
If Club Med’s ski village is a success, it could help crack a vast new market for the iconic firm. “China’s a massive country with beaches and mountains,” Kwan says, “and a lot more Chinese who want to travel.”