Club Med moves upmarket strategy into China
By James Regan and Noelle Mennella
PARIS (Reuters) - France's Club Med aims to drive forward its shift upmarket next year with plans to enter China, after its new strategy helped fiscal 2009 profit at its holiday villages inch higher despite the economic downturn.
Restructuring costs and impairment charges pushed the group to a full-year net loss of 53 million euros ($78 million), against a 2 million euro year-ago profit, missing a mean estimate of a 40 million euro loss in a Thomson Reuters I/B/E/S poll of 12 analysts.
But top executives at the company said on Friday the vast bulk of the pain was behind it, revealing winter bookings that were up more than a fifth in the last eight weeks and a planned return to positive free cash flow this year.
Shares in Club Med rose as much as 6.6 percent and closed up 2.4 percent. The stock was already up by a third this year.
"The Club showed in 2009 it was resilient to the effects of the global crisis," Chief Executive Henri Giscard d'Estaing told Reuters. "That means we have a lever effect once there is some wind in the sails. Our goal will be to go and find growth wherever it is."
TUI Travel Plc, Europe's biggest tour operator, said this month it expected trading conditions to improve in 2010 as pressure on consumer spending ease, while Thomas Cook said 2010 could be even more challenging.
Club Med has recast itself as an upmarket holiday group as it tries to recapture the appeal that once made it a byword for fun. Over the years, it had added luxury villages in the Pacific and Alpine ski resorts, catering to a wider range of people.
Club Med has been held back by loss-making villages outside Europe, analysts have said. This included the Americas, but Giscard d'Estaing said that region would remain its top market. Continued...