A New Era 12-16-2006

Cancun and Club Med share a common history. In 1976, when Fonatur, the Mexican government’s tourism development organization, created the destination of Cancun, Club Med was one of the first two resorts to open there. As the story goes, the company’s legendary founder, Gerard Blitz, traveled for weeks throughout Mexico looking for the perfect spot for the property. His search ended with the 22-acre parcel on the Yucatan Peninsula where Club Med sits to this day.

Given this history it makes perfect sense that the company chose Cancun as the setting for the unveiling of its new worldwide corporate strategy. After last year’s devastating Hurricane Wilma, Club Med spent more than $24 million to completely overhaul the resort and create an upscale, family-friendly and culturally rich all-inclusive.

“With this new product now in place, Club Med Cancun Yucatan is the flagship for our other resorts in North America,” said Cedric Gobilliard, CEO of Club Med North America, at the resort’s grand opening last month.

Despite the fact that the Club Med brand is well known, executives felt they had to rethink its position in the post-Sept. 11 travel environment.

“When I began as the head of Club Med, the company was at a crossroads,” said Henri Giscard d’Estaing, chairman and CEO of Club Med. “We had critical decisions to make. How do we get strong? How do we rebuild? How can we be in better connection with our customers, who we knew would be different after 9/11?”

The company’s research indicated that some consumers are solely interested in the lowest price point, while others are willing to pay for quality.

“By now, our choice at Club Med is hardly a scoop” said d’Estaing. “We chose the upscale route.”

Club Med is investing big in this new plan.

“In five years, we will have renovated worldwide more than 70 villages, spending more than $1.2 billion,” said d’Estaing. “We opened 20 new villages and closed 50 that were not in line with our strategy. So it’s a sea change.”

Travel agents are expected to play a major role in the new Club Med.

“The travel agent community is key to Club Med,” said Gobilliard. “We are moving our clientele from a medium to an upscale client, which means we need to explain Club Med. We need you, so we are going to invest in you. Educate you on the differences between the villages. Agents are central to our North American strategy&.”

According to Paula Hayes, senior vice president of sales North America, Club Med’s regional sales reps have helped identify 1,000 agencies that account for the company’s top accounts. Next, the company will compare these agents to geographic areas that they believe are fertile with possible customers. Club Med will then educate these agents and help support their sales efforts in whatever way they can.

In addition, the company will work with consortia that they feel match up well with Club Med’s new brand identity, such as Vacations.com, Signature Travel Network, Liberty Travel and Carlson Wagonlit.

But will agents respond to the new Club Med? If the agents at the grand opening were any indication, the reaction should be positive.

“There is no question that Club Med is upgrading its properties, and & the money seems well spent,” said Steve Abrams, of Sober Vacation International, based in Los Angeles. “But marketing to families seems limiting. On the other hand, it’s been my experience that Club Med with its team of G.O.s offers the very best family vacation.”

“I think that Club Med should definitely market to families but the term ‘upscale’ is not the right word to use,” said Melissa Truskett of Los Angeles-based Montrose Travel. “The resort is beautiful, and very easily sellable &. The rooms have been updated and are very nice, with wonderful mattresses and flat-screen televisions, but they are certainly not the same as at a Four Seasons or Ritz-Carlton.

“Still, I would definitely have no problem selling this property,” Truskett continued. “The meeting space is excellent, and it’s a beautiful location for meetings, incentives and affinity groups.”

Gobilliard takes comments like these seriously. He has been spending the past several months traveling all around the U.S. getting input from agents. He says the next step will be to set up advisory boards with experts in tourism, transportation and the trade. He says his mantra has become, “Measure. Don’t gamble.”

While Club Med’s strategy will surely continue to evolve and there will undoubtedly be a bit of confusion for consumers along the way the good news for the company and for agents is that they at least have a game plan for the future. That in itself is a step in the right direction to some agents.

“I’m optimistic about their future,” said Abrams. “They had been very slow in changing their resorts, and I’m just happy to see them moving forward.”