Fosun Tourism’s Club Med to build more resorts in Hainan, eyes return to profitability this year
- Club Med aims to build one or two more resorts in Hainan province, most likely in major cities such as Sanya and Wenchang, an executive said
- Parent Fosun Tourism is optimistic about posting a profit after back-to-back losses in 2021 and 2022
Club Med plans to build more hotels in Hainan province, one of its key markets in mainland China, as it bets on the post-Covid travel boom, while parent Fosun Tourism expects to post its first profit in three years amid rising demand from Chinese tourists and growth in its Southeast Asian markets.
Club Med is checking sites in China’s southernmost province, in cities such as Sanya and Wenchang, to build one or two new resorts within two to three years, Fosun Tourism co-president Andrew Xu said in a recent interview.
The flagship brands of Fosun Tourism – Atlantis and Club Med – are expected to post record revenue and profit this year based on their performance so far this year, said Xu.
“The bookings [so far] for the first half and second half recorded a big gain – around 20 to 30 per cent – compared with the same period of 2019 and 2022, which makes us very optimistic for the whole year’s performance,” he said. “This year we will certainly turn a profit from [previous years’ losses].”
Hong Kong-listed Fosun Tourism reported a loss of 544.9 million yuan (US$79.2 million) for 2022, narrowing from the 2.72 billion yuan loss in 2021, according to an exchange filing on March 26.
Hospitality firms have been gearing up to tap Chinese consumers and travellers, and the first-quarter economic data that showed strong consumption growth will buoy their spirits further. Chinese outbound tourists – the largest source market globally before the pandemic – spent US$255 billion on overseas travel in 2019, according to the World Tourism Organization.
The number of Chinese tourists travelling domestically will surge 80 per cent year on year earlier to 4.55 billion this year, contributing to 4 trillion yuan of tourism revenue, a 95 per cent year-on-year increase, according to a forecast by China’s Ministry of Culture and Tourism.
The outlook is further buoyed by the company’s penetration into lower-tier Chinese cities, Xu said, with demand for outbound travel also picking up pace after Beijing scrapped Covid-19 restrictions in December.
Some clients chartered a plane from Guiyang, the capital of southwestern Guizhou province, spending around 3,000 yuan per night per room, he said.
01:54
Chinese tourists return in droves to Bali, Thai beaches for first time in 3 years
Xu said he expects China, currently Club Med’s second-biggest market, to become its biggest by 2025, contributing more than 500,000 customers per year. Revenue and profit from its Southeast Asia operations will at least double from the current level in the next three to five years, he added.
“The Southeast Asian market will become our major market, although in the short run it still has some gaps, which need to be filled, to exceed the Chinese market,” he said. “But it will increase our revenue and lift the profit ratio.”
Fosun Tourism is enhancing risk management, including putting more emphasis on a light-asset business model and cutting down on mergers and acquisitions to improve its financial health, amid concerns about Fosun Group’s sustainability after years of rapid expansion.
The company is seeking to speed up the sales of its properties in certain heavy-asset projects and sharpen its focus on improving revenue flow from managing hotels and resorts.
The Shanghai-based company is expected to pick up the pace of reducing the inventory of its tourism real estate in Taicang city in Jiangsu province and Lijiang city in Yunnan province.
“Our money in the future may not be invested in tourism properties, but it will be invested in travel content and travel intellectual properties,” he said.
