Club Med Case Analysis PDF

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Club Med Case Analysis...

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Club Med – Case Analysis #1 MGMB01 Lecture 5

Club Med’s Background

Originally created in 1950 as a non-profit sports organization, Club Med very quickly became extremely influential. What was once the product of a group of friend’s informal gathering of sports fanatics, became within almost 30 years of its creation the 9th largest hotel company in the world. Starting 1954, Club Med went from being a disorganized association to a resort owning 108 villages internationally and welcoming over 820,000 vacationers annually. Having introduced in the hotel industry this new concept of an all-inclusive resort, it is without a doubt that Club Med revolutionized the standards of the industry. However, from the 1950s to the late 1980s, the company stayed for almost 40 years after its creation without real competition… Perhaps this is what made them lose sight of what they could do differently to keep The Club on a constantly growing slope, and what allowed competitors to enter the market so “easily”. SWOT Analysis Strength : As mentioned afore, what made Club Med stand out so drastically from other hotel companies was its introduction to this new concept of an all-inclusive hotel (AI). From now on, vacationers only worry when going to The Club is to relax, forget about their jobs, and not think of the money they are spending. Because of this new concept, customers no longer have to think of paying fees or making an financial decisions as everything (or almost everything) was prepaid it the package they’ve purchased for their trip. Each person would simply pay from $1,000 to $1,400 at the beginning, and their lodging, meals, activities and transportation would be taken care of. This concept made the hotel start off on a very strong foot. Then, what kept it going is it customer’s satisfaction. Word-of-mouth was not only what brought new customers coming every year, but also what made people who have already been to Club Med want to revisit and maybe explore a new destination. Moreover, the great space each village lies on in order that each customer can have their own space and each activity can be done properly is certainly a great asset. The hotel very quickly became the ultimate destination of relaxation. Everyone loved going there for their getaways, and the “family spirit” they felt within the hotel is what kept them coming back. Over 65% of newcomers came because of the many great recommendations they’d heard, and over half of the people that had gone to The Club would come back as “usuals”. Whether that be because of all the activities offered day and night, the relaxing environment, the several destinations that can be visited or the constantly evolving and changing staff team, Club Med members were without a doubt highly satisfied with their vacations. Furthermore, having a company that values social interaction as much as Club Med does undeniably makes customers come back for more. Having the opportunity to be randomly assigned seating during mealtimes to meet new people, but also to have the option to dine alone upon request, as well as getting a roommate when a singular traveler arrives, is one of the main attributes to this company. Moreover, this satisfaction Club Med brought doesn’t only rely within its customers, but it also resides in the influence it has with its suppliers and labor force. More than everyone wanting to go to the Club Med, countries in need of tourism would jump at the opportunity of having a Club Med Village as a site and airlines would be eager to sell their seats to the company; and people looking for jobs would be yearning to apply there.

Weaknesses: However, most of the strengths presenting themselves in favor of The Club can also easily become the company’s weaknesses. First off, having the hotel own many villages in different countries may seem like an advantage, although, political or climatical problems external to the company’s hands can be encountered way more often than expected as well as having difficulty with keeping up with the maintenance of facilities (nevertheless, it has been reported that despite the weather not being optimal, the team certainly makes up for it). Then, while having the team that works in each destination rotate every 6 months may give an impression of constant evolution and renewal, some people want to go back to find the comfort of the same team, or newcomers would be going to have the same experience as they were told about. Moreover, these activities that make vacationers have such a great experience during their stay, are the same activities that are repeated every single day. The vacation eventually becomes predictable and what was once new and exciting simply becomes exactly what was done the day before. It has been found that at the beginning of a stay, the customers were excited to participate in group activities, but within 3 days of their stay, they would orient themselves back to more individual activities alone or with their families. Furthermore, its lack of coverage within the travel agencies makes Club Med less discoverable to potential customers who have never been or don’t know anyone to has ever experienced a stay there. Lastly, one of the big issues that allowed competitors to have a great influence in the industry, is the lack of consistency in the all-inclusiveness. While a prepaid vacation at the Club Med includes most of the accommodations needed, it does not include alcohol and cigarettes which became a great inconvenience compared to other hotels. More troubles can be found in things such as the foreign-exchange fluctuation, the cultural differences within workers, the lack of single rooms, and the “dullness” of the rooms they have… Club Med needs to change and adapt faster than they have been, and not simply rely on the idea and they were the main founders of a new concept. Opportunities: Club Med is still in advantage though, since they have been so greatly talked about for so long. While there is great room for improvement, Club Med praises itself on being highly recommended (as it should). It must adapt itself to the evolving nature of the hotel industry and find new ways to make itself discoverable such as through the targeting of top travel industries and not simply rely on wort-of-mouth as a marketing strategy. The company could easily find its way to stand out again by adding things to it such as more activities. However, as ecstatic as the management team is about potential growth, it is time to take action as the concept that once made the hotel so attractive is no longer new and unique. Threats: By 1986, Club Med can no longer be considered as the only company with an “allinclusive concept. Other hotel companies such as Western Hemisphere, Jack Tar Village or SuperClubs Organization fight to take the lead by improving the idea of an all-inclusive as well

as bringing new insights in the industry. Jack Tar Village renovated Club Med’s all-inclusive concept, as well as this idea that Club Med had so many activities to offer. It made its all-inclusive resort truly all-inclusive by adding alcohol and cigarettes to the equation, as well as gave a plethora of activity spaces for all needs and wants. This instantly made Club Med get on the defense and claiming that the kind of clientele that was attracted by such things was not the kind of clientele it was seeking. Then, the broadness of the concept of the Club Med is what allowed competitors such as SuperClubs to find their way in. The latter created a sort of “niche-oriented resort” in order to differentiate itself from other hotels. More than making the hotel really all-inclusive, also introduced 4 different concepts to their resorts. Their two main ones being Couples I which is the first ever couples only resort, and Hedonism II which was considered a sex-oriented resort. Moreover, the stability in the staff in SuperClubs compared to Club Med made the earlier that much more attractive. And this is without mentioning the many more companies who entered the industry at an explosive rate and took importance much faster than Club Med could have expected. Recommendations It would be recommended for the company to find new ways to redesign and readapt itself into this new molding of the hotel industry as it already has such a great reputation internationally. Club Med should keep its core values of seeking social interactions and guaranteeing customer satisfaction but nevertheless keep in mind that in order to keep people coming, there should be a constant innovation taking place....