Club Med

Club Med, or simply, “the Club”, is a successful French hotel company known primarily for introducing the concept of all-inclusive resorts to the world. Throughout the 70s, the company’s business model was very unique and especially appealing to singles.

By the time of this case, in 1987, Club Med continued to be successful but was now faced with the reality of stiff competition in the industry. Competitors had mirrored Club Med’s model of all-inclusive vacationing, vast sports facilities and had even thrown in sweeteners such as, unlimited alcohol and more lavish accommodation to appeal to a new generation of vacationers. In contrast to Club Med’s Spartan rooms, set meal times and regimented activities, new AI clubs throughout the Caribbean began to offer a more flexible experience with more amenities, different staff and specialized destinations for singles, families and adults.

New clubs began to spring up at an alarming rate and Club Med was unable to keep pace. By the mid 80s, the French company had slowly lost its competitive advantage and had failed to align itself with the market demand. Despite this fact, Club Med continued to find enough success from its customers’ word of mouth. As shown in Exhibit 2, the company’s net income, sales revenue and guest numbers had all steadily increased in the years leading up to this case write-up. In addition, as shown in Exhibit 5, the potential size of its market could double worldwide if properly exploited. Furthermore, Exhibit 9 shows that approximately 75% of Club Med vacationers would return, and thus most likely recommend the Club to their friends. Based on these data points from the exhibits, coupled with its extremely low prices, social and festive atmospheres and diverse global locations, the company was still successful at the time of this case however, it may have to endure a less successful period in the decade that follows.