Club Med Chairman and CEO Henri Giscard d'Estaing’s appearance projects exactly what the chain projects - a perfect combination of elegance and a relaxed atmosphere, of attention to detail and the good life: sporty elegance.
In an exclusive interview with “Globes,” at the chain’s new Val Thorens Sensation resort in France earlier this month, Henri Giscard d'Estaing revealed when and where a Club Med resort will be built in Israel, why he is not worried that the chain will be bought by a Chinese company, and why Israelis love the chain so much.
The international Club Med chain, which is managed in Israel by Zeev Dahan, has 80 resorts around the world, and trades on the Paris Bourse at a market cap of €892 billion, after jumping more than 40% in the past year. In 2014, 1.23 million tourists vacationed at Club Med, with Israelis accounting for a substantial number of these. Israelis are ranked fourth in tourists vacationing in Club Med resorts. This is true also at the new Val Thorens Sensation resort, which replaces the previous, less fancy resort.
Israelis are in second place, in number of guests at Val Thorens, excluding French guests. How do you explain this?
“Israelis, at least some of them, are excellent skiers. They love Club Med because of the informality of the experience, and because everything is arranged - the flights, the transfers, and the ‘all included’ format.”
Is that surprising? Israel is a small country.
“It really is unusual. They just love to have fun, and this is a place that provides a lot of pleasure and a lot of activities, and it is very suitable for the requirements and expectations of the Israelis. Club Med’s market share among people going on ski vacations is 58%. Despite the fact that Israel is not a large country, the market share of Israelis who book ski vacations at Club Med is very high. Israelis love the Club Med resorts all around the world.”
And what do you think of Israeli tourists?
“They are great, because they know how to have fun. They really appreciate the Club Med format - whether they come as couples or as families.”
They aren’t too loud? <p> “They’re pretty loud, but that’s exactly the point - you can be loud at Club Med. That’s why this resort suits them. It is a part of the ambiance at the resort. In addition, the Club Med resorts have the special GO staff, and the Israelis meet GO staff from Israel here, who give them personal attention.”
Israel
Were the Club Med resorts in Israel closed because they were not profitable enough?
“Not exactly. They were simply not at a high enough standard. The resorts in Israel were not ‘luxury’; they had a three trident rating, like the one in Eilat. They had limited space. For example, they had limits on room sizes, which made it impossible to improve the product. The tourists who visited there were primarily Jews from abroad, but the resorts did not succeed in attracting an international crowd.”
So will we be seeing a new Club Med resort in Israel?
“Yes. I can say that we have changed our mind. We looked for a long time for a suitable location in Eilat, I was there myself, but there is no location that is special enough and/or available - especially in light of the fact the we have, 20 minutes from Eilat, in Sinai, a gorgeous Club Med resort, which is a great resort, and we also have a great resort in Aqaba.”
Did you also encounter bureaucratic problems in Israel
“No, in Eilat the problem was a physical one - there is simply no high-quality space. In Sinai, for example, the resort is located on a 500-meter-long sandy beach. In Eilat, we can’t find such sandy beaches. Therefore, we concluded that Eilat is not suitable for our needs. We understood that we have to look at the Mediterranean, and we found a suitable place on Dor beach. A great location, a fabulous beach, and there are historical sites to see in the area, and convenient access from Ben Gurion airport. It will be possible to easily and comfortably visit other places in Israel. Now we have reached the practical discussion state, and we intend to come to Israel as soon as possible in order to help Israeli CEO Zeev Dahan advance this. We will hold meetings with the relevant government parties, because there is no doubt that building a Club Med resort on Dor beach is a good thing for Club Med, and a good thing for Israel.”
When will the resort open?
“Within two to three years.”
Who will the target audience be?
“Tourists from around the world. In the winter, there will surely be more Israeli tourists, and business tourists, or groups, and in the summer, there’s no doubt that the target audience will be international.”
What about the regional tension? You’re not concerned about the security situation?
“Not at all. Because I know that we live with it and we need to know how to live with it. There are tensions all over the world. This past year, for instance, there were clashes and political tension in Thailand, and it caused a tourism problem. There was also the Malaysian airplane that disappeared.”
Aspirations
There are many who would probably be happy to trade places with d'Estaing, son of former French President Valéry Giscard d'Estaing, but he is not planning on going anywhere, and it seems that is for good reason.
What would you choose to do if you were not president of Club Med? What are your aspirations?
“My aspiration is to be president of Club Med, because I completely share this company’s values: values of freedom, multi-culturalism, youthfulness of spirit, and kindness of heart. These are the values that I stand by.”
And where do you, yourself, go on vacation?
“First of all, I have a chalet here in France, in the Loire Valley. It is a quiet, rural area, and I really love nature, so I go there for rest and relaxation. In addition, there is, of course, Club Med.”
Globalization, Club Med style: The Americans and Chinese are fighting for control of the French brand
The latest development is that the Shanghai-based Chinese conglomerate Fosun International, under the management of Chinese billionaire Guo Guangchang, recently increased its bid for the acquisition of the company to €24.6 per share, representing a company value of € 939 million, a premium on the company value of €892 million, and higher than its last offer, which represented a company value of €915 million. This offer is higher than the previous offer, made by Global Resorts, an investment company managed by the Italian Bonomi family, which manages assets totaling €4.4 billion.
The battle for Club Med began in May 2013, when China’s Fosun joined forces with private equity fund Ardian, and together made an offer to buy the company for €17 per share. Later, they improved the terms of the offer, with d'Estaing’s backing. But in the summer of the same year, the Italians entered the picture, and the Chinese said they would be leaving the picture. In September they returned, joined with other Chinese entities, and increased their offer. In parallel, Fosun bought shares separately and increased its holding to 18%, compared with Global Resorts’ 10% (with an option to increase to 18.9%). In the background, private equity giant KKR entered the story, and became a minority shareholder.
And then what? The French regulator began a process of time-limited pricing between the sides in attempt to end the uncertainty for the shareholders, in what has become the longest battle for control in the history of publicly traded companies in France. Either way, the well-known French brand is expected to be transferred to foreign hands in the near future, and d'Estaing does not hesitate to express his firm opinions on the matter.
What is your position regarding the sale of the chain?
“There is currently a battle for control of Club Med underway. It has been going on for four years already. I completely support Fosun - the largest private investment group in China, which also bought Israel’s Alma Lasers [for $240 million]. They want to be the controlling shareholders of Club Med, and I support them, because they are good people, and they have long-term vision, and they know that Club Med can contribute a lot to Chinese tourism, because, as we know, Chinese tourism is the largest in the world. 30% of tourist purchases in Paris shops are made by Chinese tourists. On the other hand, a counter-offer was made by a group of financial investors, including private investment fund KKR, and that worries me, because what financial investors see before them is how to get a quick return on their investment. Club Med’s financial situation is good right now, so it is a good time to invest in it, but I don’t want Club Med to be a cash cow. I want Club Med to continue to be a growth company, to reach new markets, to develop in new areas, and to open new resorts.”
It must be difficult to work like this. You have effectively been waiting a long time to find out who will control the company.
“It’s definitely difficult. It creates uncertainty. It delays some of our projects, because our partners want to know what is expected to happen before they invest their money. Also personally, it is very exhausting for me, because I fulfill two roles in parallel - on the one hand, I manage Club Med’s day-to-day operations, and on the other, I manage the process with the shareholders.”
In Israel, there are many who fear that too many Israeli companies are being sold to the Chinese. Is there a similar fear also here in France? Club Med is, after all, a French brand.
“Fear of this does exist, but I personally think that it’s sometimes excessive. Out situation is completely different, because these are international buyers, and what’s important is that the management remain French, and that headquarters remain in Paris. This is a private group that held IPOs in Israel and the US, so this situation is completely different. Also, they have held Club Med shares for five years already, and we know them. Thanks to them, we have outstanding success in the Chinese market, so, from this perspective, this is an opportunity for Club Med.”
Also the competing group could be an opportunity, no?
“No, because they are financial investors. They are a private investment fund. They buy companies and then sell them. They look at it as a business, and nothing else. They know nothing about Club Med. They don’t know what GO is. They have never visited a single Club Med resort. On the other hand, the Chinese shareholders are very nice people and they even came to Val Thorens for the inauguration of the new resort.”
Published by Globes [online], Israel business news - www.globes-online.com - on December 30, 2014
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