Club Med Case Analysis

Introduction

The following case analysis is in regards to the company Club Mediterranee Incorporated, also known as “The Club”. Starting its explosive, successful business in 1950, a mere group of friends had one idea in mind. To provide all-inclusive, quality, and luxurious vacations for one low price to customers all throughout the world. Having been successful for over 30 years, it is easy to see how not only Girard Blitz, group leader, continuously strived for the vision he had, but maintained that family culture and visionary “magic” for decades to follow. From humble beginnings to change in ownership, Club Med was in a strong position with not only customers, but logistically, with buyers, suppliers and labour. Club Med remains as the ruler of the all-inclusive hotel chain market, however, faces many uncertainties in the near future. This case analysis stands as a reminder of the reasons for Club Med’s success as well as some of my recommendations in order to keep Club Med at the top in the midst of an aggressive, competitive market. I will also break down some of the alternatives that will further aid Club Med be as successful as they can be, now and for years to come.  

Analysis

In various ways, Club Med has developed an excellent competitive advantage. Two of the biggest reasons for Club Med’s differentiation from its competition lie in its family spirit and magic as well as being the innovators of an all-inclusive concept of travel. Using this, Club Med developed its outstanding reputation and recognition, along with superior customer loyalty all over the world. Not only that, but its transition from private to public ownership and the change to president Jacques Giraud, help aid Club Med onto its gradual success. Club Med’s competitive advantage lies in its strong position with buyers, suppliers and labour. Because of its ongoing positive and stable reputation throughout the years, Club Med is known for its “true formula”. This means that they have instilled a sense of trust and security with the buyers and they are only able to purchase this special formula exclusively from Club Med.

Additionally, what differentiates Club Med from other all-inclusive, club-style resorts is its low price. The low price of Club Med relates back due its low costs, especially since the number of available beds rather than available rooms determines occupancy. Compared to its competition, which is discussed later on in this case analysis, in order for customers to get the “Club Med experience”, it would cost them 50-100% more through other vacation options. This low price is what attracts customers and more importantly, what keeps them interested. Club Med’s interesting “all-inclusive” pricing arrangement is also to be noted. The company bundles both its ground costs (lodging, meals, sports, ground transportation etc.), with air transportation (airline ticket). This allowed for customers to easily pay one price and not have to worry about any other costs.

Furthermore, unlike their competition, Club Med has also established good relationships with its suppliers, such as commercial airlines. These airlines saw the opportunity to sell seats to Club Med at huge, volume discounts. In turn, this didn’t only positively impact Club Med in the form of profits through vacation packages, but also generated jobs and tourism revenue for the host countries. The packages offered low-cost financing, foreign-worker agreements, tax breaks, even direct equity investments, which are all factors that make Club Med unique, desirable and able to thrive successfully in midst of growing competition.

Another factor that strongly separates Club Med from its competitors is its employees, or “GO’s”. The GO’s rotate to different villages of Club Med every six months to ensure that employees are able to adapt to different environments and to ensure that all customers have a refreshing, new experience during their stay at Club Med resorts. Aside from this, a large number of young and talented individuals apply each year for a position as a GO, ensuring that a variety of personalities are employed at Club Med, making each customer’s vacation a personable and comfortable one. Club Med also has a few details that differentiate them from their competitors. Club Med has “bar beads”, in which customers are able to purchase bar drinks with. The reason that this particular detail puts Club Med at an advantage is because their customers no longer have to be concerned with carrying money with them throughout their trip, unlike their competitors, where drinks are purchased either in an included all-inclusive fee at the beginning of their trip or separately throughout. It eliminates much worry and the hassle that comes with it, such as theft or loss.