CLUB MEDFred JonesCharles StumpCourtney AllenKurt KaiserWilliam CarmanBrian Keefe

• Introduction• Current State – Problem• Solution

• Club Med US• Club Med Extreme

• Innovation Analysis• BMI Profitability• Wrap Up

Agenda

Industry• Travel and Tourism industry• Accounts for 10% of employment worldwide

What is Club Med?• All inclusive upscale resorts• Currently have 74 villages in 26 Countries• Incorporate sustainable practices throughout their

villages

Introduction

1967 – Mini Club Med opens for kids

1961 – First Resort in Israel

Club Med Timeline

1950Founded by Gerard Blitz

1956 - Swiss Ski Resort opens

1957 – Bar Beads

1963 – Village Chiefs Introduced

1980 – Rapid growth as all inclusive concept catches on

1989 – Club Med takes to the water with Club Med 1, a 187m, 5 mast ship

2001 – Tourist Industry Hit Hard

2004 – Club Med restructures toward high end resorts and continues to grow

2009 – Club Med Trident 5 launches

2012 - Over 70 villages, on 5 continents, G.O.'s with over 100 nationalities speaking more than 30 languages

TH

EN

NO

W

Value Proposition-• Go to relaxing place → Have interesting

conversations → Network and New Friends→ Learn something you didn't know before

Industry Dogma-• Travel long distances and stay for extended

periods of time to have a good vacation

Value Proposition

Club Med Kani Village

Club Med’s Positioning

Core Competencies• Leisure activities

• Sustainability

• International travel

• Family travel

• Customer relationships & experiences

• Diverse staff

Balance Sheet - Annual

Profit & Loss - Annual

Financial Analysis by Geography

**Financial information from Morningstar.com

Peer ComparisonCompany MKT CAP 5 yr Rev.

GrowthOp. Margin Net Margin 5 yr EPS

GrowthFixed Assets

G/W

Club Med 655M -3.45% 9% .07% -39.16% 801M 79M

Walt Disney 76.5B 3.59% 19.49% 11.76% 8.97% 19.7B 24.15B

Royal Caribbean 5.8B 7.58% 12.36% 8.06% -1.18% 16.9B 746.5M

Starwood Hotels & Resorts Worldwide

11.4B -1.22% 11.2% 8.69% -11.75% 3.27B 2.06B

Wynn Resorts 13B 29.76% 19.13% 11.64% -4.80% 4.87B 35.75M

Wyndham Worldwide Corp.

7.17B 2.06% 18.03% 9.80% 11.75% 1.12B 1.48B

**Data from 2011 Financials pulled from Morningstar.com

Club med (us) • Brings Club Med to the United States• Loyalty Cards for Members

Club med (ex)• Takes Club Med to the Extreme• Sports Enthusiasts• Keep with Core Competencies• New Location in a new travel

niche

Solution / Blue Ocean

Membership CardRegion Based – 6 across the US

• Minimum of 3 all inclusive events per year in your region• Two Day events that include – transportation, hotel, all food

and drink as well as all activities

Membership Levels:• Individual• Family – for up to a family of 4• Corporate – allows for 5 family membership cards to be

used by various members of the company, reduced costs for conferences, meetings or retreats held at any of the Club Med Villages world wide

• Selective – top 100 spenders with Club Med, free membership and upgraded perks and greater savings on Vacations

(us)

Membership CardBrings the Club Med Lifestyle and Mentality to the US and to the customer

• Less overall vacation time

• Generally looking to keep to self while vacationing

• Allows for more frequent use, closer to home

• No liabilities of opening new locations stateside

Social Aspect - in line with core competencies• Quarterly Magazine with invites• Rent out golf courses, banquets, restaurants, etc.• Networking opportunities

Club Med (us)

Membership CardDiscounts to restaurants, hotels, recreation, airlines, etc. Rating System- have members rate experiences and if company receives less than 4 out of 5 stars than get put on probation or cancelled

• Hotels such as the Ritz Carlton, The Broadmoor, The Waldorf• Restaurants such as Chophouse, Morton's Steak House, Ruth's

Chris steakhouse• Events such as Masters, Superbowl, World Series, Kentucky

Derby, etc.

Loyalty Points• Obtain points by using card with Club Med or any Partners• Build points up for free Club Med vacation at any location or to

the new Club Med EXTREME

(us)

Target Market: Top 15% US earners & Fortune 1000 companiesDemand: 49.5 million people & 1000 companiesRealistic 5yr demand: .1% of 49.5M or 49,500 people (9,900 per year) and 5% of 1000 companies or 50 companies (10 per year)Initial Fee:

• Individual: $5,500• Family (4): $16,500• Corporate: $100,000 (5 family cards included)• Selective: Top 100 US Club Med vacationers FREE

Yearly Renewal: (80% of initial price)Value Prop: Short duration, all-inclusive, recreational, and social event with networking potential able to accommodate families

(us)BM

I

Valuable: untapped demand + social philosophy + 1st mover advantage + loyalty + Club Med persona

Rare: only so many high income individuals + little competition that delivers Club (US) value proposition

Inimitable: It would take decades + $$$ to develop clientele base

Non-Substitutable: Many vacation substitutes but few that offer the social value proposition and an all inclusive, upscale networking event specifically designed for successful peoples

Resource-Based View (BMI)

High ThreatsBargaining Power of Customers

Rivalry in IndustryCompliments (this is a good thing!)

Moderate ThreatsSubstitutes

New EntrantsBargaining Power of Suppliers

Porters 6 Forces

Risk Return Ratio• By partnering with companies who specialize in

travel we are taking on limited risk • Offer a low interest rate loyalty card, make money

on the interest, and have little default risk b/c target market is high income liquid individuals

Customer Lock-In• Points never expire but have to be a loyalty card

member to use towards vacation• Fixed fee to reinstate points

Risk Return Ratio / Customer Lock-In?

5 Year Forecasted ProfitsYEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5

Revenue $76.7 M $145.0 M $213.3 M $281.6 M

$350.0 M

Cost of Events ($54.6 M) ($106.7 M)

($158.9 M)

($211.1 M)

($263.2 M)

Discounts ($11.1M) ($22.3M) ($33.5 M) ($44.7 M)

($55.8 M)

Net Profit $11.0 M $15.9 M $20.9 M $25.9 M

$30.9 M

Net Margin 14.28% 11.00% 9.81% 9.21% 8.83%

Potential Profits Detail

• We price ourselves out of the market and don't receive the demand we anticipate

• Unforeseen OH costs• Rising commodity costs• May not get the upscale partners we want

Downfalls and Assumptions

What is it?• Club Med Extreme is going for the

niche Market of extreme sports• Keeps with the company’s current

core competencies and income structure

Club Med Sports Offered• Wind Surfing / Kite Surfing• Mountain Biking• Waterskiing / Wakeboarding• Flying Trapeze

(extreme)

Boundaries Test Site in New Zealand

• Fills another site, and a travel market niche

• Most Club Med goers continue to want new places to travel

Brings the thrillseeker to club med• keeps the social and sports aspect

Possibly use social viral media to spread the word • Big names in action sports – rally car, motocross,

skateboarding, etc..

(extreme)

Club Med Extreme Sport Offered

• Skydiving• River Surfing• Heli-Biking• Paragliding• Zorbing

(extreme)

Increase market share• US Markets• Niche Market of Extreme Sports

Increase Net Margins

Questions?

Summary & Questions