Fosun’s $700 Million Club Med Bid: Chinese Tourism’s Great Leap Forward?
Image Credit: Flickr (booizzy)

Fosun’s $700 Million Club Med Bid: Chinese Tourism’s Great Leap Forward?


In recent days, Chinese tourists have been accused of being a boisterous lot, breaching etiquette and crossing social lines from Paris to Bangkok. Spitting, jaywalking, littering, talking loudly, ignoring dress codes at places of worship (or for that matter, vandalizing them) – the list goes on.

Reports of rudeness and ruin aside, the increased attention on mainland Chinese travelers reflects the fact that more are heading abroad than ever before. Two years ago, Chinese travelers outnumbered Americans for the first time, with 70 million of the former and only 58.5 million of the latter venturing beyond their respective borders.

Chinese travelers took yet another distinction last year, becoming the biggest spenders. In 2012, they spent $102 billion, according to the United Nations World Tourism Organization. Numbers two and three on the list – Germany and the United States – shelled out around $84 billion each over the same period. A list of the world’s other top spenders can be seen here.

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As The New Yorker notes, Chinese have recently passed a collective rite of passage for newly moneyed travelers: “the grand tour” of Europe – a market that is fast becoming a magnet for Chinese with disposable income. Evan Osnos, who wrote the article, lists some of the rather grand, wistfully named European tours on offer from Chinese agencies: “Big Plazas, Big Windmills, Big Gorges” gives a panorama of the Low Countries. “Visit the New and Yearn for the Past in Eastern Europe” is self-explanatory. Ultimately, he opted for the ten-day “Classic European” trip, for which each member must pay a bond amounting to $7,600 (roughly two years’ the average mainland salary) on top of the $2,000 tour fee. His account of the trip, which he takes, is well worth the read (linked above).

Perhaps the biggest wake-up call yet that China means serious business in the travel industry came last week when Shanghai-based Fosun International, along with French insurer Axa Private Equity, made an offer to acquire Club Méditerranée (Club Med) for a cool $700 million.

The plan: for a Chinese firm to take a very visible role in developing the Western brand, conceived by a Belgian water polo star in 1950. The company initially catered to the collective imaginations of American and European travelers who wanted to hit the beach. In the future, however, it could serve as a vehicle for Chinese making the trip to Europe, as well as a growing number of Western travelers making the trip to China.

Indeed, as Businessweek points out, travelers coming to China have spiked in recent years, reflected in the nation’s position as the fourth most popular tourism destination ($50 billion in international tourism revenue) in the world last year, trailing the U.S. ($128.6 billion), Spain ($55.9 billion) and France ($53.7 billion). China’s ascension as a global destination has been swift. In 2005, the nation ranked seventh, earning $29.3 billion, just over half 2012 levels. In the ensuing seven years, the PRC leapt ahead of Italy, Japan, France, and the UK.

Fosun has factored the desire to nudge – more like push – this trend along with its Club Med designs. “We have the means to face short-term uncertainties to support the development of Club Mediterranean, in particular in Asia,” Qian Jiannong of Fosun Group told Businessweek.

The bigger story here is China’s outbound traffic. In the coming years, it is expected to continue growing. By 2015, the number of Chinese to head overseas (again, 70 million in 2012) will mushroom to 100 million. Travel industry players, from hotels and casinos to theme parks are planning accordingly.

"The Ritz Paris (under renovation) has a Chinese concierge," Mei Zhang told CNN. "Shangri-La and the Peninsula – both considered by Chinese to be somewhat Asian brands – have restaurants serving Chinese breakfast. They've adjusted their menus.”

Zhang goes on: "In New York, at the Waldorf Astoria, if they know it's a Chinese person arriving they'll give them a tea kettle and a pair of slippers. The luxury stores in Paris have equipped themselves with Chinese-speaking staff.”

This trend extends to Asia too. In April, Dreamworks Animation inked a deal with Sands China in Macau, which allows the casino to use its Shrek and Kung Fu Panda characters in parades and shows. The deal was a no-brainer.

“China is the fastest-growing, greatest place of opportunity on planet earth,” said Dreamworks CEO, Jeffrey Katzenberg. “I am confident this is only the beginning of something much bigger.”

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