As with most of its 65 sister resorts around the world, Club Med Cancún Yucatán, in Mexico, is about many things: plentiful (if not particularly good) food, plentiful (and actually quite good) cocktails, and plentiful, well-manicured sand. In the morning, there is a scramble to stake a claim on a beach chair, the chaises underneath the tiki huts snapped up like sheets at a white sale. There are theme nights for dress (black-and-white! colorful! black top and jeans!) that almost no guests adhere to except the French, because, well... There are men in Tommy Bahama shirts who escort dead-eyed wives in shoulder-dusting earrings. And a constant stream of children interrupt all tranquility with a kid’s singular brand of chaos.
Like at all Club Meds, the resort is overseen by “Gentle Organizers,” or G.O.s, an army of polo-shirted cruise directors whose job is to metaphorically sing “Be Our Guest.” Mariachi bands roam the dining room; the suites have a polished adobe feel, as if the ancient Aztecs had discovered Pottery Barn. The whole experience is laced with a tinsel luxury that is pleasing but faux.
Which is why if you are a world-class traveler of discriminating taste, you do not come to Club Med. But if you are a savvy investor, you may have discovered that Club Med, to your surprise, has turned out to be a lucrative position: For the better part of a year, the resort chain was the subject of an unlikely bidding war between Fosun International, a powerful Chinese conglomerate, and flashy Italian tycoon Andrea Bonomi.
Fosun was declared the victor in January. Over dinner, I ask Nicola Gala, the Italian who oversees the Cancún resort and whose stylish looks belie his telenovela name, what I should ask Club Med’s CEO when I talk to him. Gala laughs: “Ask him how he’s feeling.” Even in Mexico’s white sand trenches, the troops know that change is coming to Club Med.
For decades after the company’s founding in 1950, the resorts of Club Méditerranée (nicknamed Club Med) carried a reputation for little more than louche glamour and sensual hedonism, perhaps best summed up by the manager of the Martinique resort, who in the early 1970s memorably told his staff, “You are here to keep the clients happy. If that means f---ing them, then you’ll f--- them!” The Tahiti property was infamous. One Swiss G.O. was known to keep notches on his bedpost.
Club Med was the brainchild of a gregarious and charming Belgian named Gérard Blitz, who had been a champion water polo player and Olympian and also a hero of the French resistance in World War II. His vision: a one-size-fits-all bohemian vacation paradise for war-weary tourists ready to have fun. Guests paid one membership fee that included everything: lodging, activities, meals. (But not alcohol. Blitz wasn’t stupid.) Eventually the company opened resorts all over Europe, Mexico, the Caribbean, and the United States, in the process attracting a roster of international investors ranging from Baron Edmond de Rothschild, of the French banking family, to Giovanni Agnelli of Fiat and the Bronfmans of Seagram’s-spirits fame.
During Club Med’s heyday, the prevailing dress code was nudity; the shenanigans ranged from random hookups to full-on orgies. Celebrities flew under the radar so as not to be associated with the pockets of sin. That didn’t stop the occasional gossip item, such as the time Charles Revson, the man behind Revlon, yachted up to Club Med Martinique and hopped off the boat—with two blondes.
Alas, no party goes on forever. By the mid-1970s, Club Med was reeling from robberies by masked gunmen at its resorts worldwide, terrorist attacks at its Corsica property, and a murder at its Greece outpost; by the ’80s, the company, like its guests, had gotten old and fat, with its la dolce vita image becoming that of the paunchy middle-aged lech with chest hair and gold chains parading poolside in his Speedo as he leered at his cocoa-buttered, bikini-clad prey.
Still, the company proved resilient, opening new resorts and closing others while slowly shooing away the randy singles and rebranding itself as a resort for families. By 2000 the family demographic had leaped to 50 percent of all guests. (It’s now 62 percent.) Flying under the travel radar, Club Med seemed to hum along—until a muscular contest for control changed everything.
In May 2013 Fosun, a corporation with interests in mining and pharmaceuticals, announced that it was offering $22.10 per share to take the company private. (By comparison, in 2011 Club Med’s shares hovered in the $15 range, down from nearly $150 in July 2000.) The company’s affable French chairman and CEO, Henri Giscard d’Estaing, worked on the deal with Fosun—which at the time owned a sizable chunk of Club Med stock—leading to both parties being stunned when Bonomi, backed by his own investors, proceeded to engage Fosun in a ping-pong match of escalating bids. Bonomi wanted to double down on Club Med’s European roots, worrying that Chinese ownership would, in effect, de-Frenchify the company. Meanwhile, Fosun saw Club Med as a tool to plant its flag in China’s emerging leisure market and that of other fertile prospect nations, like Brazil.
The battle ended in January, when Bonomi declined to best Fosun’s offer of $29.40 per share. D’Estaing was thrilled. “What it shows,” he now says of the spirited contest, “is Club Med’s very special value.”
Club med was the latest purchase in a shopping spree by Fosun’s chair man, Guo Guangchang, known as “the Warren Buffett of China.” Fosun has recently acquired or heavily invested in office towers in Manhattan and Sydney, a Portuguese insurer, a Hollywood film studio, and a Greek jeweler. While the buying binge has a mercurial feel to it—Fosun obtained a 35 percent stake in the Italian fashion house Caruso after its head of global investment reportedly liked the fit of one of the brand’s suits— in the eyes of investors, purchasing Club Med wasn’t really a head-scratcher.
“I wasn’t very surprised,” says Kai Hu, a vice president and senior credit officer at Moody’s Investors Service in Hong Kong. “It shows Fosun’s appetite. The acquisition was a message that Fosun was not satisfied with being the minority shareholder. It wants, I think, to influence the management to try and leverage some synergy between Club Med and its other overseas investments. This is the logical step.”
At least in public, d’Estaing remains as sunny as the shores of Cancún. He dismisses the worries that, under Chinese ownership, Club Med will lose its French identity and calls Latin America and China “two new frontiers.” He boasts that the company has gotten its financial house in order: It has closed almost half of its resorts worldwide (it now has 66), while pouring $1.2 billion into new builds and renovations since 2005. He is confident that Club Med’s enduring formula—great locations, a wide array of sports offerings (the company has a partnership with Cirque du Soleil, for example, to offer guests circus training), its focus on activities for kids, and its G.O.s—will carry the day and draw back the high-end traveler.
But issues remain. Now, instead of being able to make its own decisions on how to borrow and spend money, Club Med is at the mercy of its corporate parent, whose liquidity issues remain severe—a result of all of Fosun’s buying. “We see its cash flow as pretty tight,” Hu says. “This is the reason its bond rating is still pretty low.” D’Estaing responds that Club Med itself has “a very sound cash situation” and will pursue partnerships, “attracting a growing number of real estate investors who think that Club Med is the best tenant for either their existing resort or their project ready to go.”
Fosun’s takeover was aggressive, and there is indication that its management of Club Med will be as well. It sees Brazil as a wide-open market for all-inclusives; the company already operates three properties in China and is opening another ski resort there, in addition to new sites in Beijing and Shanghai. It plans to open seven new resorts worldwide in the next three years, to “continue what we started,” d’Estaing says, “which is to make Club Med the global leader in premium all-inclusive holidays, served with French, or French-Dutch, savoir faire.”
Perhaps. But the travel industry is a fickle mistress, prone to all sorts of mood swings wrought by the economy or the random military overthrow. Club Med’s ability to restake its claim rests on not only its new owner’s ability to attract investment capital as it strains from possible overleveraging but also its effectiveness at branding and marketing itself in a travel landscape far removed from the one that Gérard Blitz entered with his first tent resort, in Alcúdia, Spain, in 1950.
At Club Med Cancún Yucatán, I watch Victor Simon, a striking 25-year-old sports manager from Tunisia and one of the resort’s G.O.s, lead 20 guests in line dancing on the beach. Simon cajoles on his microphone, whooping and emitting bird noises as a DJ spins Eurotrash pop. Later I ask him if getting people into the party mood is tough. “The French know the way of life at Club Med,” he says. The Americans are more reticent. The Asians “will try anything.”
Simon looks at the smorgasbord of global guests and smiles. “It’s not that complicated,” he says. “People just want to have a good time.”
Image Credit: Courtesy of Club Med