Club Med was celebrated in its early days as a socialist paradise where thanks to its villages' all-inclusive formula, money had no value. Holidaymakers are "all multimillionaires," exclaimed Paris Match in 1965. Judging by its results, Club Med still has an anti-capitalist philosophy. It has lost about $321 million on revenues of $16.7 billion in the past eight years and its share price has fallen from more than $154 in 2000 to $18 now. But there is no shortage of interest in the company.
Last year Club Med was the target of Bernard Tapie, a Marseilles businessman, who bought a chunk of shares and pushed for change before selling out in December. This past June, Fosun Group, a Chinese conglomerate, took a 7 percent stake.
Most recently there have been reports that BMB Group, the sultan of Brunei's investment company, wants to invest, though it has denied having direct talks with the firm.
For a long time, sun, sea and sex sold. A 1978 cult film, "Les Bronzés," in which a group of holidaymakers attempts a record number of conquests, lampooned Club Med. But its mass-market formula did fairly well in the 1980s and 1990s. It peaked in 2000, with its village at Oyyo in Tunisia opening soon afterwards, at about $514 per person per week for unlimited food and music under the slogan "Si tu dors t'es mort" ("If you sleep you're dead").
Then the events of Sept. 11, 2001, and the SARS virus hit tourism, and Club Med's profits collapsed. Desperate, a new chief executive, Henri Giscard d'Estaing (whose father was France's president) took the business upmarket. Club Med has shut its cheapest sites and spiffed up its properties.
The culture has changed: Its hosts and hostesses, known as Gentils Organisateurs, now have to address customers with the formal vous rather than tu in public. Its "crazy signs" -- choreographed communal dance moves -- are scheduled far less frequently, according to "Le Club Med: Réinventer la Machine à Rêves" ("Club Med: Reinventing the Dream Machine"), by Jean-Jacques Manceau.
The strategy seems to be working. Thanks to richer customers spending more, Club Med announced a profit of $3.85 million for the first half. It expects Chinese tourists to drive future growth. The partnership with Fosun Group, it says, will help it win 200,000 Chinese customers by 2015, up from 23,000 now.
But observers are skeptical.
