“Club Med”: from (non)economical tourism to eco(logical)-tourism
If I asked you “what industry is the most likely to be affected by climate change?”, no doubt that some of you will say “well, tourism obviously!”. Whether you prefer to go to a sunny beachfront resort or to majestic mountains after a turbulence-free flight, nearly every aspect of the journey (and therefore of the industry) depends on the stability and predictability of the weather.
Club Méditerranée, commonly known as “Club Med”, is a French company specializing in the sale of “all-inclusive holidays” at vacation villages, around the world. Recently, its positioning as a high-end holidays destination was reinforced.
As stated by Xavier Mufraggi, President and CEO, “Club Med’s all-inclusive getaways give you the freedom and peace-of-mind to share unforgettable experiences with those you love”. (Exhibit 1) So imagine what would happen if a hurricane, a storm or a tsunami happened…
Exhibit 1
Indeed, climate change consequences can jeopardize the company’s operating model in different ways. First, climate change will provoke greater weather volatility and increased frequency of extreme weather events that could threaten infrastructure and customers’ safety (Exhibit 2). In addition to that, air travel costs will increase (e.g., carbon tax, increased price for fuel), leading altogether to decreased attractivity of touristic destinations. In the long run, the company may also be criticized because climate change will have negatively impacted water and food resources, reduced biodiversity and changed the landscape.
Exhibit 2
With its dual positioning as a summer and winter destination, “Club Med” is all the more exposed to these threats. Indeed, its coastal and island destinations will face an increased vulnerability to rising sea level, hurricanes, flooding, water shortages and erosion. Its winter destinations will be characterized by reduced snow cover and shorter cold.
In order to face such challenges, “Club Med” could implement two series of solutions – curative and preventive. Curative solutions could include the construction of resorts higher above sea level, storing food for emergencies, implementing disaster training or a “four-seasons” approach for mountain-based locations.
Interestingly enough, “Club Med” seems to currently prioritize preventive solutions. Not only has the company taken a series of symbolic actions to show its commitment to the fight against climate change[1], but the management team has also launched a global strategy to fight global warming. Indeed, according to Agnès Weil[2], Chief Sustainability Officer at Club Med in 2013, the strategy has three core components:
- Reduction of carbon intensity linked to the energetic use of buildings/villages
- Efficient use of energetic resources with high-performing equipment and well-trained teams
- Gradual move to less carbon-intensive energy
Beyond those principles – that a lot of companies are legally obliged to follow – “Club Med” also designed a more granular strategy aiming at reducing its environmental footprint[3] (Exhibit 3). Such strategy is designed across three pillars:
- “Village construction” / “Club Med” as a pioneer of sustainable construction, including promotion of eco-certification, construction and “greeninnovation”
- Village operations / “Club Med” as a leader in environmental management, including operational bio-certification, protection of biodiversity and sustainability in resources utilization
- Outreach to customers, suppliers and GO/GE, including development of eco-nature villages, stakeholders’ management and promotion of healthier/more sustainable food
Exhibit 3
So far, the success of Club Med’s strategy seems to be relative. One the one hand, successes have been achieved. For instance, the Green Globe certification process launched in 2010 was continued in 2015 and to led to 73% of all villages being eco-certified (Exhibit 4).
Exhibit 4
On the other hand, carbon intensity linked to the energy use of buildings is still relatively high. Indeed, at constant scope, over the 2010-2015 period, the change in intensity is ~ 5% per THD, especially due to the increase in consumption of fossil fuels in Asia. In addition to that, the proportion of renewable energy is only 14% of the total of electricity consumed.
Compared to one of its peers – Accor, environment efforts are aligned. Indeed, Accor has identified “commitments for 2020” in its “Planet21” strategy[4]: 100% of renovated or new hotels to be low-carbon buildings, -5% of energy consumption per room and of water consumption per night by 2018 and – 65% of waste.
Going forward, I think that “Club Med” should radically change its high-end positioning to transition to ecotourism[5]. I think that the strategy that has already been implemented in the company enables “Club Med” to obtain the ecotourism certification in a lot of countries.
Having authentic ecotourism would not be too far from the original value proposition of Club Med’s “Villages” and we could easily imagine “Club Med” create its high-end version of other recent examples: “Porino Ecotourism Ltd” – a safari company working with local Masai communities, which only uses renewable energy or even “Rainforest Expeditions” – a Peruvian Ecotourism company which started offering “sustainable experiences” in “Amazonas Villas”.
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[1] Support in the adoption of a new international climate agreement formed under COP21, Signing member of the “Paris Pledge for Climate”, Participation to the Carbon Disclosure Project (CDP) questionnaire since 2006 and increased rating from 70 C (2013) to 98 B (2015)
[2] http://www.lechotouristique.com/article/club-med-le-changement-climatique-a-un-impact-sur-notre-strategie,55151
[3] Corporate Social and Environmental Responsibility report, 2016: http://developpementdurable.clubmed/wp-content/uploads/2016/06/ENGL-CRS-report-2015.pdf
[4] http://www.accorhotels-group.com/uploads/static/planet21/en/buildings.html
[5] United Nations Environment Programme (UNEP), “The components of successful ecotourism”: http://www.unep.fr/shared/publications/other/WEBx0137xPA/part-two.pdf
Thanks for sharing these thoughts on Club Med. I am intrigued to read about your suggestions for “curative solutions” for the dilemma the company faces. Do you think it might encourage holiday-makers to avoid visiting Club Med destinations all together knowing that the risk of a major weather event is significant enough that the Club has to stock emergency food and water? More broadly, do you believe that the Club Med business model is truly sustainable in the long-run? I would argue that as coastlines disappear, as flying becomes more expensive (unless an environmentally sound alternative is developed) and as consumers become more eco-conscious, Club Med will become a thing of the past – like the sandy beaches it exploits for profit.
I am looking at this from a different perspective. In the short and medium term travel costs are predicted to decrease. Furthermore, the trend towards budget holidays seems to continue. However, even if Med’s business model is unlikely to become obsolete over the coming years I believe increased instability in weather may mean that Med needs to offer “flexible” holidays such that customers can shift between different destinations around the globe at short notice. In fact, such curative solutions will be much more important to the company than any preventive solutions. Med remains a small player in terms of global eco footprint and will most likely simply have to cope with whatever is coming their way. A lot of this will be done through diversifying locations and “moving” buildings away from the sea.
Awesome article! I wonder if club med’s business model is inherently environmentally unfriendly, as they encourage people to fly to far off destinations (which uses fuel). Maybe they can incentivize people to fly shorter distances, e.g. by discounting local destinations vs farther ones
Interesting post – very informative! I’ve been to a couple of tropical islands that are still getting back on their feet after devastating hurricanes that hit the islands years earlier. I wonder what the average recovery period is for such a physical and economic blow – I’m sure it’s intensified by the lack of available capital to rebuild, which is likely compounded by the decline in tourism following such storms. Such a difficult and unpredictable cycle to operate within. It’s commendable that these resorts are trying to push for more sustainable, long-term changes to combat climate change, but they must have to balance these initiatives with strategies to maintain business short-term if they hope to survive.
Adding insult to injury, Zika virus, yet another issue related to climate change, has become a new hurdle creating friction as families and couples decide where to vacation. Club Med has dedicated an entire page on their website to addressing Zika: https://www.clubmed.us/l/zika; a sign which suggests the virus is a frequent consideration for customers visiting the brand’s various locations online.