Club Med CEO Sees Luxury Customers Changing Rapidly

Club Med VP of Marketing & Digital, Sabrina Cendral and Xavier Mufraggi, president and CEO of Club Med North America

Xavier Mufraggi, president and CEO of Club Med North America, visited our offices recently to update us on the all-inclusive company’s expansion plans and to share consumer trends for the luxury market.

The biggest news for Club Med these days is the opening of Club Med Michès Playa Esmeralda this December. Reservations are already open for this resort in the Dominican Republic.

Also on tap is a ski resort outside of Quebec City, set to open in about a year, said Mufraggi.

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Globally, Club Med, headquartered in Paris, has 80 resorts. These existing properties have undergone upgrades, and you can expect the overall portfolio number to grow.

“Over the last few years we have invested $1.5 billion in renovating our properties to four- and five-star standards, and now we're going to open five new properties every year,” Mufraggi tells us. “That's really a big change.”

He says that because of the overall growth of the all-inclusive hotel industry, Club Med is seeing a massive shift in terms of demand, especially from the affluent and wealthy market.

“The consumer market is starting to understand that the all-inclusive is really a product for upscale and wealthy people. They are not looking for mass product. They're looking for convenience. When they arrive on location, they are looking to see that everything is organized; they want to know that the children are registered in the kids’ program and that they’re not going to be watching video games.”

Photo by Club Med

When Club Med opens a brand new resort, it puts a lot of pressure on itself, says Mufraggi. “It’s got to have a breathtaking, unspoiled beach and it has to be less than an hour-and-a-half from an international airport.”

Another must? New resorts must be “low density,” meaning Club Med is not seeking to build massive properties that dominate the landscape.

“We don't believe luxury [can be found] in a set of towers,” he says. “We don't believe in towers and luxury. We believe everybody who is building high-rise resorts right now, especially in the Caribbean, will have difficulty in the coming years.”

This is because consumer trends for the next decade indicate a desire for sustainability; travelers won’t be looking to stay at properties that destroy nature, he adds.

Changes in affluent consumer behavior are accelerating more quickly than ever, says Mufraggi.

“Trends are moving much faster than they were, particularly niche trends,” he said. “It's families traveling all together, and it’s multi-generational. Sometimes people have two mommies or three dads; you’ll have divorcees and so on and people are coming from different countries. We’re really talking about the wealthy, upscale market.”

Also major is the desire for experiential travel.

“This is now very obvious,” says Mufraggi, “But when we started looking at this two years ago we thought it was really coming from the Millennials. For them, experiential travel is just about mandatory, but what’s striking is that within the wealthy market, everybody wants to copy that behavior.”

The Millennial demographic is also changing rapidly. Mufraggi says the generation now comprises 40 percent of the market and that 40 percent of the group now has families. “Over the next five years, 80 percent of [Millennials] will have families,” he says.

Combine this with the fact that Millennials are not changing their psychographic, which is this thirsting desire to see every corner of the world. As a result, they do not want to sacrifice travel if they have children, which will make the amenities a family resort provides more important than ever.

Mufraggi cites the example of a traveler who used to go backpacking through Asia before they had children. They might not be game to take their kids backpacking through foreign lands, but they can go to a family resort like the Club Med Guilin in China.

“You can have all the facilities of a Club Med, including the kids' club, but then from there you can take an excursion to explore China. You can do that with your kids, or the kids can stay on the property and the parents can do the excursions,” says Mufraggi.

Bottom line? “Families are starting to realize that, ‘oh, an all-inclusive could serve as a hub of experience for me, and a hub that I can use as an adult or with the kids.’"

Consumers are now very focused on sustainability, and their concern goes way past whether a resort has banned the use of plastic straws, says Mufraggi. In fact, guests are asking so many questions relating to sustainability that Club Med has had to retrain its staff to be able to answer questions on topics such as how much food waste the resort produces.

For Club Med that type of question is not difficult, since its chefs can calculate food usage way ahead of time based upon the anticipated guest list.

“But now we have to explain our own process about food, about how much of it is local,” says Mufraggi. “There’s also a major trend about people asking where your employees are coming from, how we protect them, how we lodge them, and how we give them food. For us, that’s always been in the DNA of the company so we feel safe about it,” he adds.

Club Med is also keeping a close eye on how it uses digital technology. It has an app that, for example, allows a customer going to one of its ski properties to upload their shoe size so when they get to their resort in the Alps their skis are waiting for them in a locker that can be opened with an RFID bracelet.

It’s not all digital for digital’s sake, however.

“We always have rules for how we pick our digital innovations and enhancements,” says Mufraggi. “One is, does it make the experience even more seamless, because all-inclusives are all about being seamless and easy from the beginning right to the end.”

Wellness travel is forecasted to grow at double the speed of travel in general as an industry, says Mufraggi. For that reason, Club Med is intensifying its efforts in that arena. For example, a resort might not have just a yoga school, it could provide aerial yoga, a nice complement to its signature trapeze lessons that it provides at its properties throughout the world.

This all connects to the concept of transformative travel, says Mufraggi.

“People are looking for self-betterment, for this connection that they can achieve through their vacation and so we're also offering ways to facilitate that. People also want their kids to learn new things and to be in contact with different cultures, and that's where the ‘GO’s on our staff come into play, because they're traveling around the world from all different resorts. We probably have 25 nationalities of staff in one resort. Parents want that for their kids as well,” says Mufraggi.

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