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THE PERFECT ‘FOLIDAY’

BY R JACOB

Industry heavyweight Fosun Tourism Group is transforming the Chinese tourism sector into an ecosystem for holidays.

China, one of the world’s largest economic superpowers, has been making headlines recently for regaining its place as the world’s ‘Fastest Growing Major Economy’ – a title it lost to India two years

ago. This growth is perhaps most evident from its burgeoning middle class and their newly acquired purchasing power. As a result, China’s tourism industry is booming, with over 145 million Chinese tourists taking overseas trips in 2018. This number is expected to reach 400 million by 2030, with Fosun Tourism Group, the tourism arm of conglomerate Fosun International, leading the way.

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Qian Jiannong, Chairman, Executive Director and CEO of Fosun Tourism Group, at the company’s listing on the Hong Kong Stock Exchange in 2018.

The Club Med Joyview Anji, located near Shanghai, was opened to cater to domestic tourists travelling outside the main city areas.

Fosun Tourism has partnered with Mattel to create a playing club for children under the brand name Miniversity.

Founded in 1992, Fosun International Limited is one of the largest business conglomerates in China and is 416 in the Forbes Global 2000 ranking. Established in 16 countries, the company has multiple holdings in diverse sectors ranging from healthcare to real estate, entertainment and more. Fosun Tourism Group (FTG) was listed on the Hong Kong Stock Exchange in 2018, raising $428 million in its initial public offering (IPO).

As a pioneer of the all-inclusive holiday concept in China, Fosun Tourism Group recently unveiled its FOLIDAY (abbreviation of Fosun and Holiday) concept to widespread appeal. Under the watchful eye of Chairman, Executive Director and CEO, Qian Jiannong, the company looks set to become the ultimate one-stop shop for global families.

In Good HandsMuch of Fosun Tourism’s success today can be attributed to Qian’s adept leadership. After gaining a master’s degree and doctorate in Germany, he began his career in the consumer sector of retail company METRO in Dusseldorf. He eventually returned to China, where he became the president of the country’s largest retail drugstore chain,

China Nepstar and oversaw its successful IPO on the New York Stock Exchange in 2007. In 2009, Qian joined Fosun International and subsequently began managing a number of investments at a time when the company was looking to expand its international reach. While the company has made a number of investments into renowned names such as Vigor, Atlantis Sanya, Secret Recipe, Osborne, China CITS, and Thomas Cook, the first investment was in Club Med, the resort company from France which became a major stepping stone for the formation of Fosun Tourism.

Club Med is an international holiday resort chain established in 1950 by Belgian entrepreneur Gerard Blitz. Blitz dreamed of creating a utopia where people of various races and nationalities could come together as individuals, without any socio-economic barriers. Along with his partner Gilbert Trigano, Blitz established a colony of tents on the island of Majorca, naming it Club Méditerranée. Despite having only bare minimum facilities, the hospitality concept’s electrifying energy made it an instant hit amongst visitors. The following summer, Club Med was officially established and ushered in a new era of tourism – the all-inclusive holiday. In 2015, Fosun Tourism acquired a majority share in Club Med.

When Qian became the chairman and CEO of Fosun Tourism, he made a decision to spin off from Fosun International and focus on the global tourism and holiday business, a sector that forms almost 10% of the Chinese GDP. “We are not only in the resorts business, we also develop our destinations and manage destinations in China,” he explains. Broadcasting its focus on all aspects of the industry, such as travel agencies, intellectual properties (IP) and show business, Fosun Tourism is more like a tourism conglomerate, and has become a household name in China after its successful IPO listing and the launch of its FOLIDAY concept.

Turning Things AroundDespite its success today, Fosun Tourism’s initial days were far from smooth sailing. The company posted a net loss of RMB954 million in 2015, RMB473 million in 2016 and RMB295 million in 2017. The strategic decision to invest in Club Med proved a saving grace, with the holiday chain providing 100% of the group’s revenue in 2015-2016, 99.7% in 2017, and 95.5% in 2018. As Qian puts it, “We made a very successful turnaround. In 2018, we already achieved RMB387 million in net profit, despite a very difficult market situation in Europe over the past few years.”

Fosun Tourism has continued to expand rapidly, opening five Club Med resorts last year, including two new resorts in China and one in Japan. “Once we speed up our expansion for Club Med, its existing business also goes up. And secondly, our new destination and travel business also picked up very quickly,” Qian reveals. This

provides an ideal ecosystem for the FOLIDAY business, which is focused on building a one-stop holiday service. “Shopping centres like Walmart, Carrefour and METRO deliver a one-stop shopping experience for the family. But in the tourism sector, there are few companies that can do this. Our goal is to build a different portfolio company that can cater to the variety of demands in travel today.”

A Self-Sustaining EcosystemPutting its focus on the family holiday market, Fosun Tourism has refined its FOLIDAY ecosystem to concentrate on three prongs working in tandem to drive business forward. The first revolves around creating accessibility and

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Atlantis Sanya, an integrated luxury resort located in Hainan, has reported strong performance since its opening in 2018.

desirability around its resorts and destinations by opening more locations globally. This in turn will provide greater choice and value to customers. “This is our basic business. In tourism, the products cannot come to people – the people have to go to the product!” Qian quips.

The next aspect is building engaging content and parallel businesses to augment these resorts and destinations, such as the Fanxiu, an entertainment show company or the Miniversity partnership with American toy manufacturer Mattel.

Inspired by the ‘mini-club’ model of Club Med, a trusted day care for children of holidaying parents, the Miniversity model comprises four areas: play, education, retail and F&B. The model works because working parents no longer want just a day care centre, but a holistic development experience for their children. With Mattel being one of the leaders in the preschool segment, and having an excellent programme based on their toy products, the partnership seemed an almost natural progression.

“Most importantly, we also sell holidays in the Miniversity, because nowadays a lot of holidays are driven by children,” says Qian. This model not only targets the children’s market, but also provides cross marketing for the Club Med and FOLIDAY business.

In China, children from the 1980s ‘baby boom’ decade are now adults with their own children. With the end of the one-child policy, the coming decade is looking bright for Fosun. “Holidays itself are a low-frequency business. But the Miniversity business is a high-frequency business. So, we try to combine them for better synergy,” Qian discloses. He plans to further expand this ecosystem by adding healthcare, education, and other related elements.

Everyday Is A FolidayThe final cornerstone of this ecosystem is customer sales, accomplished by setting up establishments like travel agencies, boutiques and shopping centres that help provide a true one-stop holiday experience. With the newly built FOLIDAY app platform, Fosun is able to cut out the middleman and sell their products directly to the customer. “So that means we have three kinds of businesses, and all these businesses actually synergise with each other, and make very good, complementary efforts to meet the family’s holiday needs,” Qian explains.

In the future, the Group plans to develop a concept called FOLIDAY LIFESTYLE. “With the development of new technology, people have more leisure time. The way we work is also changing. People do not need to go to an office, they work from home. But in the meantime, they may also feel lonely. With FOLIDAY LIFESTYLE, we are trying to build a new lifestyle that will be like a second home for the people,” says Qian.

An example of this is the app’s plans for an appointment system, where people can socialise in destinations by making appointments with people who have similar hobbies and interests. “That is a new lifestyle. It is a FOLIDAY. That means holiday plus everything. Even your job,” he says, smiling.

Much of Fosun Tourism’s revenue comes from outside China, but they plan to correct that trend with tailor-made offerings for domestic tourists. Considering the country’s mammoth size, access to premium resorts is not as easy as in the European market. This is where Club Med Joyview resorts come into the picture. With two operational resorts located close to the metropolitan cities of Shanghai and Beijing, this new brand is opening up the option of high-frequency holidays for domestic tourists. A premium offering is being planned for the region of Lijiang, and will offer access to stunning mountains and traditional cultures, while the recently opened Atlantis Sanya offers a coastal experience.

The Atlantis Sanya hopes to draw tourists to Hainan Island, popularly known as the ‘Hawaii of China’. Operational since May 2018, the property has generated revenue of more than RMB700 million in the past year, and RMB150 million in the Chinese New Year season this year alone, surpassing all expectations. According to Qian, “The Atlantis Sanya has been an instant hit since day one!”

The potential for Fosun Tourism’s future growth is massive. In 2017, it became the largest leisure tourism resorts group worldwide, with a market share of 0.8%. Surprisingly, while China may be one of the most populous nations on the planet, just over 10% of its citizens own a passport. This signifies a market simply waiting for an opportunity to reach its full potential. With its ecosystem in place and ambitious plans of partnership-based expansion, Fosun Tourism is only getting started. “Synergy is what I see, not competition!” says Qian.