NEW DELHI, Feb 5: Club Med, one of the larger resort companies in the world, has closed down its only sales and reservations office in India, and instead appointed Thomas Cook as its general sales agent for the country. The step is widely believed to be part of the downsizing and consolidation exercise in the Club Med worldwide which is reported to have turned in none-too-encouraging results last year. Club Med spent approximately Rs 6 crore on developing the India market and its operations since it opened its Delhi office in March 1995.The contract with Thomas Cook is likely to be signed this week. Club Med will, however, continue to have a token presence in India through a small liaison office within the Thomas Cook premises on Panchkuian Road.
However, Club Med denies it is quitting the lucrative Indian market. Instead, the company is expected to rework its entire game-plan for notching better sales of its all-inclusive holidays. Its decision to close the sales and reservation operations is believedto have been guided by the unviability of maintaining its own infrastructure. Sources admit that the company found its direct presence in India to be uneconomical vis-a-vis revenue generation from the Indian market.
It will also carry out feasibility studies and look for a site in Goa or Kerala for setting up its first resort in India. The company plans to launch a new low-cost, high-pitch marketing campaign whereby its focus will be on the agent network and off-season charters to make the overall package for the customer cheaper by cutting the airfare component. Last year, Club Med spent Rs 80 lakh on advertising alone.
Club Med's downsizing confirms travel industry's fears about the company's performance in India. In spite of heavy advertising and promotion budgets, the company could grow its subscription base to approximately 5,000. This is the number of clients who become members of the club at an extra payment of $30 per annum, though it entitles them to little besides some promotionalmaterial.
Though the company failed to provide the exact revenue figure, according to a rough estimate, the figure is between Rs 5 to 6 crore. Since Club Med was also processing bookings from the middle-east Asia, Pakistan, Bangladesh, Nepal, Bhutan, Sri Lanka and Russia which forms part of its India region, revenue from the India operations was no more than 80 per cent of the total. Club Med representative Sameer Sindhwani claimed the above regions together comprised approximately 20 per cent of its revenue.
Club Med had appointed Thomas Cook as its GSA for the western region last year and the travel agency is believed to have turned in good bookings from Mumbai. ``It will be beneficial for both as Thomas Cook will get their commission on the basis of each package sold,'' said Sindhwani. The company has now given a rather optimistic 5,000 booking target for the current year in spite of the closure of its office.
According to Sindhwani, Club Med booked between 3,000 to 4,000 visitors last year asagainst a target of 6,000 last year, the second year of its operation. In the previous year, it registered 3,000 against a target of 4,500. ``It is difficult to tap the top-end customer who is scattered throughout the country. So we thought it was better to operate through Thomas Cook's 40 nationwide locations as we were unable to serve such a big market from just one location,'' he said.
Club Med offers over 120 destinations in 45 countries. Every year, over 1.2 lakh people travel to Club Med resorts worldwide. Majority of the bookings Club Med made out of the Indian region were to the south-east Asian destinations as these resorts were viewed as more affordable at an average of $130 as compared to the premium category destinations in Europe, Africa and the Caribbean.
Since Club Med focussed more on promoting the south-east market for Indians, that restricted its revenue. On the other hand, Club Med failed to enthuse Indians to take up south-east destinations at $130-150 a night. Club Med business wasalso affected, as was the rest of travel industry, by the south-east smog late last year. The recent south-east currency meltdown, which has made certain countries in the region extremely cheap destinations, also affected Club Med's business as hotel rooms went abegging at a new low.Though Club Med packages, averaging between $130 and $185 per night, are not too expensive considering it is an all-inclusive package, industry watchers feel the company did not market itself too well. Moreover, the concept is still too new for India. ``One major factor for lacklustre response to Club Med's packages is the traditional Indian mindset. Indian tourists like to shop when they go abroad. If shopping is not part of a package, its success automatically becomes limited. Hence, they could have customised their packages to gain better results,'' an analyst said.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
