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French Resort Operator Club Med Hopes to Restore Prestige to Brand Name

By Dale K. DuPont, The Miami Herald
Knight Ridder/Tribune Business News 

May 4--Among the thousands of runners in this evening's Club Med Corporate Run in downtown Miami will be John Vanderslice. 

While he's aiming to finish in good time, the race itself is far more important, because it's part of his company's push to restore luster to its brand and customers to its resorts. 

Vanderslice is president and chief executive of the new North American division of Club Med, the huge French resort operator that's overhauling its properties. 

In place nearly a year, Vanderslice oversees 15 villages from the company's Coral Gables headquarters. His territory is the first separate zone established for Club Med and the one with the most autonomy. 

Vanderslice knows he doesn't have an easy job. 

"The first thing we had to do was dramatically invest in the villages," he said. 

The company has just spent $325 million to renovate 70 of its 120 properties, including almost all in North America and the Caribbean. And last year it launched a major ad campaign -- with projects like the corporate runs in Miami and Fort Lauderdale -- designed to raise its profile. 

That's a new strategy for the pioneer of the laid-back, unpretentious all-inclusive resort that has seen its brand and its resorts fade over the past decade or more. Club Med, which just celebrated its 50th anniversary, was overtaken by competitors more in tune with the market. That includes other all-inclusive resorts and cruise lines, which offer one-price packages with an ever-increasing array of amenities. 

Club Med's cycle of success and failure is all tied to demographics, said James Cammisa, the Miami-based publisher of Travel Industry indicators. 

The company built a healthy business in the '60s and '70s catering to singles. Then it went after families. But it got in trouble with the Baby Boomers, who wanted more luxuries than Club Med offered. 

Now, the target audience is more psychographic than demographic, Vanderslice said. Club Med is going after active adults and families. Club Med prides itself on offering 64 different sports for its guests, and is adding even more. The latest is kite boarding, a combination of hang-gliding and water skiing. 

"I think the North American turnaround is behind the turnaround in Europe," said Vanderslice, 40, who has a track record in rejuvenating brands. "The North American zone and the U.S. in particular is the second largest market for Club Med after France." 

He came to Club Med from the Triarc Restaurant Group, where he was involved with concept development for brands like Arby's and T.J. Cinnamons. Vanderslice, who has a three-year contract with Club Med, also was in senior brand management and category management with Kraft Foods. 

In addition to polishing its image, Club Med plans to add one new village a year for the next four years in the Western Hemisphere and a total of 14 worldwide. The company added 10 last year and now has properties in 40 countries. 

It expects to add another Florida property. 

"Florida is one of our top development targets," Vanderslice said. The resort in Port St. Lucie, which opened in 1987, is one of Club Med's top performers in occupancy and revenue, the company said. 

"They do have some very unique locations," said Chase Burritt, managing director of hospitality services for Ernst & Young in Miami. 

And the one-price concept is attractive to families, he said. What's more, the security the resorts offer -- especially in remote or exotic destinations -- appeals to all travelers. 

Club Med is going beyond just resorts in its overhaul. It also is rolling out a new concept: Club Med World, a city version of the resort with all of the activities but no hotel. Top U.S. cities in contention for the project some time next year include Miami, Los Angeles and Chicago. 

"I think Miami is going to be the first," Vanderslice said. 

South Florida was the choice three years ago when company consolidated five U.S. offices into two -- a headquarters in Coral Gables with about 175 employees, and a branch in Scottsdale, Ariz., with 100 employees. 

Club Med reduced its prices somewhat, too, Vanderslice said, and adopted a more consistent pricing strategy, so rates are the same no matter when a reservation is made. 

Club Med had 2000 profits of about $52.8 million on revenue of $1.7 billion. North American revenue, which represents 16.1 percent of the total, rose 2 percent, "reflecting the first signs of recovery in this zone," the company said in a January report. Executives say the advertising campaign is paying off. 

But in mid-March, shares fell 19 percent after the resort operator cut its profit forecast because of slow sales in the United States and Japan. Analysts attributed the drop to slowing economies in both countries. 

This was the second time in six months that Club Med said growth was falling short of expectations. Chairman Philippe Bourguignon earlier had promised sales and profit growth of 10 percent or more this year. 

"We are in for a rough time for consumer companies, and this one is particularly exposed to the economy," said Nigel Reed, an analyst with BNP Paribas. "The fact that the forecasts of just two months ago have been withdrawn suggests that the situation is deteriorating." 

Vanderslice is trying to make sure it doesn't. 

For him, the Corporate Run goes beyond the 3.1 miles he'll cover in Miami today -- he hopes in less than 25 minutes. 

Bloomberg News contributed to this report. 

-----To see more of The Miami Herald, or to subscribe to the newspaper, go to http://www.herald.com

(c) 2001, The Miami Herald. Distributed by Knight Ridder/Tribune Business News. 


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