Summary of Key Points
Fosun International has separated its Club Med business from Fosun Travel & Leisure, which included cultural and tourism properties such as Sanya Atlantis. Club Med has applied to list on the Hong Kong Stock Exchange under the name “ClubMed Lifestyle,” aiming to raise over $500 million to expand its resorts. However, the market response has been lukewarm (Fosun’s stock price only rose by 0.6%). The reasons for this include:
1. Fosun Travel & Leisure’s stock price plummeted after its initial public offering in 2018, and it was privatized just one and a half years later before making a comeback in 2025, leaving investors with lingering concerns.
2. Club Med itself has experienced slow growth, high costs, and lack of progress in new business initiatives.
3. The departure of the former CEO and subsequent personnel disputes and governance issues have raised doubts among international investors about the company’s future.
Detailed Analysis
Why Separate Club Med for a Separate Listing?
The previous combination of “resorts” and “cultural and tourism properties” (e.g., Club Med, Sanya Atlantis, and real estate projects in Taicang and Lijiang) made it difficult for investors to understand Fosun Travel & Leisure’s business model. Was it a hotel company, a consumer brand, or a real estate developer? The confusion around its valuation led to a decline in its stock price (from an issue price of HK$15.6 to HK$4 before privatization).
By separating Club Med, Fosun aims to create a clearer business focus: “ClubMed Lifestyle” will solely operate resorts and provide brand-related services, while the real estate assets (such as Sanya Atlantis) will be managed through a REITs structure. This move is intended to help Club Med gain a more accurate valuation as a standalone brand.
Club Med’s Persistent Problems
Despite the separation, Club Med still faces significant challenges:
- Stagnant Growth: Revenue increased from €1.86 billion to €1.95 billion between 2023 and 2025, a growth rate of only 4.7% per year, with occupancy rates consistently below 60% (meaning 4 out of 10 rooms are vacant).
- High Costs:
- Rental Model: 41 out of 69 resorts are leased for periods of up to 15 years, requiring fixed rent payments even when the resorts are not occupied, similar to renting a storefront without customers.
- High Labor Costs: The core staff, known as G.O.s (Happy Gestionnaires), are responsible for various tasks such as organizing activities and providing childcare services. Recruiting and training these employees from abroad adds to the costs.
- Declining Profits: Although the company has increased its gross margin to 30.3% through premium offerings, net profits have decreased from €68.77 million to €10.92 million in 2025 due to depreciation, rental expenses, and financing costs.
New Business Initiatives
Club Med has tried two new areas:
- Joyview (Short-Term Urban Retreats): Targeting Chinese weekend travelers, this service offers optional all-inclusive packages (rooms and breakfast only). Initially, plans were to open 6-7 outlets in East China, but currently, there are only 4 locations (in Anji and Qiandao Lake), with the earliest one (Anaya) having closed. The Black Dragon Beach outlet generated only €41.56 million in revenue in 2025, resulting in a net profit of just €0.58 million.
- Urban Oasis (Urban Resort Spaces): There are only two outlets in Taicang and Nanjing, which have a negligible impact on overall revenue.
The revenue from these new services (brand management and design) amounted to only €9.7 million in 2025, accounting for 0.5% of total revenue and a 33% year-over-year decline. In essence, traditional resorts still generate the majority of Club Med’s income.
Personnel Disputes and Governance Issues
The departure of the former CEO, Didier Desaint, who led Club Med to its premium brand status for over 20 years, has caused conflicts. Desaint sued Fosun, accusing the management of lacking understanding of international business, poor English skills, and disrespect for French cultural values. He wanted to list Club Med in Paris (its main market, generating 60% of revenue from Europe, Africa, and the Middle East), but Fosun chose Hong Kong instead.
These issues have raised concerns among investors:
- Hong Kong investors are not familiar with Club Med’s European resorts.
- French media suspect that the fundraising is merely to fill Fosun’s financial gaps rather than to support Club Med’s growth.
- There are concerns about Fosun’s control over Club Med’s strategic decisions, potentially harming the brand’s long-term development, such as possible cuts to European operations for short-term profit gains.
These doubts affect the company’s valuation, as investors fear that their investment may be manipulated by Fosun’s controlling interests.
The Reason for the Cool Market Response
Investors learned from their past experiences with Fosun Travel & Leisure’s stock price crash in 2018. They were skeptical about the company’s “cultural and tourism ecosystem” narrative and were unwilling to invest again. When Fosun Travel & Leisure was privatized in 2025, Fosun had to offer HK$7.8 per share (95% above the suspension price) to convince shareholders to sell their shares, resulting in significant losses for many investors.
Conclusion
Club Med’s attempt to list separately is a strategy to revalue the brand. Success will depend on two key factors: whether it can genuinely boost growth after raising funds and whether it can convince international investors that the brand has a independent future, rather than being merely a tool for Fosun’s financial needs. Otherwise, even a successful listing may not lead to a significant increase in the stock price.