Club Med owner Fosun Tourism says China recovery will help ease the pain as coronavirus shuts down European operations
- Company says occupancy at its Atlantis Sanya resort in Hainan province has recovered by around 50 per cent year on year when it reopened last week
- Europe’s largest ski resort operator is starting to temporarily shut down operations in Italy and France
Fosun Tourism Group, the owner of French resort chain Club Med, has said that its globalisation strategy is helping it to cope with the slump in its business. The Hong Kong-listed travel company has seen its operations in China slowly recover from the slump caused by the coronavirus outbreak even as the deadly disease continues to spread rapidly across the world, affecting its operations in its main market of Europe.
“Our resorts in Italy and France have started terminating operations temporarily as Covid-19 is widely spreading,” chairman and chief executive Qian Jiannong said on Wednesday after the company posted a near 100 per cent jump in annual profit.
He added it was too early to predict how Fosun’s operations would be hit, noting that the gradual resumption of travel in China would ease some pain.
“Our businesses in China were seriously hit since the end of January and we had zero revenue in February at the peak of the outbreak. However, we managed to see total revenues grow 8 per cent in the first two months, thanks to the business outside China,” said Qian in an interview with the South China Morning Post.
On Wednesday, the Shanghai-based tourism group said revenue grew 6.6 per cent year on year to 17.34 billion yuan (US$2.45 billion) for 2019, but much slower than the near 38 per cent growth in 2018. Net profit attributable to shareholders reached 609 million yuan, up 97.4 per cent year on year.
Europe has now become the epicentre of the coronavirus pandemic that has spread to most countries globally, according to the World Health Organisation. Italy, Spain, France, Germany and the UK have imposed severe restrictions, including the closure of schools and limits on the movement of people, affecting everyday life. China on Thursday reported zero new domestic infections of the Covid-19 disease for the first time since the outbreak began. However, there were 34 new imported cases. The novel virus has claimed 8,845 lives and infected some 210,000 people globally so far.
Some 20 per cent of Fosun’s revenue comes from China, about 50 per cent from Europe and North Africa and the rest from Asia and the Americas.
As of the end of December, the group operated 66 Club Med resorts and had business in more than 40 countries spread across six continents. It operates 17 ski resorts in Europe, the most on the continent, and four in Asia.
“Now it is low season for skiing anyway. The impact of any temporary suspension on [our] business will be smaller than [during the] peak season,” said Qian.
Thomas Cook’s demise scuttles Fosun’s goal of creating a global leisure empire
Qian said occupancy at its Atlantis Sanya resort in Hainan province was recovering after its reopening last week, standing at around 50 per cent of what it was during the same weekend last year. He added that the company’s recovery and that of the tourism sector will be led by Chinese tourists.
“It’s only a start … once the epidemic ends nationwide, the sector will see decent recovery,” said Qian, referring to the growth seen after the Sars (severe acute respiratory syndrome) in 2003.
In 2019, Fosun saw revenues generated by Atlantis Sanya surge 74.2 per cent year on year to 1.3 billion yuan, attracting about 5.2 million visitors.
Meanwhile, the Shanghai-based company also plans to relaunch Thomas Cook as a lifestyle platform. Fosun acquired the 179-year-old British tour operator and related hotel brands for £11 million (US$12.7 million) in November after its collapse two months earlier.
Shares of Fosun Tourism Group fell 10.6 per cent to HK$6.08 on Thursday. They are down 46.2 per cent since January 23 when China locked down Wuhan, the epicentre of the outbreak in the Asian country.
