In the 1950s, Club Med pioneered the concept of all-inclusive holidays. Companies such as Club Med that offer all-inclusive holiday services typically provide lodging, meals, drinks and other services all for a specified fixed price. Numerous companies have since begun to offer all-inclusive holidays making the all-inclusive segment a significant part of the tourism industry. This paper presents an intra-industry analysis of the all-inclusive holiday segment of the tourism industry.
Competitor Analysis
Sandals, Jack Tar Village, and SuperClubs are three of Club Med’s close competitors. The four companies offer all-inclusive packages to customers in a village setting. Within the strategic map, they are categorized into the global intermediate line resorts’ segment.
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Sandals Resorts has been in operation for more than 36 years. Sandals Resorts’ parent company, Sandals Resorts International, owns several resorts and private villas around the world. Sandals Resorts’ operations, however, are largely in the Caribbean (Sandals, n.d.). One of the strategies that sets Sandals apart from other competitors is its target. Sandals primarily targets couples, who have different requirements from an average guest and actively seek to find resorts or hotels that cater for their family needs. Sandals actively markets itself as a wedding and honeymoon destination. The resort seeks to meet the needs of the couples who desire more than what a typical resort would offer. Sandals has so far been successful in meeting its objectives of serving the niche market. It has won numerous awards, including the Gold Travel Life, Baxter Travel Media, and Thomas Cook (Quester & Fleck, 2010). Nonetheless, there is a risk involved in targeting couples only because the strategy reduces the size of Sandals’ potential market.
Similarly, Jack Tar Village is an all-inclusive chain of resorts that offers a wide array of activities to its customers. Jack Tar’s target market includes families and couples. Its resorts are predominantly located in the Caribbean and in the United States. One of the hotel’s key strengths is relatively low pricing, which enables the chain to attract to the middle class that accounts for a sizeable share of the total market. Jack Tar is the only one of the four competitors in the global intermediate line resorts’ category that does not actively provide its services in the upper class. With lower revenues because of low pricing, Jack Tar Village aims at increasing customer volume (Palmer, 2012). As a consequence, the hotel has to advertise aggressively to maintain the high volumes. The lower margin that Jack Tar Village generates is a key weakness. Therefore, the low pricing creates a perception that the quality of the company’s services is lower than those of its competitors.
Like the preceding two hotels, SuperClubs has been competing with Club Med for a long time. SuperClubs gained market share by capitalizing on Club Med’s weaknesses (“It’s Raining Hard on Club Med,” 2002). Club Med was not entirely all inclusive as it required its customers to pay for certain high-end alcoholic drinks. SuperClubs refined the ‘all inclusive’ concept by making all drinks available to clients at no extra cost. Club Med also had rigid meal times: visitors had to take their meals at specific times. SuperClubs relaxed the rule on when guests could have their meals by extending the times set by Club Med. Baby boomers who desired more luxuries responded positively to what SuperClubs was offering. The all-inclusive package that SuperClubs offers to date is one of its key strengths.
In spite of having strong competitors, Club med has remained an all-inclusive market leader and pioneer in the tourism industry with many premium resorts in very spectacular locationssince 1950. It has continually evolved and created innovative ways of providing memorable experiences for its guests (Skift Travel IQ, 2015). The competitors in the tourism industry have to keep inventing new and creative ideas to survive in the market. Therefore, Club Med has an advantage with its history of trust over the years, but it has to put in an extra effort to surpass the competitors who are equally innovative.
Looking for Profitable Segments
The tourism industry revolves around key tourist attractions or activities. These sites and actions include wildlife, skiing, beaches and related activities, lakes, and mountains (Scarrot, 1999). They define the nature of product and service offering that resorts will provide. From the activities of the four competitors, it is apparent that beach tourism is a particular attraction to many tourists, and, as such, it has attracted many players. All three of Club Med’s competitors offer beach-related products and services (Nagle, 1999). The high number of competitors calls for differentiation of products and service offered. It is clear that Club Med’s competitors have made attempts to differentiate their products and services in some way. Sandals, for instance, primarily targets couples, while Jack Tar focuses on middle and low-income individuals. Having established that beach related services are profitable as they are on high demand, the competitors should capitalize on the market demand. They can tap the opportunity by setting up operations in locations that are ideal for beach activities; the Caribbean offers an ideal location (Issa & Jayawardena, 2003). The all-inclusive segment is profitable if it can offer sufficient activities to entertain guests.
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References
Issa, J., & Jayawardena, C. (2003). The “all-inclusive” concept in the Caribbean. International Journal of Contemporary Hospitality Management, 15(3), 167-171. doi:10.1108/09596110310470211.
It’s raining hard on Club Med. (2002, February 4). BloombergBusinessweek. Retrieved fromhttps://www.bloomberg.com/news/articles/2002-02-03/its-raining-hard-on-club-med.
Nagle, G. (1999). Tourism, leisure and recreation. Cheltenham: Nelson Thornes.
Palmer, K. (2012, February 7). The financial benefits of all-inclusive resorts. U.S. News. Retrieved from https://money.usnews.com/money/personal-finance/articles/2012/02/07/the-financial-benefits-of-all-inclusive-resorts
Quester, P., & Fleck, N. (2010). Club Med: Coping with corporate brand evolution. Journal of Product & Brand Management, 19(2), 94-102. doi:10.1108/10610421011033449
Sandals. (n.d.). Retrieved from https://www.sandals.com/.
Scarrot, M. (Ed.). (1999). Sport, leisure and tourism information sources: A guide for researchers. Oxford: Butterworth-Heinemann.
Skift Travel IQ. (2015). The evolution of the all-inclusive resort. Retrieved from http://sete.gr/media/2633/150507-skiftreport-clubmed-the-evolution-of-the-all-inclusive- resort.pdf.