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Hospitality and tourism giants Club Med receives millions despite Covid-19 pandemic

CLUB MED Southern Africa has announced the signing of long-term financing by its global company Club Med, for a total amount of €260 million (ZAR5,000 million) to secure liquidity and future development.

Hospitality and tourism giants Club Med receives millions despite Covid-19 pandemic

The financing comprises of a €180 million loan agreement, guaranteed by the French State (Prêt Garanti par l’Etat) with the support of a pool of French banks, and a €80 shareholder loan agreement from Fosun Tourism Group.

Club Med entered the COVID-19 crisis with a strong business model generating profitable growth, a positive free cashflow and a solid financial position.

In 2019, on a comparable exchange rate basis, the business volume of Club Med resorts grew by 5%, thanks to the global upscale strategy and growth in digital sales. On the financial side, the free cash-flow was positive for 3 consecutive years.

January and February 2020 performed very well, with a business volume up by 8% compared to the first two months of 2019. The €300 million credit line negotiated in August 2019 and the liquidity available at the end of last March, at more than €200 million, put the company in a strong financial position when the crisis surged.

COVID-19 had global consequences across all sectors of activity. The hospitality sector (tourism, hotel and transportation) was particularly affected. This sanitary crisis brought Club Med’s activity almost to a standstill for 3 months and last April, for the first time in its 70-year history, all resorts were temporarily closed. In this unprecedented context, Club Med decided to adapt extremely fast to protect its clients, teams and cash situation, and to be ready to rebound once the pandemic is under control allowing its activity to resume fully.

Alongside the many deep cost actions taken to protect its cash position, Club Med, with the support of Fosun Tourism Group, completed a financing scheme, aimed at securing its liquidity to face the COVID-19 crisis and prepare itself to swiftly restart operations.

The €180 million Term Loan facility guaranteed by the French State (Prêt Garanti par l’Etat) will be guaranteed for 90 % by the French State via BPI France for a 6-year duration. Fosun Tourism Group as an active and supportive shareholder, granted an additional €80 million shareholder loan.

This financing provided by French financial partners of Club Med (Arkea, BNP Paribas, Groupe BPCE, Groupe Crédit Agricole, Groupe Société Générale and HSBC) and Fosun Tourism Group emphasize trust in the business model of Club Med, and its potential of further profitable growth. With a total amount of €260 million, it enables the company to significantly secure its cash position.

According to the President of Club Med, Henri Giscard d’Estaing: “The confidence demonstrated by Fosun and our financial partners through this additional financing is good news. Over the next few months, during the European summer, our goal is to allow our guests, with the appropriate sanitary measures, to enjoy a Club Med experience with even more space for everyone, flexibility and choice.

We are convinced that our premium all-inclusive formula will appeal to families who, after several weeks of constraints, want to enjoy holidays with freedom, conviviality and serenity thanks to our exceptional resorts and our GO & GE teams.”

After the successful reopening of five resorts in China in April and May, Club Med have reopened their Sandpiper Bay resort in Florida for the US market and, beginning of July, reopened fifteen resorts in Europe.

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