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Fosun Tourism to adopt asset-light strategy for new Club Med resorts-chairman

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Fosun Tourism Group will adopt an asset-light strategy and run under management contracts the Club Med resorts it plans to launch in China and other countries over the next few years, its chairman told Reuters.

[HONG KONG] Fosun Tourism Group will adopt an asset-light strategy and run under management contracts the Club Med resorts it plans to launch in China and other countries over the next few years, its chairman told Reuters.

The three-year-old arm of Chinese conglomerate Fosun International, which posted its first annual profit in 2018, will launch at least 11 new resorts in the coming years under the French brand with minimum capital expenditure, as part of a two-pronged approach to accelerate growth.

It already flagged the launch of the resorts in December but did not provide details about the business model.

"The management contract model doesn't cost us any capex or pose any operational risk, and contributes a steady income. We will adopt such asset-light business model to most of (Club Med's) resorts in the future," Fosun Tourism Chairman Qian Jiannong told Reuters in an interview.

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He added Club Med generally charges about 30 per cent of a resort's business volume as its marketing and management fees under the model. Parent Fosun acquired control of Club Med in 2015, which now manages nine resorts, owns 17 and leases 41.

Fosun did not disclose how many of the 11 new Club Med resorts will be in China, but said at least one will come up in Yanqing district of Beijing. France, Spain, Canada, Seychelles, and the Dominican Republic are some of the other nations where the resorts could come up, it said.

The other leg of Fosun Tourism's growth plan is to boost its own developed travel destination business, which offers both resorts and vacation apartments, like the US$1.74 billion Atlantis Sanya integrated luxury resort launched in April.

Fosun Tourism, which went public in Hong Kong in December, posted on Sunday a 2018 net profit of 389 million yuan (S$78.24 million), reversing a loss of 295 million yuan a year earlier.

The Atlantis resort, its first destination project, generated 4.2 billion yuan in revenue last year, with 3.4 billion yuan coming from vacation apartment sales.

The company has started construction of another two tourist destination projects, in Lijiang of Yunnan Province, and in Taicang of Jiangsu province.

Fosun Tourism has already deployed a combined 2.86 billion yuan on both projects. With the total cost expected to reach about 10 billion yuan, it has also been in talks with banks including foreign ones, for the loan financing, said Qian, without elaborating.

REUTERS