• Fosun takes happiness public

Fosun International confirmed a spin-off of its hotels, fashion and brewing group unit, the Fosun Tourism and Culture Group.

The move came a few months after Fosun said that it was looking to expand into North America through acquisitions.

No further details were given in a statement to the Hong Kong stock exchange.

The tourism and culture group was part of Fosun’s ‘happiness ecosystem’, which also included brewer Tsingtao and French fashion house Lanvin. Other divisions include the wealth ecosystem and health ecosystem. The happiness ecosystem reported revenues of CHY22.5bn (USD3.4bn) in 2017, up 22% on the year.

The group includes Club Med, which Fosun acquired in 2015 for EUR939m. In a presentation to analysts for the group’s most-recent annual results, the company said that Club Med had seen 1.3 million visitors, up 6.6% on the year, with operating profit seeing a CAGR of 26% between 2015, when it was acquired, to 2017. The group said that, in eight years, China had become the largest source of customers for Club Med.

The growth in results was mainly attributable to the performance of ski resorts in terms of resorts performance, and the increase in the number of tourists for long-haul travel destinations in Europe, Asia and the Americas in terms of tourist’s type.

Guo Guangchang, chairman, said: “China has the single largest consumer market in the world with an expected middle class of 400 million people in the near future, which is unprecedented in the history of mankind. From this, an unimaginable number of opportunities will arise. I believe that demand in China will certainly flourish, and enterprises will enjoy a variety of excellent opportunities.

“With Fosun, the number of Club Med customers in the Greater China region has increased 10 fold. At the same time, their success in the Chinese market also fostered their development outside China. Last year, we helped Club Med open a new resort in Tomamu, Hokkaido, Japan. The resort has become highly popular, not only among local and international visitors, but particularly amongst Chinese tourists.”

During the year Club Med’s new village openings included Grand Massif Samoëns Morillon in France, Tomamu Hokkaido in Japan in 2017 and a new concept brand in China, Joyview with two new resorts opening in Anji and Beidaihe in January 2018. Joyview offers premium excursion resorts in China.

In addition to Club Med, the tourism unit included luxury hotel development Sanya Atlantis, which it built for USD1.6bn on China’s southern island of Hainan, where the government has started a push to promote tourism.

Sanya Atlantis Resort had its soft opening in February 2018 and officially opened in the first half of 2018. Atlantis also included approximately 1,000 saleable residential vacation units, named Tang Residence, which already generated approximately CHY5.42bn in pre-sales proceeds as of 31 December 2017.

The end of 2016 saw Thomas Cook and Fosun International, which has a 5% stake in Thomas Cook, launch Thomas Cook China as a joint venture, looking to tap into the expected boom in outbound Chinese tourism.

The China-based company has a 51% stake in the joint venture. Thomas Cook China managing director Reto Wilhelm, said: “There is a great opportunity to bring our strengths and experience to this exciting market, offering customers a reliable travel company providing unique, personalised holidays delivered by knowledgeable travel professionals who put customers at the heart of what they do.”

The agent aimed to be a full-service travel company, offering inbound travel to and within China, as well as holidays and tours for Chinese customers looking to travel to destinations around the world.

Thomas Cook China’s focus is on the growing Chinese travel market, as Chinese consumers start to move away from traditional group tours towards, it said, more premium, personalised experiences.

In addition, by collaborating with Thomas Cook in its markets across Europe, the joint venture sought to promote China as a destination for global leisure and corporate customers. This includes tailor-made tours and new and innovative travel routes for leisure travellers, as well as catering for the growing meetings, incentives, conferences and events market.

HA Perspective [by Katherine Doggrell]: Out of health, wealth and happiness, it is generally felt that balance is the best route, not favouring one or the other. Philosophy over, Fosun is moving to offer some of its happiness to the public – for a fee.

What this fee is remains to be seen. Speculation suggests a figure of USD500m and here at Hotel Analyst we understand that Fosun has no wish to relinquish control of its happiness entirely and will only be floating a part of the division, as it looks to continuing fuelling the resurgance of Club Med and buy in North America.

Which brings us around to wealth. While the likes of HNA and Anbang have been pulling back from their overseas spending sprees as debt catches up with them, Fosun looks sound, having not participated to the same degree. If it proceds with the offering, it could fund, most transparently, the purchase of something complementary.

But, as we have seen, it’s not that easy with those who would trade out of China. Which brings us to health. Guangchang was chummy with former president Jiang Zemin, repotredly less so with Xi Jinping. Guangchang wound up in custody in 2015 as part of the country’s anti-corruption drive, causing a certain alarm amonsgt shareholders. One source quoted in the local press claimed that one of his catchphrases was “stay close to politics, but stay away from politicians”. With the government acting unfavourably to those who would look overseas, the next move will have to be made delicately.

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