01 Apr 2000
A Place in the Sun
The Business and Pleasure of Travel and Leisureby Julia Hanna and Garry EmmonsTopics:
There is something in the human soul that yearns to get away from it all, to some unspoiled paradise by the sea, lulled by gentle breezes. And those dreams of golden days and starlit nights translate into a startling, cold-cash reality: Tourism generates up to 10 percent of the world's gross domestic product.
The lure of faraway places recently led the Bulletin to consider two different sorts of vacation enterprises in which HBS alumni play prominent roles. The first, Turtle Island (at left), is an intimate, one-of-a-kind hideaway; the second, Club Med, is a global brand. Both offer their guests a unique experience and relaxing respite from the fast-forward pace of modern life.
Turtle Island: A Personalized Paradise
Have you had it with impossible deadlines, frustrating flights, and late-night staff meetings? Then picture this: white sand beaches lapped by gentle waves, swaying palms, silence, and water of the impossibly clear, sapphire blue seen only in postcards . . . unless one is fortunate enough to be a visitor to Turtle Island, Fiji. (Turtle Island's Web Site)
Better yet, dispense with the idea of a mere vacation and make the island your permanent home. Live in a year-round Eden of 75-degree temperatures, where you can breakfast on fresh guavas and relax into a way of life that values family and friendship over keeping up with the Joneses. Such was the path chosen by Richard Evanson (MBA '62), owner and operator of what he declares is "the only six-star resort on the planet."
"There are certain images that come up with five-star service that I just don't like: telephones, swimming pools, valet service," Evanson says from his 500-acre island. "It's a way of differentiating our product, which is unique."
"Product" seems too workaday a term for the personalized paradise enjoyed by Turtle Island Resort's fourteen guest couples. Fourteen couples, fourteen private beaches, each with its own cottage, or bure, designed and constructed according to the standards of traditional Fijian craftsmanship (without forgoing modern comforts such as a king-size bed, a hairdryer, and a fully stocked bar, to name a few amenities). Fine wines and gourmet cuisine featuring fresh, local in-gredients like lobster and passion fruit are standard fare, as are on-demand activities that run from deep-sea fishing to the time-honored pastime of sipping a cool drink at the water's edge.
A stay at Turtle Island is an eagerly anticipated experience, and those expectations create management challenges for Evanson and the resort's 130-person staff. "One thing my HBS professors would love is that every morning we have a meeting," Evanson notes. "We talk about where we are, who we are, and what happened yesterday. We discuss each guest's enjoyment levels: Did George and Mary have a good time yesterday? Did they have a life experience? What are George and Mary planning to do today?"
Evanson refers to the primarily Fijian staff as a family unit. "I'm in a culture where it's very difficult for people to tell other people what to do. It's not the usual supervisory manager-submanager structure found in the United States."
Before coming to Turtle Island, Evanson was involved in the emerging market of cable television, influenced in part by the words of HBS professor emeritus Theodore Levitt. "He said, ŒBe unique, don't compete. If you can get yourself into a dominant position where you have price flexibility, do it, because you'll be a lot happier not having to worry about the bottom line so much.' " In 1963, Evanson launched Telecable, a Seattle cable television company, and in 1969 sold the enterprise -- by then a multimillion-dollar business -- to CBS. He then "dabbled in real estate" and during a trip to the South Pacific to explore potential investment opportunities, scheduled a stopover in Fiji.
"I ran into a guy who had an option on an island, so I flew over the island and said, ŒI'll buy it.' " In 1972, Nanuya Levu, as it was then known, was an uninhabited paradise lost, overgrazed by goats and battered by tropical storms. Undeterred, Evanson methodically went about the business of planting thousands of trees, the first of a variety of environmental initiatives that he has undertaken over the years. His devotion to preserving the island's natural beauty as well as the Fijian culture has earned Turtle Island accolades that include the 1999 Green Hotelier Award from the International Hotel and Restaurant Association and British Airways' 1999 Tourism for Tomorrow Award for the Pacific region.
Living on Turtle Time
The idea of creating a resort, however, occurred to Evanson only after Columbia Pictures requested permission to make the 1980 film The Blue Lagoon on Turtle Island. Bures were built to accommodate Brooke Shields and the rest of the cast and crew, and Evanson moved the island's clocks ahead one hour to provide additional daylight for filming ("turtle time" has been standard ever since). After the film crew left, Evanson says, "it was a bit like decorating your house for Christmas and sitting around and enjoying it on your own." So he decided to rent out some of the cottages. The first guests ate at a common table, as they do today. "You make a social investment here. People who get no return on a social investment probably shouldn't come. We don't want the jet-setter; the trendy; the plastic person; the nit-picking, antisocial groucher; or the obnoxious imbiber. We want caring people who have some romance and adventure left in their bones."
It goes without saying that Evanson would also like to host people who will appreciate Turtle Island enough to make contributions -- financial or otherwise -- to preserve its natural beauty. In 1992 he founded the Turtle Island Community Foundation, a charitable trust that provides assistance to local villages in the areas of health, transportation, education, and cultural development. The resort is closed every January to host a medical clinic for Fijians, and plans are under way for a $2 million hospital for the islanders.
"The Fijians don't have much material wealth, but they have an extreme amount of happiness, which derives from their character, their security, their culture, and their traditions. It's my goal to identify those things and try to nurture and protect them," says Evanson, who doesn't feel the need to take a vacation from his work. "I'm pretty much in my own little world here," he laughs.
Club Med: A Brand Restored
On this planet of six billion travelers, only a fortunate few will ever stroll the sun-splashed shores of Turtle Island. But for all the rest of us who long to shed the chains of everyday responsibilities, memorable escapes are also within reach. Much of the credit for that belongs to Club Méditerranée, the original purveyor of paradise to the masses. Over the years, Club Med's innovative ideas about vacationing and holiday merrymaking have been instrumental in shaping the modern travel and leisure industry. (Not the least of its contributions has been the introduction of the all-inclusive, prepaid, hassle-free holiday package, a concept that has been imitated all over the world.) (Club Med's Web Site)
To position itself for the 21st century, the company is relying on the likes of Yves G. Martin (MBA '86), acting CEO of Club Med North America, and Nicolas C. Giraud (MBA '91), director of sales support, both of whom were hired in 1997 by Club Med's new CEO, Philippe Bourguignon. Previously, Martin, at French mass retailer The Casino Group, and Giraud, at Euro Disney (with Bourguignon), had both proven their mettle as managers in turnaround situations.
Martin and Giraud stress that Club Med's core business is still its isolated seaside and snow "villages," where vacationers use beads instead of money, enjoy all manner of sports and recreation, bond with staff and fellow guests from around the globe, and forget the pressures of the outside world. But, the two executives say, Club Med now has a broader vision, in part as a reaction to a recent slump caused by changing market conditions and other factors. Through acquisitions and by building on its strengths, Martin and Giraud note, Club Med intends to double in size by 2003, operating as a services company that is active in leisure and entertainment.
"Our strategy," Giraud explains, "is based on restoring the brand, regaining competitiveness, refocusing on marketing and distribution, and renewing the business." Martin notes that several hundred million dollars are being spent to refurbish the villages, and more pricing options for village vacations are being introduced. Club Med is also actively licensing its brand, with items such as sportswear and sunglasses. This spring, "Club Med World," the first of a number of urban entertainment centers worldwide, will open in Paris.
From his Paris office, Giraud directs sales support for Club Med, which includes responsibilities for upgrading its global reservation systems, including Internet traffic, and overseeing the operations of a newly established pan-European call center that he designed and implemented. These high-tech business operations are a far cry from Club Med's humble beginnings in 1950 as a nonprofit sports association. Organized by a Belgian diamond cutter and water polo champion named Gérard Blitz, the association was inspired in part by a desire to forget the horrors and privations of World War II. Seeking diversion, Blitz put together extended holidays with dozens of friends who camped out in tents on Mediterranean beaches, enjoying good food and a full regimen of sports activities.
The outings of "Le Club" proved so popular that by the late 1950s they were commercialized. By 1999, Club Med boasted 120 villages (including winter sports venues) in 36 countries on 5 continents, with 1.8 million visitors annually. The company envisions solid future growth, through acqui-sitions and by exploiting its brand: The Club Med name is known throughout the world.
Yves Martin explains that North America is a prime target for growth. "The U.S. market holds great potential," he says. "Currently, it accounts for 15 percent of our sales, second only to France. But Club Med's penetration is still low in North America, so the region represents a tremendous opportunity for us.
"Because we are in a business -- travel and leisure -- that is fairly unbranded," continues Martin, "our strong brand is a competitive advantage. The big challenge is to communicate emotion-based intangibles in a market where consumers are oriented toward material things and getting value for their money. We're a big-ticket item, so we have to convey to the consumer the inherent value of the Club Med experience."
Amid expansion and growth, Martin and Giraud em-phasize that Club Med will retain its core concept of the "magic" of the guest experience -- the interaction between guests, the gentils membres or GMs, and their youthful hosts, the gentils organisateurs or GOs. "This interaction is what sets us apart from the other all-inclusive resorts and the cruise lines, where the contact between staff and guest remains quite superficial," Giraud says.
For decades, Club Med touted itself as "the antidote to civilization." Set in beautiful, unspoiled surroundings, the Club Med village was a world unto itself where everyone's relaxed, fun-loving inner self could flourish. That formula brought the organization unrivaled success.
But times got tough in the 1990s. Club Med's original customer base was aging and its libidinous image grew passé. The company also faced new competition in the form of other all-inclusive resorts and the burgeoning cruise line business. Club Med revenues dropped off, and the physical plant at many of the villages deteriorated. The company's new management, however, has apparently halted that slide. Its bold plans for the future were buttressed in January when the company announced a 48 percent increase in earnings.
Their hard work is paying off, but Martin and Giraud understand the importance of recreation, too. Martin, who, in addition to his North America duties, serves as executive vice president with responsibilities for worldwide marketing, sales, and transportation, is a firm believer in the Club Med philosophy. An avid tennis player and equestrian, he says that "when you clock a seventy-hour workweek, you need some fun in your life to make it all worthwhile."
As for Giraud, the Club Med way is in his veins. His father, Jacques R. Giraud (MBA 11/ '47), now retired, worked for the company for some twenty years as one of its top executives. As a youth, Giraud visited a number of Club Med villages and later was himself a GO for two summers, teaching golf and tennis at villages in France and Mexico. "I love sports," Giraud says, "and that continues to be a Club Med emphasis."
But the new Club Med isn't all sports -- a group of top American writers recently conducted a kind of literary salon for several days at a village in Mexico. Another change is Club Med's new family orientation, which is gradually replacing its image of singles hedonism. Notes Giraud, "Adults have a great time at Club Med, but especially for kids, there simply is no better place." He further observes that as people spend more time on computers on the job and at home, the greater their need to break away. "The more the virtual world becomes important in everyday life," Giraud says with a smile, "the more necessary a Club Med vacation becomes."