Club Med Losses Widen After Restructure

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. June 11, 2009

JUNE 11, 2009 - French holiday group Club Med has reported that its fiscal first-half losses have more than doubled to EUR22m from EUR9m, whilst summer bookings are 18 percent down on last year.

The operator said its first half to April had been hit not only by the downturn but also non-recurring items relating to its restructuring programme and the temporary closure of a number of its villages for renovation.

Revenues fell 4.2 percent to EUR724m, although revenue per available bed (revPAB) was up 2.3 percent at EUR107.90.

The improvement was driven by a marginal improvement in occupancy to 71.7 percent, together with an average price rise of 3%, reflecting the group strategy of shifting upmarket.

Accor meanwhile has sold a 4% stake in Club Med to French bank Credit Agricole for EUR10 million, as part of its refocusing strategy.

The French hotel group has retained 98,800 Club Med shares, which will later be sold on the open market.

There has been renewed interest in Club Med after French entrepreneur Bernard Tapie announced last month that he was considering buying a stake in the group.

However the group has also said it had taken legal action against the French entrepreneur over what it described as his damaging remarks about its underperformance.

"This criticism denigrates the company, tarnishes its image and is harmful to its business," Club Mediterranee said in a statement on Thursday as it reported its widening losses.

"Mr. Tapie publicly criticised the way Club Mediterranee is run as a business, its strategy and what the company is today, all at a time when the company was carrying out a capital increase."

Tapie said last month he was interested in buying a stake in Club Med despite the group raising capital and criticised management as well as the performance of the stock in recent years.

The Club Med board said it was sticking by Chief Executive Henri Giscard d'Estaing and his strategy of shifting the group upmarket.

"The board feels that the personal attacks against Mr. Giscard d'Estaing are slanderous and completely unfounded," it added.

Tapie is a former minister, former president of soccer club Olympique Marseille and currently a television soccer commentator and actor on stage and screen.