Club Med, Inc., is the American part of Club MTditeranTe, a French resort company that began operations in 1950. When the first "village" (as Club Med resorts are called) opened in Majorca, visitors stayed in U.S. Army tents. The emphasis from 1950 through the mid-1970s was on low-budget vacation packages targeted to unmarried individuals. Villages had no door locks, no safes for valuables and often no in-room telephones. The seclusion which became a hallmark for the villages also provided built-in security, which was enhanced as necessary with fences and alarms.
In addition to seclusion, Club Med offered an all in one package that included all meals, activities and lodgings for the duration of the guest's stay. There was no tipping. Entertainment was provided by the village staff, and amateur nights featuring guests were also popular. Air conditioning was generally unavailable. Food and beverage service consisted of buffet style meals eaten at tables for eight and open bars. The focus of these early vacations was on inexpensive get aways designed to attract adventurous (and generally liberal) singles.
Population shifts in the 1970s and 1980s forced Club Med to rethink some of its marketing strategies. Earnings during the 1970s were strong as singles sought out adventure and romance in the villages located in Cancun, Eleuthera, Mauritius and other exotic locations. As the American baby boomers who had been the mainstay of the company during the 1970s matured, however, earnings began to flatten out, averaging less than five percent per year from 1986 through 1989 (Alderman, 57).
During 1988, Club Med attracted more than 218,000 North American guests, down from 220,000 in 1987. During the same period, net income decreased from $18 million on sales of $337 million, to $9 million on sales of $412 million. The company still attracted significant repeat business (as much as 47 percent of its guests have stayed with th...