2006 Annual Results

1
2006 Annual Results

• 12 December 2006

2
2006 Operating Highlights
Implementation of strategic actions to create the
worldwide specialist in all-inclusive, upmarket,
friendly, multicultural vacations

• Faster shift in the village base
• Major product innovations
• Bar Snacking Included now widely available a
  competitive advantage
• Comfort à la Carte (room reclassification)
  response to the need for choice
• Baby Welcome and Passworld response to the
  needs of families
  
• Change process underway and accelerating in the
  US
• Repositioning in the upmarket family segment
• Committed teams and an efficient HR organization

With a challenge manage the transition
3
Summer 2006 Managing the Transition

• A decisive step was taken this summer
• Last summer, Club Med took two bold actions
• Closing six entry-level villages
• Extending BSI throughout the season in Europe
• which is already delivering benefits
• The customer base is moving upmarket faster, with
  gains in the target segment
• Record growth in satisfaction rates, which have
  reached historic highs
• Winter 2007 is well underway
• 50 of open villages are 4T (snow/sun)
• Strong growth in winter bookings

• Improvement in average price
• Loss of non-target customers (France)

4
Club Med has returned to growth

• Increased business
• Revenue up 5.6
  
• Clear upturn in revenue growth for the first time
  since 2001
• REVPAB up 9
• Improved net income
• EBITDAR Leisure 232m vs. 222m in 05
• Operating income Leisure stable at 24m

Revenue
(In m)
1,679
1,609
1,600
1,590
2003
2004
2005
2006
Net income
5
(In m)
3
(44)
(94)



EBITDAR Earnings before interest, taxes,
depreciation, amortization and rents
2003
2004
2005
2006
5
2006

• Financial Review

6
Financial Highlights
5.6
4.9
EBITDAR Leisure Operating Income Leisure before
rents, depreciation and amortization
7
Operating Highlights
1 652
1 614
RevPAB Total like-for-like Village revenue, net
of tax and transportation costs, per available bed
8
Operating Highlights

• Customers France

9
Consolidated Revenue

• Analysis of 2006 revenue growth(in millions)

- 37
1,679
115
11
1,590
Volume
Currency
Price mix
2005
2006
10
A Sharp Increase in Average Price, in Line with
the Strategy

• BSI, resegmentation and comfort à la carte
• Issuing country mix, village mix, etc.

11
Occupancy Rates Rose in the 4-Trident Villages

• Hotel days sold and occupancy rates per comfort
  level

12
RevPAB Rose a Strong 9
RevPAB Total like-for-like Village revenue, net
of tax and transportation costs, per available bed
13
Village EBITDAR Leisure Activities
2005 EBITDAR - Leisure
200
2006
2005
(in millions)
Currency Volume Price mix Insurance Margin on
var. costs Currency Selling costs Operating
costs Other
9
1,346
Revenue (1)
1,288
(34)
823
Margin on var. costs
791
76
of revenue (2)
60.4
60.2
(19)
(32)
(171)
Fixed selling costs
(162)
(6)
(405)
Fixed operating costs
(395)
(7)
(39)
Overheads
(34)
(7)
(4)
208
EBITDAR - Leisure
200
208
2006 EBITDAR - Leisure
adjusted revenue (2)
15.4
15.4
(1) Revenue insurance payments (2) Adjusted for
insurance payments
14
EBITDAR/Operating Income - Leisure by Region and
Business
like-for-like revenue
13.8
13.8
13 .5
13.6
adjusted revenue
15
Statement of Income
16
Finance Cost - Net
2005
2006
IFRS excl. IAS 32/39
IFRS incl.IAS 32/39
IFRS incl.IAS 32/39
(in millions)
(22)
(21)
OCEANE
(15)
(18)
(18)
(12)
Interest expense
(1)
(1)
(4)
Other
Finance cost net before currency effect
(34)
(41)
(37)
Realized unrealized exchange gains losses
(4)
(4)
5
Finance cost - net
(32)
(38)
(45)
Average debt
(594)
(625)
(481)
7.12
7.02
5.72
Calculated cost of debt
5.72
5.76
5.72
Cash cost of debt
17
Statement of Income
18
Balance Sheet
19
Update on Capex and Disposals
20
Update on Property Assets Portfolio Holdings
Property assets, net book value
Assumptions
Including approximately 100 million in
asset-based refinancing
21
Brand Value
2004
2006
2002
In millions
22-23per share
Value of the Club Med brand
362
438
302

• The value of the brand has increased by 76
  million
• Improved brand positioning and awareness (brand
  strength)
• Potential for additional growth by country
• But with conservative assumptions
• Prudent DCF growth rates
• Potential sources of value excluded property
  value of the villas, possibly strong growth in
  Asia, etc.

Room to improve in the years to come
22
Cash Flow Statement
2006 IFRS Incl. IAS 32/39
2005 IFRS Excl. IAS 32/39
(in millions)
Cash flow
22
15
22
9
Change in working capital
Change in provisions
3
(2)
22
47
Net cash provided by operating activities
Capital expenditure
(151)
(114)
143
246
Disposals
39
154
Free cash flow
(10)
(4)
Impact of changes in exchange rates and other
29
150
Decrease in debt
23
Outlook for Winter 2007
24
Winter 2007 Capacity by Category and by Region
25
Winter 2007

• Winter 2007 bookings (vs. winter 2006)at 9
  December 2006

26
Strategic Review
27
I. A strategic movement whose drivers are more
valid than ever

• Market confirmed potential in targeted affluent
  segments worldwide
• -Satisfied customers
• -The brand a higher value asset
• -The villages a profitability model that
  improves with the move upmarket

II. The new Club Med will be ready at the end of
2008
-Complete the process of moving the village base
upmarket -Complete the process of enhancing GO
skills and talents -Complete the process of
shifting the customer base upmarket -Upgrade the
distribution model -Explore new high-potential
markets, e.g. in Southeast Asia -Implement the
property management strategy refinancing and
capturing value (Club Med villas)
to become the worldwide specialist in
all-inclusive, upmarket, friendly, multicultural
vacations
28
The Upmarket Strategy Announced in June 2004

• The market
• The village profitability model
• Revenue and margins increase with the level of
  village comfort
• Customers
• Are demanding greater comfort and more services
• Satisfaction rates are higher in the new 3 and
  4-trident villages
• The brand perceived as upscale territory

Before 2001 After 2001
- Strong, steady demand

- Volatile demand -
Commitment to reaching critical mass
- Market
polarization
VERTICAL INTEGRATION STRATEGY
NICHE STRATEGY
A major decision Shift from a volume to a
value-driven strategy
29
A strategic movement whose drivers are more
valid than ever
30
Outside France, the Market is Continuing to
Polarize Example Singapore
Consumer spending on market-sector vacation
services in Singapore since 1993
6
5
Top 4
4
Top 4-8
en milliards US corrigés de linflation
3
2
Top 12-20
Top 8-12
1
Top 20-90
0
A1993T1
A1993T3
A1994T1
A1994T3
A1995T1
A1995T3
A1996T1
A1996T3
A1997T1
A1997T3
A1998T1
A1998T3
A1999T1
A1999T3
A2000T1
A2000T3
A2001T1
A2001T3
A2002T1
A2002T3
A2003T1
A2003T3
A2004T2
A2004T4
A2005T2
A2005T4
A2006T2
TOP 4
TOP 4-8
TOP 8-12
TOP 12-20
TOP 20-90
(Source IPSOS)
31
Outside France, the Market is Continuing to
Polarize The Example of Brazil
Consumer spending on market-sector vacation
services in Brazilsince 1993
6
5
4
In billions of US, adjusted for inflation4
3
2
1
0
1999Q3
2008Q1
1993Q1
1993Q3
1994Q1
1994Q3
1995Q1
1995Q3
1996Q1
1996Q3
1997Q1
1997Q3
1998Q1
1998Q3
1999Q1
2000Q1
2000Q3
2001Q1
2001Q3
2002Q1
2002Q3
2003Q1
2003Q3
2004Q1
2004Q3
2005Q1
2005Q3
2005Q4
2006Q2
2006Q4
2007Q2
TOP4
TOP4-TOP8
TOP8-TOP12
TOP12-TOP20
TOP12-TOP20
(Source IPSOS)
32
Market a Large Number of Potential Customers To
Be Won in Key Countries

• Potential market estimated at 39 million people
  in Europe (Top 4-20) and the US (Top 30)
• Studies are underway in Asia

33
Customers Have Embraced the New Club Med Record
Satisfaction Rates in Winter and Summer 06 

• Over 8 winter seasons, 1998-2006
• Record number of very satisfied customers ()
• Improving satisfaction
• 4-trident villages consistently rated as the most
  satisfying
• Success of the new villages
• Peisey Vallandry, Kani, Les Boucaniers, Agadir
• Bar Snacking Included highly popular Bar
  satisfaction score up 15pts
• Over 9 summer seasons, 1997-2006
• Excellent results so far this summer
• Record percentage of delighted GMs
• Satisfaction is highest in the 4T villages
• Same trends in Intend to return and Value for
  money

34
The Brand Improving Awareness and Increasing
Value

• In France

A brand recognized as upmarket in France
Sources IPSOS 2006 image survey Base people
over 15 and in the upper socio-economic categories
35
The Brand Improving Awareness and Increasing
Value
In the United States, prompted awareness is
higher than the competition
Prompted awareness, Club Med vs. the competition
Source IPSOS July 2006, based on 917 respondents
in the Top 30
36
Financial model village profitability increases
with the move upmarket

• Validates the decision to transform the village
  base and to move it upmarket

REVPAB Total like-for-like Village revenue, net
of tax and transportation costs, per available
bed GOP/HD Gross operating profit per hotel day
37
I. A strategic movement whose drivers are more
valid than ever

• Market confirmed potential in targeted affluent
  segments worldwide
• -Satisfied customers
• -The brand a higher value asset
• -The villages a profitability model that
  improves with the move upmarket

II. The new Club Med will be ready at the end of
2008
-Complete the process of moving the village base
upmarket -Complete the process of enhancing GO
skills and talents -Complete the process of
shifting the customer base upmarket -Upgrade the
distribution model -Explore new high-potential
markets, e.g. in Southeast Asia -Implement the
property management strategy refinancing and
capturing value (Club Med villas)
to become the worldwide specialist in
all-inclusive, upmarket, friendly, multicultural
vacations
38

The new Club Med business model will be ready at
the end of 2008
39
Villages the Move Upmarket Needs to be Completed

• Profound shift in the village base

• Massive upgrades in 2007

Villages
Y
When
Cancun Yucatan
3
-gt
4
W07
La Caravelle
3
-gt
4
W07
La Plagne 2100
3
-gt
4
W07
Villars
3
-gt
4
W07
Opio in Provence
3
-gt
4
S07
Ixtapa Pacific
3
-gt
4
W08
Les Deux Alpes
2
-gt
3
W08
Kemer
3
-gt
4
E08
05/05/08
Pompadour
2
-gt
3
H08
09/02/08
After 2008, a majority of villages will be 4T
40
Complete the Process of Enhancing GO Skills and
Talent

• New business model gt new skills to acquire
  (e.g. hotel services, marketing)
• HR managerial teams committed and aligned with
  our strategy
• Well-understood strategic vision 91 of village,
  HQ and office managers say that they understand
  Club Meds strategic vision (vs. 87 in 2005)
• Confident managers 98 of managers say they are
  confident in Club Meds future
• Proud managers 91 of managers say they are
  proud to work for Club Med
• Creation of a corporate university the School
  Village in Vittel 1,100 GOs trained in November
  2006
• (Source September 2006 survey of 300 managers
  by the Occurrence polling firm)

Move upmarket gt new products, need to upgrade
service levels New customer expectations
Need to reinvent GO practices, attitudes and
identity Multicultural teams
A profound transformation that needs to be
supported
41
The Customer Base Needs Further Adjustments

• France gt a more precise core target segment the
  Top 12

2006
2003
2005
480 171

Individual customers, France Number of Top 12
people (000s)

443 305
451 270
69
Percentage of Top 12 people
35
60
1,189
Average spend per GM France ()
1,010
1,097
Sharp growth in Top 12 numbers along with an
increase in average spend
42
The Customer Base Needs Further Adjustments

• In the United States
• A challenge of clarifying the brand identity
• A challenge of transitioning the customer base to
  families
• In our Top 30 target segment, 63.2 of families
  are interested in a  refined, generous and à la
  carte  Club Med, with a strong preference for
  the all-inclusive Bar Snacking and Club Med
  Baby Welcome services.

Prompted awareness by target segment
88
95
87
89
Total
Single
Couple
Family (at least one child)
US Top 30 survey Source IPSOS - USA, May 2006 -
Based on 917 respondents
43

Repositioning the Americas
Implementing the recovery plan

• The potential target segment has been defined and
  quantified upmarket families
• - Top-30 segment
• - 63 of families and 76 of prospects
• - Potentially 28 million people
• Upgrading the village base
• - Crested Butte sold
• - Boucanniers and Caravelle fully renovated
• - Cancun Yucatan 4T upmarket families opened
• - Ixtapa renovated and upgraded to 4T
• Distribution enhanced relations with agencies
  specialized in premium vacations and a boost from
  online sales

To drive sustainable, profitable growth in the
Americas

44
Upgrading the Marketing Model to Optimize
Profitability

• Distribution increasing direct sales

An assertive sales and marketing strategy to
increase direct sales, especially in
higher-margin online channels
Increase margins by reducing the proportion of
indirect commissions Make the Internet the
primary CRM platform Develop the virtual call
center project
Reduce selling costs Generate value-added
sales Own the direct sales relationship with our
customers
45
Towards a More Efficient Distribution Model

• The virtual call center for shared customer
  relationship management
• Shared telephone system
• Intelligent automated call router
• Real-time sales agent availability management
  system for incoming call routing

Club Med European Call Center
Club Med Voyages Agencies in France
Club Med Voyages Agencies in Europe
46
The Internet a New Communication and Sales
Channel

• In six years, the Internet has become an
  integrated distribution channel, spearheading
  Club Meds move upmarket

47
Distribution Model a New Website to Leverage the
Internets Strong Global Marketing Potential in
2007

• An integrated Internet strategy (brand, product
  and customer, sales channel and medium)
• A web presence in 24 countries (including 12
  e-commerce country sites so far)
• More than 25 million visits in 2006
• Objectives met
• 2005 business volume 74 million
• 2006 business volume 100 million (up 35) ?
  2006 objective met

2007 objective 140 millionup 40
48
Customers Strong Growth Potential in Southeast
Asia

• Club Med is expanding in Southeast Asia
• - 57,000 GMs before the 2004 tsunami
• - Nearly 20,000 new GMs in Asia in 2006
• - Revenue up 48 in two years
• BSI introduced in the region on 4 January
• Strong potential for Chinese customers China,
  Hong-Kong, Singapore, Taiwan

2008 target more than 100,000 customers in
Southeast Asia
49

Conclusion
2006-2007 two years of implementing the latest
strategic actions

• Completely renovated villages Cancun, Opio,
  Ixtapa, La Plagne
• New openings Albion, Buzios, Taba
• Bar Snacking Included integrated into the
  offering everywhere, all the time
• Room comfort à la carte
• Revamped Trident system
• New website
• Enhanced GO talent and skills
• Creation of a customer loyalty section on the
  website
• The virtual call center
• Creation of next-generation Club Med Agencies

50

Conclusion

• For the new Club Med at the end of 2008
• The worldwide specialist in all-inclusive,
  upmarket, friendly, multicultural vacations.
• A Club Med enjoying sustainable, profitable growth

51
Appendices

• Business
• Number of customers by issuing county
• Revenue by region and business
• Like-for-like revenue by region and business
• Capacity and occupancy by region
• Results
• EBITDAR leisure by region
• Operating income leisure, Jet tours and other
  businesses
• Capital expenditure and investments
• By category
• EBITDA to EBITDAR
• Synergies with Accor
• Brand value

52
Number of Customers by Issuing Country
(In GM 000s)
2002
2003
2004
2005
2006
France
656
613
581
582
568
Belgium
108
104
101
100
100
Italy
87
86
79
76
68
Switzerland
41
35
34
32
29
United Kingdom
32
29
27
28
27
Netherlands
36
33
32
27
24
Israel
24
17
17
20
23
Germany
40
34
28
24
21
Turkey
14
14
13
11
10
Russia
7
6
6
6
8
South Africa
6
6
6
5
7
Spain
7
2
2
5
4
Greece
5
7
7
5
4
Austria
8
3
3
3
2
Other
20
14
14
15
16
Total Europe
1,090
1,003
950
939
911
United States-Canada
142
138
150
137
122
Brazil
66
81
79
79
64
Mexico
14
13
23
25
20
Other
11
12
16
18
15
Total Americas
233
244
268
259
221
Japan
99
95
102
86
81
Southeast Asia
58
47
34
54
74
Australia
26
21
22
17
21
South Korea
24
16
19
12
17
Other
4
3
0
3
3
Total Asia
212
182
203
172
196
TOTAL CLUB MED
1,534
1,429
1,421
1,370
1,328
53
Revenue by Region and Business
(in millions)
Other businesses 3.4 vs. 3.4 en 05
Tour operating 17.8 vs. 18.0 in 05
France 36.5 vs. 36.5 in 05
56
300
613
Asia 8.7 vs. 7.3 in 05
145
196
369
Americas 11.6 vs. 12.9 in 05
Rest of Europe 22.0 vs. 21.9 in 05
Total 2006 1,679 million
54
Like-for-like Revenue by Region and Business
55
Capacity and Occupancy by Region
56
EBITDAR - Leisure in Europe
151
2005 EBITDAR - Leisure
2006
2005
0
Currency Volume Price mix Insurance Margin on
variable costs Currency Selling costs Operating
costs Overheads
(in millions)
(39)
985
Revenue (1)
944
69
568
Margin on var. costs
543
Revenue (2)
57.7
57.5
(6)
24
(115)
Fixed selling costs
(108)
1
(270)
Fixed operating costs
(266)
(7)
(20)
Overheads
(19)
(4)
EBITDAR - Leisure
164
151
(1)
(1) Revenue insurance payments (2) Adjusted for
insurance payments
164
2006 EBITDAR - Leisure
57
Analysis of EBITDAR - Leisure in Asia
2005 EBITDAR - Leisure
27
2005
2006
(in millions)
Currency Volume Price mix Insurance Margin on
variable costs Currency Selling costs Operating
costs Overheads
0
Revenue (1)
142
146
18
Margin on var. costs
94
89
0
Revenue (2)
66.2
61.0
(24)
(22)
Fixed selling costs
(22)
(6)
(41)
Fixed operating costs
(40)
0
(5)
Overheads
(6)
(0)
(1)
EBITDAR - Leisure
21
27
1
(1) Revenue insurance payments (2) Adjusted for
insurance payments
21
2006 EBITDAR - Leisure
58
Analysis of EBITDAR - Leisure in the Americas
22
2005 EBITDAR - Leisure
2005
2006
(in millions)
Currency Volume Price mix Insurance Margin on
variable costs Currency Selling costs Operating
costs Overheads
9
213
Revenue (1)
200
(13)
166
Margin on var. costs
152
7
revenue (2)
77.9
76.0
11
(35)
Fixed selling costs
(32)
14
(7)
(95)
Fixed operating costs
(89)
(13)
(9)
(0)
Overheads
EBITDAR - Leisure
23
22
(2)
(4)
(1) Revenue insurance payments (2) Adjusted for
insurance payments
23
2006 EBITDAR - Leisure
59
Operating Income - LeisureJet tours
2005
2006
(in millions)
Revenue
295
303
Semi-net margin
38.7
36.9
13
12
revenue
Other costs
(34.4)
(33.8)
Operating income - Leisure
4.3
3.1
60
Operating Income - Leisure Jet tours and the
other businesses
(in millions)
2005
2006
Operating income - Leisure
IFRS
IFRS
Jet tours Club Med Gym Club Med World
4.3
3.1
2.5
4.4
(3.2)
(2.0)
Total
3.6
5.5
61
Capital Expenditure and Investments
2004
2005
2006
(in millions)
Capital expenditure and investments - Property,
plant and equipment - Intangible assets -
Financial assets
(101)
(130)
(87)
(9)
(9)
(8)
(4)
(12)
(5)
Total
(100)
(114)
(151)
Disposals - Deconsolidation - Property sale and
leaseback - Other
60
245
143
37
20
70
164
63
0
23
61
10
Net of subsidies/tax exemptions/acquired cash
62
EBITDA/EBITDAR
2005
2006
(in millions)
24
25
Operating income Leisure
63
70
Depreciation and amortization
3
2
Provisions


EBITDA
90
97
5.4
6.1
of revenue
Rents
142
125
EBITDAR
232
222
13.8
13.8
of revenue
63
Financial impact of synergies
Actual
2005
Actual
2006
In millions
Accor
Club Med
Accor
Club Med
Increased revenue
2.9
3.6
3.4
8.1
Optimized purchasing
3.1
1.8
8.3
4.6
Sharing capabilities and expertise
0.2
0.6
0.3
1.4
6.2
6.0
12.1
14.1
Total synergies
12.2
26.2
Initial annual targets
(December 2004)
17
33
64
A Powerful Synergies Dynamic

• Synergies already delivering real-world customer
  benefits in 2006
• New fitness room in Novotel units, thanks to Club
  Med Gyms expertise
• Customer retention thanks to the integration of
  Club Med into Accor loyalty programs (AFG
  Sofitel since last summer )
• Accor Chèques compliments vouchers redeemed in
  Club Med and Jet tours networks
• Reciprocal brand promotion
• Links between the two Groups websites
• Accor hotels listed in Jet tours brochures
• Innovative, one-of-kind combined corporate and
  incentive offerings
• Big Events and Business Relax solutions
• UK Gift Card
• Launch of a multi-brand gift card, with Club Med
  as the only travel and tourism affiliate
• Italy
• Launch of a joint offering in Polynesia with
  one week at Club Med and one week at Sofitel

65
Methodology and Changes from 2004 Brand Valuation

• Higher growth potential
• Brand strength score has increased (global
  weighed average) 63 (2004 59)/ using the
  royalty relief method
• Enterprise business value computed through DCF
  
• Conservative assumptions taken
• Club Med business opportunities not included
• Villas opportunities, Southeast Asia growth
  potential
• Conservative criteria for DCF model
• Group Beta of 1.00
• Terminal Growth Rate (2012 onwards) of 2.0

Brand Value (by country) S NPV of revenue x
royalty rate x (1- tax rate) - Royalty
rate is calculated using a 0-3 range, based on
brand strength rating by country - NPV for year
n calculated using discount factor of
1/(1WACC)n - WACC estimated using CAPM with an
additional adjustment for BrandBeta TM
(calculated based on brand strength by country)