Club Méditerranée announces measures in response to the crisis provoked by the September 11 terrorist attacks

In an economic environment which had already been difficult for all players of the tourist industry for several months, compounded by the recent dramatic events that have taken place in the US, Club Méditerranée has decided to implement an action plan aiming to take account of the impact of these events on its operating conditions.

This plan is a coherent part of the Transformation Plan, which was put into action at the beginning of the year and will be accelerated to enable the group to recover once the current critical economic period has passed.

PLAN OF ACTION

Since September 12, Club Méditerranée has taken a series of conservative measures including various measures to reduce overheads and the freezing of half of planned capital expenditures for 2002 (from 200 million to approximately 100 million Euros) without putting either the quality of its product or its medium term village development policy into question.

Today, in view of the overall reduction in bookings made in recent weeks, Club Méditerranée has decided to adjust temporarily the number of villages open for the 2001-2002 Winter season.

The group has therefore decided to implement the following measures, concerning fifteen villages in about 10 countries:

Temporary closure for the Winter season (or for the whole year) of villages (or villas) where booking levels are judged to be insufficient : Huatulco, Playa Blanca and Sonora Bay in Mexico (closing for the whole year) ; St. Lucia in the Caribbean, Assinie on the Ivory Coast, Cherating Beach in Malaysia, Mare Nostrum in Greece, Colombus in the Bahamas, Coral Beach in Israel ; Amoun (villa) in Egypt ; Tenerife (in the Canaries) ;

Temporary closure of a village where significant renovation work is planned (Djerba la Douce in Tunisia) or definitive closure of villages coming to the end of their lease (Leysin in Switzerland) or of operations (sale of Byron Bay in Australia);

Furthermore, provisional closure of a small number of villages (about 4/5) where the outlook for occupancy could generate significant losses. The list of these villages is being studied and will be according to booking levels in the weeks to come.

These combined measures will lead to a probable reduction of worldwide capacity of about -15% compared to that of Winter 2001 and of about -20% for non-ski villages in Europe, whereas capacity is up 10% for ski villages.

Headquarters and offices in countries are subject to a reorganization study in order to reduce costs and to improve the process of accelerating the implementation of the Transformation Plan.

In order to implement these measures, Club Méditerranée is considering to 70 million Euros of provisions, incorporating the cost of measures announced today (particularly fixed costs of villages closed during winter 2002, amounting to approximately 20 million Euros) and a provisional estimate of the impact these measures and plans currently being studied, may have.

These measures will be financed in particular by the sale of assets, which have already been made or are in progress, and will have no impact on the Group's level of debt which should stand at the same level on October 31, 2001 as that of the previous year.

Another key aim of this action plan is to reduce Club Méditerranée's fixed costs, while maintaining the quality of the Club Med product, as well as to safeguard the strategy and future growth of Club Méditerranée.

In this respect and to demonstrate this will to bounce back, Club Méditerranée will focus its means on its activities (sport, entertainment) in villages remaining open, particularly its 30 ski villages and continue to implement a dynamic and targeted marketing policy, through:

A European advertising campaign focusing mainly on the Snow product is currently in progress ; as of next January it will be replaced by a new worldwide campaign;

The opening of two new Neige 3 Trident villages in Serre-Chevalier (France) and Cervinia (Italy) ;

The signing of an agreement regarding the opening of a new 3 Trident village in la Palmyre, near Royan ;

Advanced negotiations for an agreement regarding the planned opening of a 3 Trident village in summer 2002 in Calabre (Italy) ;

The opening of the 2nd Club Med World in Montreal on October 27.

These initiatives are complemented by new actions taken in public relations and promotional activities.

ORGANIZATION

To implement this plan of action, Club Méditerranée is reorganizing itself in a more operational way, by tightening its management.

In this context, Philippe Bourguignon, Chairman of the Executive Board , appoints Henri Giscard d'Estaing, previously Deputy Managing Director and member of the Executive Board, as Managing Director in charge of all operating units and operational support. Philippe Bourguignon will take direct charge of Finance and Marketing. He has also created a new management team for strategic alliances and strategy, for which he is responsible.

OUTLOOK

At the end of August, operating profits from village activities were similar to the good levels seen last year, despite the slowdown seen in North America and, to a lesser extent, in Asia, while the cost of developing new activities and the relaunch of Jet Tours continued to weigh on results. The events of September 11 have had a significant effect on the activities of Club Méditerranée in all of its geographic zones and will have a negative financial impact currently estimated at around 25 million Euros for the last 2 months of the financial year. As a result, Group operating income for financial year 2001 is likely to be between 45 and 50 million Euros.

As for Winter 2002, after a promising start, reservations saw a brutal slowdown, extending over a period of three weeks to a lag of 50% against those of last year. They now stand at a cumulative 16% behind those of last year at the same date.

In the current economic environment, it is still too early to make any kind of forecast.

Nevertheless, in the context of the scenario based on an assumed 15% reduction in activities, measures announced today should enable Club Méditerranée to achieve an operating result close to flat for Winter 2002.

Commenting on these measures, Philippe Bourguignon, Chairman of the Executive Board , said:

" The aim of decisions announced today is to react as quickly as possible to the consequences of the crisis in activity whilst retaining our strategy and our capacity for future growth.

Once this crisis is over, Club Méditerranée should be able to capitalize upon its assets in order to better rebound : the strength of its global brand and product which will enable it to continue to grow market share in its strategic markets ; a very healthy financial position and retained cash reserves ; a tightened organization focused on the company's strategic criteria.

And above all this winter, by concentrating its means on its 80 villages remaining open (30 villages in the mountains and the rest in the sun) in almost 30 countries, from North America to Asia, via Europe and by continuing to implement a dynamic marketing and commercial policy, Club Med will be, more than ever, " RENEW ".