After harsh winter, business owners planning to bounce back stronger
Despite being hit hard by the coronavirus outbreak, China’s ski industry remains bullish about its long-term future as resort owners predict a bounce-back effect buffered by more robust business models.
With their properties shut down and consumers staying put during the crisis, China’s fledgling ski industry has dealt with an unprecedented drop in revenues over the past winter, when major infrastructure upgrades and ideal weather conditions were expected to bring the best season ever.
Despite consistent snowfall lasting into early spring, the ski area on the mountains surrounding the Chongli district of Zhangjiakou in Hebei province has seen its well-groomed slopes and perfect powder snow wasted over the past two months, with chair lifts swaying silently in the breeze and once-bustling resorts still and empty.
The bleak scenes at the emerging ski town, which is now linked to Beijing by a new 50-minute, high-speed rail line, are a microcosm of the entire industry’s predicament.
Around 40 percent of businesses operating in the country’s winter sports sector have seen their revenues more than halved this season compared to the previous winter, while the same proportion are operating on cash flows that will last only two more months, according to an industry analysis published by the Beijing Olympic City Development Association last Thursday.
Despite such grim figures, some ski operators can still see a silver lining.
“As long as we can survive through the challenge, which I believe we can, we will resurge starting from next winter, with a rebound in consumption a very likely scenario,” Luo Li, founder and chairman of Wanlong Paradise Resort in Chongli, said during an online forum last week.
“A public health crisis like this pandemic will inspire people to embrace a more active lifestyle through sports participation afterwards, which I believe is a boon for the outdoor industry as a whole.”
Executives from nine major ski resorts across the country agreed during the video conference that even the “coldest” winter the industry has ever faced will thaw into spring sooner or later.
“The damage of this season was huge as the virus abruptly cut short the entire operation window,” said Li Jianhong, president of the Silk Road International Resort in Urumqi, Xinjiang Uygur autonomous region.
“Yet it might have a bright side for the long term because all the resorts are now forced to come up with new ideas to diversify their business models, which is critical for sustainable development.”
Although permitted to reopen in early March since being shut down in late January, all the major resorts have struggled to attract visitors due to the strict virus prevention measures and quarantine policies which have restricted cross-city travel.
Since accepting pre-bookings in late February, Wanlong’s daily visitor numbers amounted to just around 200－one-twentieth of its peak volume the previous season, according to Luo.
Such slim pickings have done little to alleviate losses incurred through operational costs at the property, which continued to make snow and groom courses during the business standstill.
Just across the ridge from Wanlong, the Genting Resort Secret Garden, which will co-host some snow events at the 2022 Beijing Winter Olympics, has also had to absorb a painful financial hit, losing an estimated 180 million yuan ($25 million) this season, according to its senior vice-president, Shu Wen.
Adhering to government regulations, the Genting resort reopened on Feb 28 following a month-long shutdown, but visitor numbers have been minimal with the majority of its core market unable to travel from Beijing due to quarantine measures.
Genting, though, has maintained a skeleton operation to accommodate six national ski and snowboard teams for behind-closed-doors winter training programs.
Lessons learned from operating on tighter budgets and exploring new revenue streams should ultimately be beneficial for resorts, according to industry observers.
“Streamlining management and lowering unnecessary operational costs while seeking new projects for all-season business have now become the ideal model for all resorts to thrive in the long run,” said Wu Bin, president of Beijing-based industry analyst Carving Ski.
Offering the likes of mountain biking, hiking and river rafting during the offseason is common practice at established destinations in Europe and North America, however it’s still relatively uncharted territory for the Chinese ski industry.
Huaibei International Ski Resort in north Beijing’s Huairou district has begun exploring this market, developing a river-rafting trip which takes tourists on an exciting 3.86-kilometer ride through a forested valley.
Huabei’s president, Chen Huanzhang, said the river run attracted nearly 100,000 visitors last summer but he remains cautious about the viability of offseason attractions.
“I don’t think the idea to go for yearlong operation suits everyone’s situation in China,” said Chen.
“Outdoor sports participation is far from a mainstream pastime at the moment in our country. Any further investment made in this area at ski resorts without having preferential conditions, such as proximity to urban regions and ideal natural tourism resources, will only add to the already heavy financial burden of operators.”