During the past several years, China’s emerging ski industry has begun to generate considerable excitement in the hotel and resort market. Oft-cited, and even more oft-changing, statistics report millions of Chinese consumers taking to the slopes every winter in pursuit of skiing and snowboarding. The potential windfall for “discovering” China’s next great domestic consumer trend is a very tempting reason for enthusiasm about the rise of skiing. The seemingly unlimited potential for China’s ski industry has implications for a broad range of underlying business opportunities in equipment and apparel retail, travel, hotels, training programs and vacation home sales.
While the volume of annual skier visits has exhibited strong growth over the past several years in China, there still are several reasons to remain level-headed about the potential for big profits in the near future.
In summer 2009, Horwath HTL conducted a primary research survey of nearly 200 Chinese skiers. This survey specifically targeted ski clubs and related outdoor interest groups, which were identified by ski resort operators to constitute a key source market for skier visits. The group of surveyed skiers generally was experienced and enthusiastic about the sport: 43 percent had three to five years of experience and 21 percent had more than five years of experience; more thanthree quarters of respondents skied 10 times or more each ski season. Representing the segment of relatively dedicated skiers, this group is among the most likely to visit to new ski areas.
In selecting a ski destination, survey respondent generally placed very little importance on the quality of hotel accommodations or food-and-beverage facilities. Moreover, 57 percent of respondents would only be prepared to pay RMB 200-300 (US$29.29-US$43.94) per night for a “5-star hotel” located at the base of the ski slope; no respondent was willing to pay more than RMB 1,000 (US$146.54) for such a hotel.
The data help to indicate that even China’s relatively experienced skiers generally are unaccustomed to paying high prices for international-quality hotels at ski areas because they do not yet exist in China. In fact, many ski area operators reported that because of budgetary constraints, many skiers choose “homestay” accommodation in the nearby village rather than pay a few hundred RMB per night in the hotel. While skiing is viewed as trendy and cool among urban Chinese, it is not a sport reserved for the elite. Most people who just want to try skiing in China, and many of those experienced skiers discussed earlier, come to a ski area primarily for the activity itself and demonstrate little regard for supporting services and amenities. Most skiers in China are uninformed about what constitutes a top quality ski experience elsewhere in the world. Therefore, they cannot yet be expected to seek it out in China.
The greatest obstacle
The greatest obstacle to the ski industry’s next leap in China is the need for high-quality products that exemplify the standard of experience that has become the norm in international ski destinations in Europe and North America. In any part of the world, investment in a ski resort with a broad array of well designed and maintained ski runs with a charming, full-service “ski village” capable of keeping any snow junkie well fed, entertained, and rested for a week or more is a major undertaking.
In China though, the volume of skiers that any individual ski area can expect to receive in a season remains small. On the busiest days, even the largest, best-known ski areas in China receive only a small fraction of their counterparts in Europe and North America during peak season periods. On top of that, daily per capita expenditure is typically within RMB 200-400 (US$29.29-US$58.59). Therefore, it is very difficult to justify the investment needed to bring China’s ski industry to the next stage by introducing goo- quality products that can encourage the cycle of consumption.
Even finding a suitable location for such a ski resort in China is a problem. Many of China’s mountainous regions, some of which hold snow for many months of the year, are poorly linked to major population centers. Most of China’s existing ski areas are thus located in coastal northeastern China where temperatures are cold enough to sustain man-made snow, but don’t actually receive that much natural snowfall each season. Established ski areas in this region simply can’t offer that much terrain because the vertical drop is too small to make trails more than a couple of kilometers long. This limitation in trail volume also means that the destinations’ appeal for discriminating skiers willing to spend more on hotels, dining, entertainment and other ancillary services also will remain limited.
Ironically, many existing ski resorts in China struggle because they are too focused on skiing. Ski season revenue in China commonly is insufficient to cover the investment and operating costs, but these ski resorts typically have no plan for revenue generation in the non-ski season. In some of China’s best known ski areas, owners have developed little else for people to do apart from ski in winter and often nothing at all to do during the summer and shoulder seasons.
With so much pressure riding on the ski season to bring in enough money for the year combined with the difficulty in identifying a mountainous destination that is accessible and appealing for outdoor recreation in all seasons, there is little financial incentive to create a high-quality ski experience for the Chinese market. Until the market is widely educated about this type of skiing experience, however, consumers likely will continue to drag their skis to the same mediocre local slopes. For those skiers with enough time, spending money and a passport, travel abroad will remain a preferable option rather than waiting indefinitely for China’s ski industry to catch up.
Since joining Horwath HTL in 2007, Michael Joyce has worked on a range of major hotel and resort development projects throughout China. Michael is passionate about outdoor recreation and its future development potential in China. Michael is a fluent speaker and reader of Mandarin Chinese.
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