Xinjiang is mostly desert, where investors prospect for minerals and visitors follow well-worn Silk Road itineraries. Thomas Ching aims to change that with – of all things – a ski resort.
Skeptics scoff for good reason. China’s mediocre eastern slopes are scarred with earlier promises that dashed expectations. Serious skiers still head for the fine pistes of Europe or North America. Ching, a two-decade veteran of trading and developing in China and an avid skier himself, concedes that the idea is somewhat incredulous.
“Clearly, anybody who’s been to China and indeed anybody who hasn’t will say we’ve heard this a thousand and one times. There will be skepticism, we acknowledge that,” he says. “We have to deliver a quality experience, no matter how narrow or broad the product is, which means delivering a first-class quality product equal to Vail or Aspen.”
By last October, Ching had raised enough capital to stake out 20 square kilometers of mountains in Xinjiang’s Tian Shan with peaks ranging between 2,750 and 3,150 meters offering skiers a vertical drop of more than 1,100 meters. “We have a site that is unparalleled in China and, I would argue, in the entire Asian region. We have very clear days and an average winter temperature of minus 10, which is great for skiing,” Ching says.
The mountains helped win over recruits such as 49-year-old Billy Mattison, who in June joined Ching at the headquarters of his company, PingTian Resorts, in the capital Urumqi to direct mountain operations. “Thomas flew me out in January. I knew immediately this was a great place. The mountain rivals any in Colorado, that’s for sure. The way you come out of a desert into the foothills and then up into pine forests really reminds me of Colorado,” says Mattison.
The golden goose
Colorado’s terrain has seen a thriving leisure industry develop over the last three decades. Ching thinks that could happen in Xinjiang. Earlier this year, he took senior officials from Xinjiang to Colorado to show them the jobs and tax revenuens that could come from saving the golden goose of the environment from death by rash development.
It is a big change because Chinese officials have been imbued with a growth-at-all-costs mindset over the last few decades. Long-term intangibles such as quality of life and the environment are often trumped by immediate deals promising quick profits and fast results to bolster promotion.
“Having your idea ripped off is quite common,” says 30-year-old Augustus Greaves, who was analyzing turnaround prospects in China for Intrawest, a Canadian resorts developer. “Somebody will open a resort next to yours, he’ll have his buddy in government help him out, he’ll be taking advantage of all the infrastructure you’ve helped put in. Competition is a very, very big worry if you’re going greenfield.”
Ching, drawing on this two decades of dealing in China, is not overly concerned. “There’s the standard Chinese political-regulatory risk, but we think we’ve mitigated that, we’ve spent a lot of time on that,” he says.
Green credentials
Having preached to officials about the environment, Ching now promises practice by setting PingTian up as a benchmark for green development. He is looking at ways to harness wind and solar power to meet some of PingTian’s electricity needs, while banking on carbon credits to offset pollution caused by power bought from the grid and guests jetting in from afar.
“We want to use recycled materials as much as possible. We’re looking at cutting-edge water treatment plants that do not use vast amounts of chemicals. We’re very tree friendly, we’d like to plant more than one for every tree we cut down,” he says.
Bringing this green-tinged vision to reality are Colorado firms SE Group, charged with planning, and BSA Architects, briefed to draw on local esthetics. “The use of these firms speaks well for the project and if they do their usual work the resort will be world class,” says Charles Goeldner, a 75-year-old professor emeritus at the University of Colorado specializing in ski industry marketing.
There will be a dozen chair lifts, snow-making equipment, at least two villages and, later, residential developments. “Once we get the lifts going up to the top of the mountain and get those bowls open, it will be attractive to people all over the world,” says Mattison. “We’ve talked about setting up yurt-to-yurt skiing, which could trans-late into hiking, mountain biking and horseback riding in the summer.”
The challenge
This November, Mattison will be watching over guests when PingTian’s first phase is due to open. Five years and US$300 million later, the final phase should be ready, by which time there will be three golf courses, an equestrian center, hotels and chalets, villas and apartments, and conference facilities. By then, Ching is predicting the number of days skied by guests will total 500,000 per year. It is nothing if not ambitious.
“Frankly, the vision is far easier than its implementation. The sophisticated resorts in Europe and North America have not come to maturity in less than a decade, and that’s if you’re throwing money at it,” says Ralf Garrison, president of the Advisory Group, a mountain leisure consultancy in Denver and a former vice-president for marketing at Crested Butte Mountain Resort.
Ching concedes the ride may not be smooth. “The biggest risk in this is that things can take longer than we’d expected. If you strip out the technical things, the schedules, the biggest challenge is always going to be one of mindset. The quality of the product has to go from myself to everybody in the organization. It is more difficult than it appears. It affects the service, the way the company is run.”
Greaves, the former ski resort analyst, agrees. “Service delivery is the major issue. Can you get the right people? Can you keep them? You have to really tantalize them. The other angle is training up local people to deliver the service, people who have never stayed in a hotel. It can be done, but it’s a challenge.”
Promising signs
Clearly, PingTian is going to bring jobs that many locals could find attractive. However, it remains to be seen whether there are enough people who have the spark Ching wants and can deliver good service and speak foreign languages. Moreover, competition for labor is heating up.
Shangri-La Hotels and Resorts will open a Traders Hotel in Urumqi next year. Sheraton and Kempinski are already there. Suntime, a local conglomerate, is apparently planning a mountain resort. Other investors could jump on the bandwagon. Ching is unconcerned. “The other local ski areas lack the vertical drop, it’s more of an amusement. I suspect they may be taking a more realestate-centric approach.”
Staff and service may well make or break PingTian because Ching is targeting a sophisticated, influential niche of cosmopolitan Chinese and foreigners who tend to fill the offices and bars of Beijing, Shanghai and Hong Kong.
Ching believes that if he can win these two groups over, a huge market will begin to open among less worldly but nevertheless well-off Chinese looking for a new thrill. Without them, hitting the ski-days target could be tough.
There are already promising signs though. While assessing dreary ski resorts on the mainland for a makeover, Greaves could see skiing was booming, albeit at mountains near large, prosperous cities like Beijing and Harbin. “Skiing in China is growing around 30% a year, it’s an aspirational sport.”
Aspirational factor
Skiing’s aspirational factor should not be overlooked, especially in East Asia where fast-developing societies have become incredibly status-conscious almost overnight. “To the extent that mountain leisure sport is a status symbol, then folks will allocate relatively more of their available time and money because it gets them higher on the social scale. Socialization is a very powerful driver,” says Garrison.
A fast-growing market with plenty of cash, which has been fuelling residential and equity market bubbles, could well prime a boom in mountain property. “When a chair lift goes up, the value of the surrounding land should increase exponentially. The chances are the ultimate economics will be driven by the real estate than mountain operations themselves,” says Garrison.
There is, however, one barrier to rash development and even tourism: distance. Urumqi is a four-and-a-half-hour flight from Beijing and about six hours non-stop from Hong Kong.
“It’s quite something to get people to fly all the way across the country. Getting the volume will be a challenge,” says Greaves. “However, if you brand it right, getting to the resort can be part of the experience. If you can do that, then access falls down the totem pole of problems you may have.”
Ching thinks distance will not be an issue as the buzz spreads. “Some of the first reactions some people came up with was that it was so far away. A lot of that changes when people first come out here. Urumqi is an interesting and intriguing location in itself. When you add the fact we are building something that is compelling, distance is not a significant factor in the end.”
Destination guests
In fact, distance might be an advantage. PingTian’s remoteness from large cities inevitably means most guests will stay for at least a few days. “Destination guests are more preferable, they make a far more significant contribution because they are likely to stay longer, say a week,” says Garrison.
In which case PingTian’s location, an hour from Urumqi’s international airport, may be hard to beat in the long run because, with rising wealth, more people can afford to take longer holidays. Europeans or North Americans pack airliners for six-to-12-hour trips to take one- or two-week holidays. That puts Urumqi well within range of Singapore, India, Dubai, Europe and even Chicago. “At first flush, it might seem absurd, but the more you look at it, you can see there might be an opportunity as much as a risk,” says Garrison.
Those days though lie somewhere off in the future. Right now, Ching is flat out building a corporation and keeping his excitement in check. “We haven’t skied yet, we’ve walked up and down it, but nobody’s skied it yet.”
|
|
