VIRUS CHILL BITES ON SLOPES

With businesses stifled by the novel coronavirus outbreak, China's fledgling ski industry is relying on a joint effort from investors and government as it struggles to pull through its "coldest" winter.

The recent Spring Festival break－usually peak season for skiing－was hit particularly hard by the COVID-19 epidemic, with resorts closed, events canceled or postponed and consumers grounded to contain the risk of infection. The cumulative effect has posed an unprecedented challenge to businesses that have been put under huge financial pressure.

Since the beginning of the holiday on Jan 24, over 95 percent of the country's 770 ski resorts have been temporarily closed, cutting the estimated number of consumer visits for the whole 2019-20 season to about 11 million－a year-on-year drop of 47 percent, according to the China Ski Industry White Paper (2019) published on Tuesday by industry analyst Carving Ski.

The report also estimated that the sector would bear total losses of up to 8 billion yuan ($1.14 billion) due to sharp declines in ticket sales, equipment rental, training and accommodation for almost half of the season (December to February) while continuing to incur heavy costs in wages, facility maintenance and utilities.

With winter sports participation gaining momentum in China leading up to the 2022 Winter Olympics, the epidemic has caught industry stakeholders off guard at what was supposed to be a golden time for growth, said Wu Bin, a vice-chairman of the Beijing Ski Association.

"The outbreak of the virus hit everyone involved in the business as well as skiing enthusiasts with a head-on blow," said Wu, who is also president of Beijing-based consultancy Carving Ski.

"The negative impact of the business shutdown during the holiday break, which usually comes with a consumption peak, is catastrophic, especially for those new resorts counting on the first couple of seasons of operation to survive."

Most of China's ski resorts count on winter revenues to cover operational costs and repay bank loans for the rest of the year. This year balancing the books will be difficult even for the market's strongest players.

As one of China's oldest and biggest skiing destinations, the Wanlong Paradise Resort in Hebei province has developed multiple business modes to maintain yearlong operations. Yet winter income still contributes a whopping 90 percent of its annual revenue, according to its founder and chairman, Luo Li.

"Being forced to close at the height of the season hit us the hardest," said Luo.

"Our revenue stream was cut abruptly just on the momentum of a strong increase."

Located in the Chongli district of Zhangjiakou, Beijing's co-host city for the 2022 Games in Hebei, Wanlong closed on Jan 27 along with another six major resorts in the region, as required by the local government.

The popular venue, which boasts 32 ski trails spanning an area of 30 square kilometers, had received 30 percent more visitors than the same period last season since opening to the public in November.

Similar increases were also reported at other major resorts in the region, largely thanks to the newly opened Beijing-Zhangjiakou high-speed railway, which began operation at the end of 2019. The line shortens travel time from downtown Beijing to the resort cluster from four hours by car to just 50 minutes.

Even without skiers on the slopes, Wanlong continues to make snow and groom its courses as it prepares to reopen immediately once the virus is eradicated, Luo said.

At nearby Genting Resort Secret Garden, the competition venue for Olympic freestyle skiing and snowboarding in 2022, maintenance work is also being carried out－not just in preparation for reopening but also to host multiple Chinese national teams in a closed-door training program.

Two international events at Genting－the Winter X Games' Chongli leg and the International Ski Federation's Ski Cross Asia Cup (originally scheduled for the past and coming weekends respectively)－have been canceled due to the virus, leaving investors out of pocket.

To ease the financial burden, local governments in Beijing, Hebei and Jilin have all issued preferential policies, such as reducing land tax and offering utility subsidies.

According to a 13-measure guideline issued by the Jilin Provincial Department of Culture and Tourism, ski resorts in the northeastern province, which had recorded over 300,000 visitors to resorts by Jan 23, will be compensated with 2 million yuan each.

Property investors should also develop more comprehensive business strategies by diversifying resort operation in all seasons to expand revenue streams, said Wang Shigang, vice-president of the Thaiwoo Ski Resort and Alpine Park in Chongli.

"We shall diversify our offerings by providing customers with more outdoor sports and recreational activities in summer rather than just attracting visitors with skiing in the winter," said Wang.

"A mature mountain resort relies on a four-season operation to enhance the ability to resist financial risks produced by unforeseen challenges."