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January 2006

New Frontiers

In October, ski area operators from Australia, New Zealand, China, Japan, Korea and North America discussed the future.

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What do Gucci, Burberry, Ferrari and Tiffany all have in common? They believe that China is The Next Big Thing, and they are banking on it by setting up shop in the affluent cities around China. Consider this: the GDP grew an average of nine percent each year between 1982 and 2004. Salaries are, on average, 15 times higher than they were in 1980. Food expenses went from 57.5 percent of a family’s income to 37.7 percent. That leaves a lot left over for recreational and luxury pursuits, and the Chinese are gobbling them up. Will winter sports find a role in this burgeoning, affluent society?

This question, along with many others, was tackled over the course of a two-day conference in Sydney, Australia. Called the Alpine Investment and Development Summit, which was organized by Terrapinn, the meeting brought together resort operators from all over the world in order to exchange ideas.

Some of the highlights were:

• Intrawest’s Graham Kwan spoke about his company’s interest in China and announced that Intrawest is hoping to have seven destination resorts in China by 2010.

• Japan’s Alpine slump may slowly be coming to an end. Both Colin Hackworth, president of Harmony Resorts Niseko, and Hiroshi Kojima, president of a winter resort called Arai Mountain Spa, pointed to the fact that the Japanese industry has matured and that customers are looking for a quality experience. Areas are being upgraded and turned into mini villages with many amenities.

• Australia is also looking to real estate and encouraging investment. Marshall Vann, CEO at Mt. Hotham and Falls Creek, reviewed his company’s quest to become an Alpine resort, not just a ski resort.

• Doug Simpson from Mt. Lyford Alpine Resort in New Zealand pointed out that even on a smaller scale, real estate helped him build his area by selling surrounding lots, as well as contracting to build the houses on them.

• The big news was the potential of the Chinese market. At only 4 million skier visits at 200 areas, only one of which can truly be called a destination resort (Yabuli), all eyes are on this growing market. Many feel that in order to reach its fullest potential, development in China must be done properly from the start. It’s not a build-it-and-they-will-come scenario. First, the concept of winter sports needs to be sold. Then the experience must live up to the concept. If done correctly, the numbers could be well worth the effort.