Asians Develop a Taste for Snow -- and Ski Resorts

 | Dec 06, 2017 | 9:30 AM EST
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The Winter Olympics are fast approaching. And with the next two installments happening in Asia, the center of the ice-and-snow world is shifting ever so slightly to the East.

South Korea hosts the games in February 2018, now just two months away, in and around the resort of PyeongChang. That's not to be confused with Pyongyang, the capital of the noisy neighbor to the north! Then Beijing will become the first city in history to have hosted both summer and winter games when it takes on the colder form in 2022.

China has yet to produce a ski resort of any note. The best-known is Yabuli, the largest resort in the country, 100 miles outside Harbin in the country's most-northern province, Heilongjiang. Club Med, now a Chinese company, owns one of the two slopes on the hill. But lifts and slopes are limited.

Club Med is owned by the conglomerate Fosun, which has just announced its first North American ski resort, due to open in 2020 in Le Massif de Charlevoix, in Quebec. It already has a total tally of 24 all-inclusive ski resorts around the world, including France, Italy, Switzerland and Japan, with another 15 in the works through 2019. Although Fosun the parent is private, it has a listed overseas arm, Fosun International .

Dalian Wanda, another huge conglomerate, had been developing the Changbaishan International Resort, also in northeast China. But it has reportedly sold out of that $3 billion project. The conglomerate is thought to be readying an initial public offering, although the timing is anything but sure.

The sale comes because Beijing authorities are scrutinizing Dalian Wanda's every move after several splashy overseas investments. Like the airline operator HNA Group, the property developer Greenland Holdings and insurer Anbang Insurance, their international forays have worried the Communist Party, particularly the debt of dubious sources they took on to fund them. All the groups have sold or are selling large overseas projects.

Wanda's founder, Wang Jianlin, does not appear to have actually disposed of the property. He has dealt it to the property developer Sun Xishuang, who runs the Dalian Yifang Group, and is one of Wang's business partners.

Sun's company is even headquartered in the same building that houses Dalian Wanda's HQ. So expect some behind-the-scenes Dalian Wanda dallying in the ski resort for years to come.

There's room to grow. Chinese participation in winter sports has doubled in the last five years. The country has some 50 indoor snow centers, which combined account for 5% of all ski visits around the world.

So the demand is there, given the access. The problem in China is that most of the mountains are not really large enough to accommodate skiing, or are too steep. At least Yabuli climbs from around 500 meters to 1,375 meters above sea level.

The Asian and Eastern European markets produce 34% of the world's skiers. But those regions host only 24% of the world's ski trips. This suggests there's plenty of potential in Asia's ski markets: Japan and South Korea being the most established, with China rising, and skiing in Himalayan nations such as India hardly explored at all, not to mention the 'Stans of central Asia. 

You have to heliski in India to make anything of the highest mountains in the world. But that will surely change as Asians demand more destinations that are nearer to home. For now, they travel.

The most-resilient resorts in the world, according to the Savills Ski Report, are Zermatt in Switzerland, Vail, Saas-Fee (Swiss again), Aspen, Breuil-Cervinia in Italy, and Heavenly, on Lake Tahoe.

But the report has the normal European bias toward ski reporting. Ignoring the fact that Zermatt receives far less snow (a total of 98 inches last year, or 8'2") than North American resorts (Vail got 278 inches last year), the Savills index uses measures such as how long resorts are open, the altitude and the average temperature to produce the score. You can still be cold and high with no snow.

The report does admit that snowfall has been consistently lower than average the last four seasons in the Alps. Conditions have been particularly poor in the key runup to Christmas, normally one of the most-lucrative times of the year. But the early season is increasingly disrupted by inconvenient rain rather than snow. 

This is causing a retreat to higher resorts such as Val d'Isère, Val Thorens and Ischgl. Zermatt has a particularly long season because it has a glacier -- for now! 

Last season actually delivered larger snowfall than normal in North America. The Pacific Northwest received 110% of its normal snowfall, and the figure was 115% in the Northeast states. California was particularly blessed -- Mammoth Mountain drew 174% of its average snowfall, and Squaw Valley was blessed with 158% of its average.

Austrian resorts have spent €1 billion ($1.2 billion) in snowmaking equipment in the last decade, which the report seems to consider a good thing. This can be used so "snow-starved slopes can be topped up," the report states. A full 60% of Austrian slopes are now covered with artificial snow.

This has helped companies such as privately held TechnoAlpin, which has seen sales rise 90% since 2011. Scandinavia, home to some of the northernmost ski resorts in the world, is a likely beneficiary of warmer temperatures. Little-visited slopes now will surely become more and more popular, which would benefit real-estate investors willing to buy into the market now.

The French resort of Tignes, despite being one of Europe's highest, is investing €62 million ($73 million) to create a 400-meter-long indoor slope. That will allow skiing 365 days of the year, of course, and will be a retreat when a warmer Mother Nature no longer cooperates.

Those resorts that concede the contest may concentrate on developing summer sports and recreation, with water parks, spas, zip lines, golf and music festivals. A wider mix of visitors would obviously reduce reliance on powder hounds.

I'm about to head to Niseko, on Hokkaido, Japan's northernmost main island. The resort receives copious amounts of powder snow every year due to its location. Freezing dry winds sweep across the long lonely expanse of Siberia, hit the warm water of the Sea of Japan, then dump snow on the first mountain they encounter.

This happens to be Mount Annupuri, where there are four resorts built around the mountain. Although it's only just over 1,000 meters at its peak, its unique geography guarantee snow that is so light and dry that it is often impossible to pat it into snowballs -- the snow doesn't stick.

I'm sure that resort is resilient. The main problem is that it is too full -- after being "discovered" by Australians, the rest of the Asia Pacific region has followed. Japanese officials bring delegations to Niseko to check out how the town did it, hoping to replicate that success elsewhere.

With 125 resorts, Japan has more runs than anywhere else in Asia. But few are full by Western standards. Since you can only follow the snow, look for Asian companies, particularly from China, to invest into the underused ones.

A trend that, like a good slope, can run and run and run.

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