Final Report - Asian Development Bank

TA 4721-PRC: Preparing the Shaanxi-Qinling Mountains Integrated Ecosystem Management Project
Final Report Appendix 7
of tourist sites. In fact, the STCG operates, has developed and/or manages the facilities of some of
China’s most famous historical sites, in particular the Terracotta Warriors site in suburbs of Xi’an, and
its subsidiary companies include some of the most profitable tourism enterprises in the province. The
SPG Tourism Bureau provides the Group with policy advice and guidance but there are no financial
and staff relationships between the Bureau and the Group. The Group’s funds are raised from
commercial markets, with the exception of some smaller subsides from the SPG for specific purposes.
245. As of 2005, the company employed more than 6,300 staff, 14 subsidiary companies, and
had total assets valued at over CNY3.2 billion ($385.54 million). Company investments include the
following: hotels -- Xi’an Hotel, Tang Cheng Hotel, Xi’an Oriental Hotel, Days Hotel & Suites (Beijing),
and the Xi’an Hyatt Regency. (J/V project with a 35% interest); entertainment and dining -- Tang
Dynasty Xi’an, Regal Palace Theatre Restaurant, and Chinese Cuisine House (Beijing); tourist sites
and attractions -- Terracotta Warriors Museum, Hua Shan Mountain, Guan Shan Grassland, Hua Qing
Palace, and the Fa Men Si Museum; and services -- travel services companies, tour bus company,
and tourist souvenirs.
f. Benefits and Beneficiaries
246. A number of benefits are identified. The first beneficiary of this project is certainly the LGFD,
which would achieve a significant profit through capitalizing on Louguantai’s tourism potential and
Daoism culture resources.
247. The local community would be the second beneficiary. The Hotspring project itself would
provide considerable employment opportunities for local people. The employment during construction
is expected to total about 1,060 jobs or 530 per year. The operating employment generated after
Phase II start-up is estimated at about 230 by the Design Team, while employment for all three
phases combined would be in the range of 550-600 in the early years – with further growth as day
visitation expands to approach 1,000 by the end of the projection period in 2035. And it would further
promote related industries in the Project Area to develop, via many different industrial linkages,
providing more opportunities to be employed and/or self-employed for local community residents in the
project and target areas.
248. Both domestic and international tourists would also be able to benefit from this project. Apart
from the traditional sightseeing tourism based on natural scenery and the Daoist culture, leisure and
hospitality services would be offered to all kinds of high-end tourists who want a high quality leisure
tourism experience and are prepared to pay for it. For middle class and low-end tourists, they would
have more choices to relax, recreate and travel, especially for those from the metropolitan Xi’an area.
249. The Qinling Botanical Garden and Animal Rescue Center would also be beneficiaries. The
successful operation of the Hotspring project in the commercial sense would produce a strong positive
externality for the tourism businesses at the ex-situ Botanic Garden and the Louguantai Rescue
Center. The latter two institutions, which have less business experience than the LGFD, would benefit
not only from sharing tourist flows with the Hotspring project, but because the Hotsprings facilities are
complementary to other two attractions.
250. Chinese Daoism Culture will benefit from repairing and/or rebuilding traditional Daoism
temples and related construction and leisure activities that are part of this project. In addition, this
project would also provide quite a good location and platform for all kinds of communication, education
and related activity regarding the Daoist religion, study and culture at excellent facilities.
251. Related industries in the Project Area and the metropolitan Xi’an area would become the
beneficiary. The anticipated rapid growth of the Hotspring project would offer considerable space and
opportunity for the development of local related industries, such as transportation, retail, restaurant,
and manufacturing of tourism souvenirs and handicrafts. Based on the above industrial linkage effect,
more people would be involved in the development process of Louguantai natural tourism and Daoism
culture resources.
252. As would be expected from the financial analysis, the economic analysis provided favorable
economic results. The economic internal rate of return (EIRR) for the Hot Springs base case is 18.1%,
which is well above the benchmark EIRRs of 10% and 12% used in the economic analysis.
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