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6 TA 4721-PRC: Preparing the Shaanxi-Qinling Mountains Integrated Ecosystem Management Project Final Report Appendix 13 relatively low entry fees and revenues to cover only operating costs. Most of the current PRC Botanical gardens surveyed have entry fees of CNY30 or less per entry (i.e. visitor). For example, the relatively small but quite appealing Xi’an Botanical Garden near the center of the city has an entry fee of CNY10, as does the much larger and better known Beijing Botanical Garden. 27. In other cases, the site such as the horticultural exhibitions first at Kunming in 1999 and then in Shenyang in 2006 were established and fully paid for as one-year world expo events and therefore can now charge small entry fees that again only need to cover operating costs. Even then, the Shenyang (Liaoning Province) International Horticultural Exposition of 2006, which operated for 184 days from 1 May-31 October 2006, had an entry fee of only CNY50. Now, one year after the Expo, it is operating as a more normal Botanical garden and it is charging an entry fee of CNY20. The Kunming Horticultural Landscape Botanical Garden in Yunnan is now charging the same entry fee. Therefore, to the extent that domestic and international tourists visiting Xi’an – and local residents in southern Shaanxi – have some reference point for what they are prepared to pay to visit a Botanical garden, that reference point would appear to be less than CNY50 a figure confirmed by a small willingness-to-pay survey conducted. 28. The second challenge is that Xi’an and Shaanxi offer a wide range of very attractive tourism facilities that will be competitors of the Botanical Garden and the other PA tourism facilities, particularly in the early years when the BG will be an immature Botanical garden and will not be well known among many visitors to Shaanxi. (A recent survey completed by the Design Team indicated that the BG is well known among local residents because of extensive and favorable media coverage). 29. With the exception of the Terra Cotta Warriors, the Xi’an Wildlife Park and the Xi’an Aquarium, these competing facilities typically charge an entry fee of CNY 40 to 50 and the revenues per visitor appear to be in the range of CNY100-120. The PPTA “willingness to pay” survey confirmed an entry fee of CNY50 and revenues per visitor of about CNY100. Accordingly, a high entry fee and other charges in the early years, and within-site prices total revenues per visitor that are not competitive with alternative tourism facilities in Xi’an and which are seen as not affordable by many local residents and domestic tourists, could result in very low attendance and no growth momentum for the BG based on favorable word-of-mouth advertising. This situation would place early financial performance and ADB loan repayment at risk. 30. In its earlier financial analysis, the BG Team preferred an attendance/pricing scenario which involved lower attendance in the early years – recognizing the immaturity of the Botanical garden and the need to build market interest and image over time – while charging high entry fees and other prices to enter the Park’s attractions. While the low early attendance was justifiable, the PPTA Team argued that the high entry fees and other charges were not competitive with alternative tourism facilities in Xi’an and would not be affordable for many potential visitors from domestic markets especially in the first critical years of BG operation. 31. In its May 2007 FSR, the BG Design Team proposed high early attendance, entry fees and revenues per visitor from 2011 on – with relatively little growth in these parameters 9 . The Design 9 In fairness to the BG Design Team, it should be stated that the financial analysis guidelines of both the PRC and ADB require that the financial analysis be conducted in terms of real monetary values (where the effects of price inflation are removed) and encourage analysts to use attendance, price and cost parameters that are fixed or at the very least change very little through the projection period. This static approach generally works well for traditional, slow-growth sectors such as agriculture/food processing, forestry and infrastructure. However, this static approach works less well in high-growth economies like China, and in dynamic sectors such as tourism, where the income elasticity of demand is high (meaning that tourism demand and revenues expand much faster than real per capita incomes) and where effective marketing campaigns and word-ofmouth advertising can move demand curves outward – allowing tourism facilities that are well run and differentiated from competing attractions to raise their prices through time without hurting attendance and revenues. The static approach applied by the BG Design team leads to situations where attendance and prices appear much too high in the early years but are quite acceptable and even on the conservative side in the later years of the projection period when per capita incomes and tourism demand and revenues in China are higher and the tourism facility is well established within a region’s tourism network for guided and individual tourism.
TA 4721-PRC: Preparing the Shaanxi-Qinling Mountains Integrated Ecosystem Management Project Final Report Appendix 13 Team used the “analogy” method by assessing attendance and pricing at other tourism facilities, such as the Xishuangbanna Topical Botanical Garden which is 527 km from Kunming, the Shenyang Botanical Garden noted earlier which is 40 km away from the Shenyang City Center, and the Xi’an Qinling Wildlife Park which is also on the North Slope of the Qinling and is 40 km away from the city center. The attendance and pricing figures from these tourism facilities were used to justify first year attendance of 600,000 and an entry fee of CNY70 for the Botanical Garden. 32. The PPTA Team developed a second attendance/pricing scenario that had lower attendance and prices in the early years, which would both grow significantly through time as the BG and the Qinling became better known in the tourism market, the Botanical garden matured and therefore became more interesting to the general tourist as well as biodiversity enthusiasts, and per capita incomes, consumer purchasing power and the percentage of expenditures allocated to tourism and recreation all continue to increase in Xi’an, Shaanxi, and other PRC market segments. 33. The following table compares the pricing strategies of the Design Team and PPTA Team scenarios. Revenues from each source are varied under the PPTA Team pricing/revenue strategy by increasing through time the percentage of visitors who use each service. Alternatively, the same results could be generated by holding the percentages constant and decreasing the price paid for each service. The implications for revenue would be the same. For example, for the same attendance and percentage of visitors (fixed at 85%), the price per visitor to the Ancient Biodiversity Building would need to decrease from CNY30 to CNY25 in order generate the same revenue for 2011 from this source. 34. However, under the PPTA team’s preferred attendance/revenue and pricing scenario, attendance at start-up is also lower – since the Botanical gardens are immature and the BG facility is not yet fully established. Benefit estimation was based on a visitor profile starting from 350,000 in 2011 and increasing at an average growth rate of 5.3 % of the life of the analysis. Entry fees of CNY 50 per visitor were used. The Feasibility study used a start up figure of 600,000 visitor at an entry fee of CNY75 per visitor. Table 3: QBG Visitor Projection Assumptions Assumptions: Entry Fee(CNY) 1 BG Attendance at the first year 350000 50 Growth Rate(Average) 5.29% 2 Percentage of Total will visit Paleontology 85% 30 3 Percentage of Total will visit Temple 30% 30 4 Percentage of Total will take electric vehicle 50% 30 5 Percentage of Total will take cableway 30% 60 6 Percentage of Total will have fast food 30% 20 7 Every 50 tourists will park once 50 20 35. The estimated visitors per attraction use din both the financial and economic analysis are presented table 4. 7
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Technical Assistance Consultant’s
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CURRENCY EQUIVALENTS (as at 1 June
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WEIGHTS AND MEASURES 15 mu = 1 hect
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APPENDIXES (PRESENTED IN SEPARATE V
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LOAN AND PROJECT SUMMARY Borrower P
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Implementation Arrangements The Sha
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Figure 1: Map 1 - The Project Area
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ix Figure 3: Map 3 - Google Image o
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Figure 5: Map 5 - Natural Plant Hab
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Figure 7: Map 7: Shaanxi Louguantai
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II. RATIONALE: SECTOR PERFORMANCE,
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maintain ever-increasing staff leve
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(xiii) lack of national, regional,
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low salaries, poor benefits and ina
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and mature product compared to othe
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into the Province’s tourism indus
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on Land Degradation in Dryland Ecos
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CNY 37million to CNY 64million in 2
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91. Revenue will be generated throu
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100. Improved Village and Forest-ba
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plan budget. Provision for this arr
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Component Sub-component Table 4: Pr
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Table 5: Project Investment Plan ($
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Qinling National Botanical Garden (
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Position Package A: Package A -SARC
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covered in these reports. Within 6
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water supplies, (v) a program to im
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160. Other risks relate to (i) the
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was between CNY 900 and CNY 1156 pe
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183. A major lesson from tourism re
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2 Design Summary Outputs Component
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4 Design Summary Component III: Ins
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4 Indigenous People 2 TA 4721-PRC:
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GEFSEC PROJECT ID: EA PROJECT ID: C
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i) Tourism 5. One of the strongest
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14. Poor rural households had few o
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and fauna due in large part to the
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31. The Qinling Mountain ecosystem
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continuing communication among stak
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development under construction, (v)
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) Objective 50. The impact of the p
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60. The current animal rescue and e
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Source (PPTA Estimates) 69. The rev
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77. Institutional Strengthening The
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awareness and understanding of mark
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92. The main risk to the Project’
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modify the drivers of biodiversity
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Expected Project National Biodivers
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Strategic Objectives and Indicative
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after 5 years. It is suggested that
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the lessons from the Project. All m
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119. The SPG commitment is demonstr
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130. In output 1, GEF financing of
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Tracking Tool for GEF Biodiversity
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the current tourism portfolio. This
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Please answer YES or NO to each sta
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Ecological Function Conservation Ar
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ADB TA 4271 Shaanxi Qinling Biodive
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3 ADB TA 4271 Shaanxi Qinling Biodi
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