Final Report - Asian Development Bank

16
TA 4721-PRC: Preparing the Shaanxi-Qinling Mountains Integrated Ecosystem Management Project
Final Report Appendix 13
QBG -9302 -24346 -2935 -353 2181 2698 2218 2796
SARC -3434 -8254 -10761 181 2040 2857 3233 3931
Consolidated NQBG -12736 -32599 -13697 -172 4221 5555 5451 6728
EIRR 13.67%
b. Hot Spring Development
64. The investment will: (i) improve leisure tourism services in the Louguantai area; (ii) promote
the development of the tourism industry in the Project Area; (iii) stimulate the growth and development
of related industries in the Project Area and Zhouzhi County; (iv) provide a multi-purpose tourism
facility that appeals to various tourism groups at different levels of income; and (v) promote
understanding of the Daoist culture and religion. Based on the hot springs project in Louguantai,
seeks to integrate the tourism resources of Louguantai National Forest Park, expand visitation to the
Forest Park, and construct a new Culture Tourism District that relies largely on the metropolitan Xi’an
tourist market.
65. As described in the Marketing Guide (see Appendix 30), the Hot Springs development is a
complementary attraction for the “Louguan Tai Experience” providing accommodation services for
longer stay visits to the area. It services a specialized niche market (health tourism), and it provides
an add-on service by providing day access to the hot pools. A full one day ‘package’ can be offered
which provides a wildlife-culture-recreation experience. Consultation with the Shaanxi Daoist
Association indicated a linkage between the Hot Springs and the Daoist sites.
66. The Shaanxi Tourism Group Corporation (STCG is the largest single tourism state-owned
enterprise in Shaanxi holds a 51% share of the joint venture. In 2000, the Shaanxi Province Branch
of the Bank of China signed a deal with the Group to finance CNY1.8 billion ($218 million) of the
Group’s major tourism investments over the next five years through to 2005. This Group was founded
in 1998 as a state owned company with a registered capital of CNY3 billion ($36.14 million).
67. The Group is an investment and capital management company authorized by the provincial
government to engage in management and development of cultural and scenic tourism sites, travel
services, star-class hotels, bus companies and other tourism products. In conducting these functions,
the Group places an emphasis on servicing the tourism industry of Shaanxi Province – although the
Group has as well invested in other provinces and cities such as Beijing.
68. The Group and its subsidiary companies are engaged in different tourism services including
dining, accommodation, travel agencies, transportation, entertainment, and the management of tourist
sites. The STCG operates some of China’s most famous historical sites, in particular the Terracotta
Warriors site in suburbs of Xian, 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 generally raised from commercial markets, with the exception of some smaller
subsides from the SPG for specific purposes.
69. The Hot Springs Feasibility Study provides detailed attendance, pricing and financial analysis
for Phase II of the development to be partly financed by the Project. The Design team’s financial
analysis used a discount rate of 12% as its benchmark FIRR, reflecting their commercial
requirements. The construction period was assumed to be 2007-2008 and the operating period was
assumed to be 15 years from 2009-2023. The PPTA Team altered these periods to 2008-2009 for
construction and 2010-2035 for construction to be consistent with the Project.
70. The operating income is generated from the 18 villas, based on 70% occupancy in each year
and different daily rates for the villas as follows: Villa A – CNY5,800 per day ($763); Villa B –
CNY4,800 per day ($632); and Villa C – CNY3,800 per day ($500). The daily rates are based on the
villa and not the number of people. There will be five bedrooms per villa, and the number of people
staying over night will normally be 5-10, with a maximum of 12 overnight visitors. Therefore, when ten
people are staying over night – two people per bedroom, the daily rate per visitor would be between
CNY380-580. However, even if only two rent the villa for the night, the daily rate will be the same.