Final Report - Asian Development Bank

91. Revenue will be generated through the visitation program. Visitation is projected to increase
to 430,000 by Project completion and then increase to over 1 million in 2030. Revenue levels will
increase to CNY 33.3 million by Project completion, CNY 63 million by 2015, and CNY 130 million in
2036. SARC management will contract a commercial tourism operator to manage the commercial
aspects of the site. Current staff levels of 28 full time and 12 part-time will increase to nearly 200 full
time jobs.
Table 2: Forecast Financial Performance of SARC
Column Heading Column Heading Column Heading Column Heading
2011 280,000 26.4 -1.5
2015 519,000 63 21.7
2020 829,000 100.6 50
2036
(Source: PPTA Estimates)
1,100,000 130 77
92. Hot Springs Development involves an existing development of the Shaanxi Louguantai
Daoism Hot Spring adjacent to the Shaanxi Animal Rescue Center (SARC). The first stage of
development was completed in late 2007 and involves an accommodation and bath area. The
Development is being undertaken as a joint venture between the Shanxi Forest Bureau (as
represented by the Louguantai Forest Farm 49%) and the Shaanxi Tourism Group Corporation (51%).
The Project will support the second phase of the development to improve leisure tourism in the
Project Area, to promote tourism and the Project Area as a tourism attraction, to stimulate growth in
local industry through providing goods and services to visitors, and importantly to promote greater
understanding of Daoism as a religion.
93. The Project will support the construction of 18 multi-room villas with five bedrooms for two
people each or a total capacity of 180 people per night. In addition the project will support
development of a restaurant, bathing pool complex, internal utilities and site infrastructure, equipment
and vehicles and staff training programs. Visitation is expected to derive from both over night stays
and day visitors with the development providing the top end of available accommodation in or around
Louguantai. Accommodation occupancy is expected to reach 70% by 2020. Day visitation would start
from about 300,000 in 2011 and reach 500,000 in 2023 at which level it would reach operational
capacity. Management of the operation will be undertaken through a commercial management
contractor with substantial experience in the tourism sector. The Shaanxi Tourism enterprise needs to
raise private sector funding for the completion of the hot springs development. Prior to ADB approval
a Bank Guarantee or letter of credit should be provided to ensure that financing is available.
2. Component Two: improved livelihoods from sustainable management and
conservation of natural resources
94. Component two will support the implementation of the proposed CDA zone management
strategy (see Appendix 8) and result in improved conservation values through increasing forest cover
and manipulating of existing forests to restore wildlife habitat. The CDA zone supports 4,593 residents
that lost income sources due to policies removing access to forest products, livestock and agriculture
on steep lands.
95. Financing of CDA programs will continue after Project completion through the three tourism
enterprises contribution to a profit share and redistribution program. During the construction period of
the Project the profits will be modest. After 2012 the amounts involved could increase substantially
and be able to support CDA conservation and eventually beyond the Project Area. The existing
institutional arrangements for land use and the provision of a financing mechanism are a major risk to
the profit share arrangement. The QNBG will use an internal accounting method to transfer funds from
the enterprises to the CDA. For the hotsprings the transfer is deemed to apply only to the Louguantai
Forest Farm shareholding and is therefore set at 49% of the rate applied to both Qinling Botanical
Garden and SACR. It is recommended that the management of QNBG set the fee based on an
internal charge against assets (levy on land and capital assets) to create incentives for efficient use of
land and to ensure funds are available to the CDA program.
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