In the past, if Chinese developers wanted to enhance the prestige of their malls and hotels, all they had to do was bring in luxury brand stores. Now, they are turning to activities like horseback riding, rafting, and skiing to attract customers.
As Chinese people’s wallets have grown fuller and they have more leisure time, shopping no longer satisfies them. Businesspeople who roam China’s malls have developed a taste for the thrill of Western sports like polo. After traveling overseas, Chinese consumers have also developed hobbies such as diving. Chinese parents also want their children to try healthy, inspiring, exciting, and novel activities.
Wanda Commercial Properties owns a ski resort in the Changbai Mountain area, which borders North Korea.
Qian Jiannong, assistant to the president and general manager of the commercial division at Shanghai-based Fosun Group, said that in the past, Chinese people traveled mainly for sightseeing, but now they seek different experiences like bungee jumping and archery. Fosun holds a stake in French resort operator Club Med and is aiming for a full takeover.
Guo Bina, a partner at American law firm O'Melveny & Myers who has been learning horseback riding since 2009, keeps a horse in Shunyi District near Beijing Capital International Airport. The litigation lawyer said that horseback riding is good for people like her who sit in front of computers all day. She also sees her weekly horseback riding lessons as a way to get close to nature and communicate with animals.
In Tianjin, a half-hour train ride from Beijing, the Goldin Group has built China’s largest and most luxurious polo club to cater to the needs of affluent horse enthusiasts. Covering 200 acres, the polo club features private lawns and meticulously manicured gardens; it also includes a business district, a five-star hotel, as well as high-end apartments and villas with views of the polo field.
Building and maintaining sports facilities can be costly, but developers feel it’s the only way to differentiate their offerings from competitors. Hotel occupancy rates in China have been declining as supply has outpaced demand in recent years.
Sebastian Skiff, executive director of commercial services at CBRE in China, said that against the backdrop of strong customer demand, hotels and resorts have rapidly expanded their leisure-themed offerings in a short period of time.
Skiing is one of the hot areas of development. Malaysia’s Genting Group has built China’s largest ski resort in Zhangjiakou, featuring a total of 87 ski runs and 22 cable cars. Located about three hours’ drive northwest of Beijing, Zhangjiakou is currently bidding to host the 2022 Winter Olympics. China’s largest commercial property developer, Wanda Group, has developed a resort in Changbai Mountain, known as China’s Alps. Both projects include a large number of residential properties for sale.
Although the snow quality at most Chinese ski resorts is not great, these ski towns remain popular because of their convenient transportation links to Beijing. For Chinese tourists, hotpot restaurants and hot springs are also important. In Yabuli, not far from Harbin, the Club Med resort even has a karaoke room for those who want to sing after a full day of skiing.
Another area that has attracted significant investment is water sports. Fosun Group will invest $1.5 billion to build the world’s third Atlantis hotel in Sanya. The previous two Atlantis hotels are located in Dubai and the Bahamas. The Sanya hotel will feature an ocean park, aquarium, 20 restaurants, and promises a “revolutionary” water park experience.
Qian Jiannong said they hope to bring to China concepts that have proven successful globally. Chinese consumers are open-minded and willing to try new things, though some details will be adjusted for the local market. For example, Fosun will ensure that people don’t get too much sun exposure during rafting trips.
The Atlantis Sanya hotel, set to open in 2016, will have 1,300 luxury rooms. In Hainan, which already has around 200 hotels, this is not the largest project. Agile Property and Morgan Stanley Real Estate plan to build six international five-star hotels, a yacht club, and tens of thousands of apartments in Sanya’s Clearwater Bay, with selling points including golf and many other activities.
There are signs of overdevelopment in the holiday home boom. According to data from the China National Tourism Administration, hotel occupancy in Sanya was 53% in the second quarter of this year, compared to 71% for the whole of 2011. The average room rate in the area has also dropped from 725 yuan per night in 2011 to 525 yuan per night in the second quarter of this year. This may also be due to the Chinese government’s anti-corruption campaign and the slowing domestic economy, which have curbed corporate hospitality and meeting demand.
Another issue is that while Chinese developers may be good at building quickly, operations—especially of sports venues—are a new skill for them. Randall Hall, head of Greater China at real estate services firm Cushman & Wakefield, said these facilities are not just “plug-and-play” but require international professionals to operate, with hardware being just one factor.