Low Yat Group and YTL adapting to the ski resort market

by **Cals** Sun 13 Oct 2013, 21:35

Published: Saturday October 12, 2013 MYT 12:00:00 AM
Updated: Saturday October 12, 2013 MYT 7:54:54 AM
Low Yat Group and YTL adapting to the ski resort market
BY LIZ LEE
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Avid skiers flock to the slopes of Niseko, Japan to experience its champagne powder snow.
THERE is something magically pristine about snow – its stark whiteness, the gentle way it falls and the tranquillity associated with wintry outdoors.
Japanese prime ski destination Niseko is the epitome of this. Its undefiled natural surroundings and steady supply of powdery snow brought about by the dry Siberian winds give the resort town its picture-perfect surreality.
Skiers are all too familiar with this gem of a destination, as it continues to grow in popularity. It has also attracted interest from foreign property developers, among them Malaysian companies.
Malaysian developers with a stake in Niseko include the Low Yat Group and YTL Hotels. Foreign players include Hong Kong’s Pacific Century Premium Developments, which is owned by Richard Li, the son of tycoon Li Ka-Shing.
Mount Niseko has four resort areas or ski runs – Niseko Annupuri, Niseko Village, Niseko Grand Hirafu and Hanazono.
Low Yat has opened a block of luxury condominiums called Shiki Niseko in the Grand Hirafu area, while YTL Hotels owns Niseko Village.
How have they fared thus far?
Flagship project
Last month, Low Yat announced that it was rejuvenating its flagship project in Niseko with a 50% sales target for its luxury service apartments in Shiki Niseko. It is taking a cue from the recuperating tourism sector post the Fukushima nuclear crisis brought about by 2011’s earthquake and tsunami.
With Tokyo hosting the 2020 summer Olympic Games, Low Yat executive directorLow Su-Ming believes booking and sales at Shiki Niseko will resume soon.
“The confidence shown by the International Olympic Council in selecting Tokyo as the venue for the 2020 Olympic Games should send the right message that the concerns surrounding the radiation leak in Fukushima are very much contained,” she says.
At present, Shiki Niseko’s takeup rate stands at 30%, with half of that made up of Malaysian buyers.
The takeup rate for Shiki Niseko was 30% prior to the disaster, but fell to 27% immediately amid investor jitters. However, the rate has since returned to 30%, as the Niseko government and developers worked hard to regain interest.
The luxury condominium, which opened last December, is managed by Low Yat’s hospitality wing Fairlane Hospitality. While all 68 units at Shiki Niseko are for sale, Fairlane Hospitality has opened all units, both sold and unsold, to holidaymakers to take advantage of during the winter holiday season.
Area general manager N.K. Yeoh says the group continues to target a 50%-70% takeup rate within the next two years.
“The customers who were worried about the radiation leak have not come back to us, but we are finalising some new sales packages to woo them back,” he says, reiterating that the Fukushima incident was more than 350km away from Niseko.
“We are going back to those who had held off or pulled out their investments then,” says Yeoh, adding that tourists are returning.
He says the group is intensifying its Shiki Niseko promotion in Malaysia, Singapore, Indonesia and Thailand as well as in Taiwan and Hong Kong.
Likewise, YTL Hotels was also initially concerned about the impact of the nuclear power plant crisis. However, a silver lining appeared, which kept business in Niseko going.
YTL Hotels executive director Datuk Mark Yeoh tells StarBizWeek that he was fearful when the disaster occurred in what was only YTL Hotels’ second year there. He told his financial assistants to prepare for a disaster, but things took a turn for the unexpected.
“Lo and behold, you could say we were sort of a ‘net beneficiary’ from that incident. In the summer of 2012, a lot of school trips in the Tokyo area shifted to Hokkaido, so we have seen our occupancy rates going up. Our golf course, which never used to make money, is doing so now, with our ‘Pure’ activities there.”
“Pure” is YTL Hotels brand of recreational, relaxation or cultural activities offered at its various resorts.
Mark says Hilton Niseko Village, set to achieve a 140% occupancy rate in 2012, has outperformed its target by another 40%.
“Niseko is actually booming,” he concludes, adding that it would not have been possible without the support of the local authorities.
YTL Hotels first entered Niseko during the 2008/2009 American financial crisis, when it bought Citigroup’s Hilton and Green Leaf Hotel. The US$60mil (RM192mil) deal came with 1,000 acres of freehold land called Niseko Village.
Beyond the two hotels on its property, YTL Hotels has also commenced the development of a village core set to be the heartbeat of the entire property. The ground-breaking ceremony was held on Sept 19.
“The village core is a central part of the masterplan. We’re going to start with a commercial centre and we’re planning about eight townhouses as well,” he says. These projects, the first big ones for YTL Hotels in Niseko to date, are slated to be ready by December 2014. The group is also looking to invest in a ski run and add activities to complement the village core.
He adds: “The fact that we got the land cheap allows us to take our time to digest the property and respond to market demand.”
This strategy is pretty much the same as what the group had done when it developed Sentul, Kuala Lumpur.
In total, YTL Hotels hopes to build 40 townhouses on ten parcels of land in Niseko Village. These are to be sold and then managed for the owners on a timeshare basis. “There are many property owners in Niseko who are here for only about a month in a year. They put their properties into a pool to be leased out. We think there is a market for this.”
On the grander scale of its masterplan, YTL Hotels intends to build more apartments and timeshare properties later.
It is now focusing on developing 300 acres at a time.
Hilton Niseko Village’s all-year occupancy rate is about 55%, while its winter-only occupancy rate was 78% last year. Green Leaf Hotel, which only opens in winter, had a 75% occupancy rate last year.
On collaborating with other foreign players, Mark says the Hong Kong players, who are also his friends, have considered entering into joint-venture opportunities. Although there is nothing concrete at the moment, he believes there will be possibilities of working with some of the bigger players.
“They are interested in our land, but we’re not selling. But we may ‘marry’ some of them because the big groups have their niche as well,” he says.
Niseko town’s tourism strategy and promotion section manager Paul Haggart notes that overall tourism has gone up by a third in the November 2012 to March 2013 winter period compared to the November 2011 to March 2012 period, increasing from 300,493 tourists to 385,083 visitors.
Foreign tourists have risen 88% from 116,752 to 219,935 year-on-year.
Australian tourists continue to take the lead, making up 50% of total visitor numbers, followed by Hong Kong with 16% and Singapore with 8%. Tourist traffic from these countries have also gone up - Australians have gone up 104% , Hong Kong by 35% and Singapore 70%.
Visitor count
Malaysian tourists, although only a 1.6% fraction of total visitor count, have more than doubled in the 2012 to 2013 winter season from 1,733 to 3,533.
“We’re expecting a further increase of 15% in international tourists this winter, with more China tourists because we have increased our promotional efforts there,” he said during a presentation at Low Yat’s sales gallery last month.
He said that bookings are still strong in the Hirafu area and that the hotels are already filling up across the entire valley over the New Year and Chinese New Year period in 2014.
The neighbouring Kutchan town is home to many of the condominiums and is the largest service town in the area, while Hirafu is where most of the international action is.
As tourism in Niseko can hardly be confined to only Niseko town, the local authority uses tourism figures of both Kutchan and Niseko to track the number of visitors to all the resort areas.
Low Yat and YTL Hotels may be the only two prominent Malaysian players in Niseko at the moment, but it has opened the eyes of other companies to venture into the white wilderness.
A new kid on the block is Bukit Kiara Properties Sdn Bhd, which is the latest to jump on the bandwagon where niche ski resort is concerned.
While Niseko would continue to be a choice ski destination in Asia, Bukit Kiara Properties has chosen to venture into another ski town in Japan called Hakuba.
Situated in the Nagano Prefecture, Hakuba is another popular ski destination in Japan often compared to Niseko. It was the venue for the 1998 Winter Olympics.
Bukit Kiara Properties will be opening its Koharu Resort Hotel & Suites in December this year.