A customer enjoys the indoor hot spring at Chun Hui Yuan Resort in Shunyi district, Beijing. Provided To China Daily

Government austerity campaign lets the steam out of resort business

Beijing's hot springs are feeling the chill as corporate spending cuts have seen bookings for events and end-of-year banquets dry up, forcing resorts to drive down prices in order to adapt to the new realities of the market.

Two years ago, November would have marked the start of the peak season for Rylinwon Resort and Spa in the Shunyi district of Beijing.

The resort and, in particular, its function rooms would have been fully booked for corporate events right through to the Chinese Spring Festival, usually between late January and mid-February.

This year, there have been a lot of empty booking slots for the two banquet halls and the handful of conference rooms at the resort, said Rylinwon's sales manager, surnamed Zhang.

"Business has been doing okay but the wider environment has definitely affected our business. With the dip in large corporate clients, we have had to reconsider our business strategy."

The "wider environment" he is referring to is the government's austerity campaign, which started in late 2012 and has curtailed spending by State-owned enterprises.

Although the growing spending power of China's private enterprises has helped offset some of the plunge in demand left by SOEs, the resort has still had to fundamentally change its client base to lower-spending individuals and families in order to survive, Zhang said.

Rylinwon, and many other resorts, have turned to group buying on the Internet to help increase their reach to potential customers.

However, with such large numbers of hot springs vying for customers online, prices have been driven down considerably.

A one-day pass to Rylinwon's hot spring facilities retails at 368 yuan ($59) but purchasing it via one of the many group buying platforms online costs only 138 yuan, a price the sales manager knows all too well.

Even so, group buying has become an accepted and important part of the food and leisure industry in China, where many businesses encourage its use.

A sales representative at Changping district's Longmai Spa Resort said, "The highly competitive hot springs market is now a numbers game and not about high prices."

She quoted the resort's hot spring prices as 198 yuan for weekdays and 300 yuan for weekends before revealing that if bought as a "group ticket", which requires booking one day in advance, it would only cost 98 yuan for any day of the week.

A strategy used by resorts to get customers to part with more money has been to offer package deals.

At Longmai, a package deal that includes entrance to the hot springs, one night's accommodation and three meals costs 358 yuan per person, the only caveat being that the deal has to be purchased in multiples of two because each room has twin beds.

Others have tried to attract more business by adapting to the needs of their new clientele.

Hot Spring Leisure City, in Changping district, used to count its 5,000 capacity conference and exhibition center as a key marketing feature for the resort.

However, lack of use paved the way for a strategic decision to revamp the space into a badminton hall in mid-October.

Yang Wei, manager of branding at the resort, said it would be hard to find one hot springs resort that has not seen business drop in the current environment, which makes adapting quickly and effectively that much more important.

Given that families are the key customers now, abundance and diversity of attractions is critical, she said.

Badminton can now be added to the resort's list of hot springs, swimming pool and skiing facilities

"We still hold some corporate events and if the need arises, we can quite easily convert the badminton facility back to a conference center. The space is now flexible with two uses and in the current climate it is useful to be flexible," said Yang.

muchen@chinadaily.com.cn