Yubari Resort to file for bankruptcy citing pandemic-induced tourism downturn

Only a year after purchasing the resort and related hotels, the owner-operator of the Yubari Mount Racey Ski Resort is filing for bankruptcy. The closure of the city’s only ski resort and the only three hotels nearby have devastated the local tourism industry.

Yubari Resort operates the Mount Racey ski fields as well as three accommodation facilities in Yubari City, attracting up to 50,000 skiers in a good season. This year’s pandemic has hit tourism operators hard, especially those in ski resorts.  The recent resurgence of the virus and the temporary cancellation of the government’s Go To Travel campaign could not have come at a worse time. With international tourists still banned from visiting Japan, the outlook for this year’s ski season looks grim. 

On December 24, the company announced via their website that the worsening of the coronavirus pandemic in Hokkaido has made it no longer viable for them to continue to operate. They have paused operations of the Mount Racey ski field for this season. 

Mount Racey was developed by Yubari City on the site of a former coal mine. It was sold for 2 billion Yen in 1988 to Matsushita Kosen, a former Osaka-based real estate developer founded by the family that created Panasonic. Matsushita spent over 10 billion Yen developing a hotel and ski courses, opening the resort in 1991. After suffering some operational difficulties in the 1990s, Matsushita sold the resort back to the city in 2002 for 2.6 billion Yen. When the city was facing economic collapse, they sold the resort’s operating rights to Kamori Kanko, a resort operator based in Sapporo. Kamori Kanko operated the facilities under their Yubari Resort subsidiary.

In February 2017, the city sold the underlying assets, including the ski field, Hotel Mount Racey, and Yubari Hotel Shuparo, to Yuanta Yubari Resort – an affiliate of a Chinese real estate company – for 240 million Yen. A month later, the same buyer acquired Kamori Kanko’s Yubari Resort company, and began operating the resort and hotels from April 2017. With an eye on targeting foreign tourists, the goal for the resort company was to spend up to 10 billion Yen on improvements, advertising and publicity for the city, creating a ski resort destination to rival Niseko. But, with ballooning maintenance costs and ageing infrastructure, the company sold the ski field and three hotels to a Hong Kong investment fund in 2019 for 1.5 billion Yen.

According to the Teikoku Databank, prior to the sale to the Hong Kong fund, Yuanta Yubari Resort reported annual revenue of 1.24 billion Yen as of March 2019 with an ordinary loss of 250 million Yen. 

Mount Racey was a symbol of Yubari, a small city of 5,000 households that became famous for essentially going bankrupt in 2006-2007. It flourished in the 1940s as solely a coal mining town, hitting a population peak of as many as 116,000 residents in the 1960s. Coal mines began to close from the 1970s onwards, with the population dwindling rapidly. By the time last coal mine closed in 1990 the population had dropped by 80% to 20,000. It currently sits at 7,468 as of November 2020. 

With a hilly landscape and very little land suitable for farming, the city had little else in the way of industry. The city made a desperate attempt in the 1980s to become a tourist destination and to attract new, younger residents. Theme parks and ski resorts were built, and film festivals were held, but these came with huge operating costs. The efforts were in vain, with the collapse of the bubble economy in the early 1990s wiping out asset values, and the ski tourism industry entering into gradual decline.

Location

Yubari, Hokkaido

Sources:
Yubari Resort News Release, December 24, 2020.
NHK, December 24, 2020.
Teikoku Databank, December 25, 2020.
The Sankei Shimbun, February 8, 2017.

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