05 July 2007

Ski resort entrepreneurs have mountain to climb

By Eric Jansson
Published by Financial Times, 5 July 2007

Just past the hamlet of Smrdliva Voda - translated roughly as "Stinkwater" - the paved road up Mount Kozuf breaks into a heavily rutted dirt path. Angel Nakov's 4x4 keeps roaring uphill.

Mr Nakov and his business partners are building the road. Higher up, once it runs out, he turns his vehicle on to an even more primitive path, bouncing all the way. When that too disappears, he turns straight uphill toward Kozuf's peak and steps on the accelerator. The car bounds over the wildflowers and blueberries that grow densely on the slope.

Finally it becomes too steep, and Mr Nakov jumps out to climb the last few hundred metres. At the top, only a small pillar marks the border between "SFSJ" the extinct Socialist Federal Republic of Yugoslavia and "E", Greece.

From the peak 2,160 metres above sea level, almost the entire Republic of Macedonia can be seen to the north. Looking south, there is the Aegean sea, the Greek port of Thessaloniki and Mount Olympus on the far horizon. Along the east-west ridge, one can still spot gun placements from the First World War when the Salonika Front ran through.

Such is the spectacular view from the summit of what is surely one of the most audacious entrepreneurial schemes underway in the Republic of Macedonia.

It started as "a joke" that is now 15 years old, Mr Nakov says. In the early 1990s, as the manager of a duty-free shop at a border crossing, he developed a taste for business. But he longed to mix business with pleasure. Pleasure on weekends lured him up the mountain with family and friends.

At the time, horses were the only way up. A large slice of wilderness in the southern Republic of Macedonia, including Kozuf, opened up to the general public only in 1991, after four decades spent as a closed military zone following the Greek civil war.

When Mr Nakov and his riding friends "discovered" the mountain, they immediately thought of a year-round resort, he says. But it took years to squeeze their giant dream into an actionable business plan. Now, as executive director of the private company Ski Centre Kozuf, he says they have it.

Together they have spent €4.2m to date, for which there is no ski resort to show. However they do have 55 hectares of land with detailed planning permission for a village in the valley below, initial buildings, machinery to tend the slopes, a first ski lift, passable access roads, links arranged with public utilities and a slick advertising campaign.

A deal with the state foresees swapping a share of lift-ticket income in exchange for use of the mountain.

"We can say we have a very rare situation among new projects in south-east Europe. Our paperwork is all in order. Now our work is practical," Mr Nakov says.

Work at the site is accelerating with the help of an €8m loan from Stopanska Bank, a local lender owned by the National Bank of Greece, he says. With an additional €4m under negotiation, plans call for €12m in spending in 2007, bringing in plumbing, sewage systems, power lines, snowmaking machines, a six-seat chairlift and at a stretch possibly, the construction of the first 60 chalets.

Further cash inflows are expected from property sales, with parcels going for €49 per sq m. Ski Centre Kozuf aims to capitalise on soaring UK demand for holiday homes. "We expect to sell 60 per cent to Brits, 20 per cent to Greeks and the rest local," he says.

But the company also aims to share burdens with a strategic investor. Some €80m will be needed up to 2009 to complete the whole village and mountain to a high standard, according to the plan.

But will the project work in the end? "It's a good idea, but I have some doubts," says Mirko Tripunoski, a tourism expert who to local acclaim launched the mountain resort Popova Shapka, or "Priest's Cap", in 1982. Kozuf may struggle to flourish year-round, in case of weak summer demand or warm winters, he warns.

But Mr Tripunoski's Popova Shapka today is a post-Yugoslav wreck. If the broken chairlifts and sorry scenes on its towering slopes near the Kosovo border are a sign that mountain tourism can go wrong here, they also point to unmet demand.

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