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There are three buses daily from 'Shangri-La' (Zhongdian) to 'Deqin' (8:20am, 9:20am, 10:20am, 6-7 hours, 65¥). The easiest place to start is 'Feilai Si' which can be reached in a (shared) taxi in about 15-20 minutes from Deqin (30¥ for the taxi). From this village you have amazing views over the mountain range, especially for sunrise.
The Youth Hostel in 'Feilai Si' (waypoint 'Youth Hostel Feilai Si') is a good place to stay. Here you will most probably meet other hikers to share the cost of transportation to the starting point of the hike. A dorm bed costs 40¥, a double room is 120¥.
There are shared taxis (max 7 persons, 150¥, 1.5h) that brings you to 'Xidang Hotsprings' (waypoint 'Xidang Hotsprings') where you start the hike. Alternatively you can also start in 'Feilai Si' itself and walk down into the valley (1300m descent) and then up to the Xidan Hotsprings. The taxi stops along the way where you have to pay the entrance fee to the Meili scenic area (85¥, waypoint 'Ticket Office1'). Keep the ticket, you will need it later.
The actual hike from Xidang Hotsprings (waypoint 'Xidang Hotspring') to Upper Yubeng village (waypoint 'Upper Yubeng Village') takes 4 - 5.5 hours depending on the weather (in March there was still snow). In the first 3 - 4 hours you walk up in the forest (1050m ascent) There are three tea houses along the way where you can buy water, soups, beer etc. Two of them are on the way to the pass, in March only the second one was open (waypoint 'Teahouse1'). The third one is right after crossing the pass (waypoint 'Teahouse2'). Don't miss the panoramic viewpoint (5 minutes one way from the pass, waypoint 'Panoramic Viewpoint'). There was a sign asking for 3¥"entrance fee" for the viewpoint but nobody asked for money - this might be different in high season :)
From now on it is going down for 1 - 1.5 hours (550m descent to upper Yubeng village) until you reach another ticket office (waypoint 'Ticket Office2') where you have to show your park entrance ticket. Here you need to pay another 5¥ which will be deducted from the first night in either Upper or Lower Yubeng village. Most guesthouses in Upper Yubeng village charge 20¥ or 25¥per bed in a shared room. Don't know about Lower Yubeng, I guess the price will be the same.
There are several daytrips which start from the two Yubeng villages. We couldn't do any because of the snow. Please have a look at the map http://mappery.com/maps/Meili-Snow-Mountain-Hiking-Map.jpg (Basecamp, Waterfall, Lake)
To return to 'Deqin' / 'Feilai Si' you can either go back the same way you came from or take the scenic walk to 'Ni Nong'. It is not nescessary to hire a local guide, once you are on the the right way from Upper Yubeng village you can not go wrong. When you walk out the Upper Yubeng village there is a "junction" with three pathes: one leads up the hill beneath a house (this is the way you came from), one leads straight (same elevation), one goes down in the direction of Lower Yubeng village. Take the last (right) one, which goes down. Soon after there is another junction with three pathes, here you take the middle path. Now just follow the widest path, if the path splits, always take the one closer to the river. After a while you will see a couple of houses and a bridge (waypoint 'Bridge1'). Here we crossed to the true-right side of the river but it is probably better to stay on the true-left side of the river until the third bridge (waypoint 'Bridge3'). At this point you have to cross to the true right side, there is no path leading down the valley on the left side of the river.
On the way down there is one shop / restaurant (waypoint 'Shop') where you can buy beverages, snacks. Once the valley joins the Mekong river you just turn left and walk for another hour until you reach the village 'Ni Nong'.
The mini-buses which bring you back to 'Deqin' or 'Feilai Si' are waiting on the true-left side of the Mekong at the gravel-pit before the village. It takes around 1.5 hours to drive back to Feilai Si (max 7 persons, 200¥).
Alternatively you can continue to walk along the Mekong on the true-right side and reach 'Xidang' after another 2.5 - 3 hours. From 'Xidang' you can go back by minibus or walk up back to Feilai Si.
PS: We met a guy in the 'Failai Si Youth Hostel' who gave us a lot of useful information about the hike. His name is Gilbert Chua and he is going to open a new guesthouse in Upper Yubeng village called 'Yak Butter Inn' in May 2012. Don't know about the guesthouse but I definitely recommend staying with him, he is really knowledgeable about the area.