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Hotel experts debate the future of Sochi beyond the 2014 Winter Olympics – will it all end in tears?

With Russia attracting over 25 million international tourists per year, at a rate of over 13% growth vs. 2012 (a staggering growth rate considering global growth of tourism was just under 4%), the ability to maximise growth potential has become a national priority.

LONDON – Over 360 hotel industry experts recently gathered in Sochi, ahead of the Winter Olympic Games to discuss the future of the Krasnodar region and tourism in Russia as a whole.

The Russia & CIS Hotel Investment Conference (RHIC) took place 22-23 October, just 100 days before the opening of the 2014 Winter Olympic and Paralympic Games. The official opening brought the Deputy Mayor of the City of Sochi, Oleg Yasyuk, to the stage along with the Vice Governor of the Krasnador Region Administration, Nikolay Buturlakin, to provide an important scene-setter for the next two day’s discussions at RHIC.

With Russia attracting over 25 million international tourists per year, at a rate of over 13% growth vs. 2012 (a staggering growth rate considering global growth of tourism was just under 4%), the ability to maximise growth potential has become a national priority. Sochi, with 145km of shoreline and 16 seaports, currently enjoys over 4 million tourists per year.

More than 25,000 new rooms will greet the guests of the Olympiad, however these visitors will come and go and what will remain? Empty hotels, stadiums and arenas that won’t serve anyone or a thriving resort which will attract international visitors?

Sochi and the region have a clear understanding of the critical enablers to effective, sustainable growth of tourism, and has put in place the infrastructure essential for growth including a new power station, transport systems and ITC infrastructure, however the percentage of international visitors is very low, due to the difficulties in obtaining Russian visas and the lack of international flights into Sochi.

The regional governments have activated specific programmes to incentivize hotel investors and resort developers to take advantage of the city and region, especially noting the upcoming Winter Olympics, F1 and FIFA World Cup mega-events.

As reinforced by the Deputy Mayor, their role is to provide not just incentives, but to “guide investment” to ensure that the city, region and investor realise their objectives.

The Vice Governor added that, in addition to the delivery of mega event programmes and timelines, focus is being put on post-Games marketing to ensure that the development in the city and region is able to attract ongoing visitors, and investors.

Oleg Zabara, Deputy General Director for organization of Formula 1 Russian Grand Prix, OJSC “Center Omega” participated on a panel discussion Life after mega-events. He commented “RHIC 2013 provides excellent opportunities for gaining insight into how to make a mega event a catalyst for the development of the tourist industry of the country. Formula 1 is an event of just such large scale which will give an additional impetus to the post-Olympic development of Sochi, as thousands of Russian and foreign visitors will be coming to the city for the races. People need thrills, and it’s our goal as the promoters of the Grand Prix of Russia to make the races unforgettable so that the guests would want to return time after time. I have no doubt that we’ll be able to inspire the visitors to Sochi to come here again.”

The final session of the first day focused on the critical link in the destination development chain: air transport. Alexander Zapopozhsky, Strategy & Investments Director at ‘Airports of Regions’ joined Mendiratta on stage.

The session went into in-depth discussion around the role of aviation in Russia, and the opportunity of the upcoming mega-events to raise Russia to the level of performance it can easily achieve on the global tourism and aviation stage. Zapopozhsky expressed that the opportunity for airlines within Russia, and into, is huge, however to unlock the opportunity, various issues need to be addressed; airport infrastructure; open skies; visas; airport technology and budget operators.

The upcoming mega events offer the opportunity for ‘stress-testing’ aviation systems in Sochi and across the country, using the event to identify where and how the Russian airport system and infrastructure needs to improve to maximise travel growth.

Zapopozhsky also stressed the fact that, with airport development, and accompanying airport hotels, the impact on trade, export, conference & business travel development and social advancement should not be forgotten. Ultimately, without airlines and airports, hotel investment is blocked as travellers are unable to get to the destination. As investors look to hotels and resorts, pressure on airport and airline development should also be factored in.

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