$15Bln Plan to Build 5 Ski Resorts in Caucasus

Kremlin.ruPresident Medvedev skiing in January at the Krasnaya Polyana ski resort in Sochi.

President Dmitry Medvedev hopes to strike gold by building five ski resorts in the North Caucasus that rival the best Austrian resorts by 2020, an official said Monday.

"We have a Klondike, an El Dorado, and it would be a crime not to use it," said Rostislav Murzagulov, managing partner with Agitpro, a company providing consulting services for the project.

"The situation in the south of Russia is very favorable. There are many airports and a good infrastructure. … The potential is great," he told The Moscow Times.

The price tag for the resorts will top 450 billion rubles ($14.9 billion), and they will be built in Matlas, Dagestan; Mamison, North Ossetia; Arkhyz, Karachayevo-Cherkessia; Lago-Naki, Adygeya; and on Mount Elbrus in Kabardino-Balkaria; Murzagulov said.

The resorts could face an uphill battle attracting tourists reluctant to visit a region plagued by near-daily insurgent attacks.

But Murzagulov indicated that the Kremlin saw the resorts as an opportunity to pump money into the local economy and improve the lives of locals — thereby discouraging separatism and the accompanying violence.

The idea to build the resorts came from Medvedev, while his envoy to the North Caucasus, Alexander Khloponin, will oversee the project, Murzagulov said.

The project will be implemented as a state-private partnership, with the government largely fulfilling organizational and regulatory functions, he said.

Much of the $14.8 billion in construction costs will be covered by private investors, some of which are already waiting in the wings, Murzagulov said. "These are the Russian business and big foreign investment funds and banks," he said.

Among the key investors are U.S., Arabian, Scandinavian and European financial companies, including the German insurer Allianz and U.S. banks JPMorgan Chase and Morgan Stanley, he said.

The government plans to invest up to 60 billion rubles to build roads and other infrastructure that the North Caucasus needs anyway, Murzagulov said.

He said the ski resorts would be competitive with the best ski resorts in Austria, which "gets billions of dollars" from the tourist industry.

Murzagulov said 175.6 billion rubles will be spent on constructing new hotels at the five locations and as many as 5 million tourists a year could visit the resorts.

The mountains in the Caucasus are attractive for two types of tourists — skiers and alpinists — and provide skiing year-round, said Marina Smirnova, senior vice president with consulting company Jones Lang LaSalle, which is not involved in the resorts project.

She said demand could lead to hotel occupancy rates of 60 percent to 65 percent, close to Moscow's level, but said the number of annual tourists would probably top out at 3.5 million.

Construction will be expensive because special equipment will have to be used in order not to damage the landscape, Smirnova said.

"The cost of a four-star hotel in this place may amount to $300,000 to $350,000 per room," she said, adding that the proposed funding would be enough to build 10,000 to 15,000 quality rooms in the resorts.

The five resorts will occupy a total space of 4,000 hectares, where more than 800 kilometers of ski run will be built.

Local residents are ready to work in the service sector, said Murzagulov, adding that about 160,000 jobs would be created after completion of the resorts.

Work on design plans for the resorts has started, and construction is scheduled to begin next year, he said.

Austrian company MasterConcept Consulting, which created the plans of several ski resorts in Salzburg, is creating the concept of the project, he said.

The ski plans are not the first for the region. Chechen President Ramzan Kadyrov said earlier that he would like to build ski resorts in Chechnya aimed at attracting both Russian and foreign tourists. He said the resorts could better those in Switzerland.

"We're not talking about the Chechen Republic," Murzagulov said. "That's a separate situation there, and it should be considered separately."

See also:

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7 Militants Killed by Russian Forces in North Caucasus