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. Last Updated: 07/27/2016

Olympic Investment for Sochi's 2014 Bid

Olympic-sized investments in Sochi will turn the Black Sea tourist spot into a year-round, sun-and-snow resort that will appeal to newly moneyed Russians and foreigners alike -- regardless of whether the town wins the right to host the 2014 Winter Games, officials say.

While the city's current tourist infrastructure -- consisting of a few giant Soviet-era hotels and small, winding streets -- betrays a city capable of hosting little more than a high school track and field meet, billions of rubles worth of five-star hotels, new roads and shopping centers will raise Sochi to new heights.

If Sochi gets the Games, the city will receive a total budget of 314 billion rubles ($11.8 billion) that has been earmarked to transform Sochi's facilities, triggering triple-speed economic growth, according to Sochi Mayor Viktor Kolodyazhny.

If the games are handed to a different city, the investment figure will drop to 122 billion rubles ($4.6 billion), Kolodyazhny said in a recent interview with Vedomosti.

Sochi's bid is centered on the Krasnaya Polyana ski resort, which is at the foot of the North Caucasus mountain range and famously a favorite ski getaway for President Vladimir Putin.

It has been estimated that 90 percent of Sochi's tourists stay in the city's small, bed-and-breakfast style, private hotels, which are more affordable for the average Russian than the giant sanatoriums that line the beach.

To cater to the expected influx of wealthier, foreign clientele, city authorities are planning to build the kind of accommodation to which Westerners are more accustomed.

"Yes, we need to build over 2,000 five-star, around 10,000 four-star and 13,500 three-star hotel rooms in the city," Kolodyazhny said.

And the existing large Soviet hotels -- including the Moskva, Zvyozdny and Zhemchuzhina Hotels -- are slated for major renovations.

While no multinationals are hinging their decision to invest in Sochi on the city being granted the Games, that would be a huge plus, they said.

Hilton Hotels is currently weighing up several opportunities in Krasnaya Polyana, said Rob Stoddard, the company's development director for Russia and the CIS.

"It would certainly be a plus if Sochi got the Games, but we're in the market for the long haul," Stoddard said.

Sochi's hotels would reap more of a benefit from the Games than simply the profit they could turn during the event, Stoddard said.

"We'd be looking to do more than fill up a few more rooms for just a two-week period," he said.

Central to Sochi's ability to attract hotel investment is that it becomes an international destination. Sochi is not currently on the well-to-do foreign skier's radar, said Stephane Meryat, associate director at Colliers International.

"A presence in Sochi is something that would only make sense in the mid to long term," Meryat said.

The sensible option for hotel chains would be to secure an attractive site at Krasnaya Polyana with an exit clause included in the contract, Meryat said.

"Krasnaya Polyana is right now a dream," Meryat said. "But it has tremendous potential."

But becoming an international destination starts with having an airport to meet international expectations.

Long-awaited investment in Adler airport, which serves Sochi, was announced Nov. 20 as Oleg Deripaska's Basic Element holding company bought the airport for 5.5 billion rubles ($208 million), Interfax reported.

If the Olympic bid is successful, Basic Element will pump up to $8 billion into upgrading the airport. If not, the figure would fall to $5.6 billion, Interfax reported.

International Olympic Committee officials will visit Sochi from Feb. 20 through Feb. 23, and will vote on which city will win the 2014 Games in July 2007.

Organizers are confident they could generate $200 million in revenue from holding the Games, according to the web site for Sochi's bid, Sochi2014.com. Ticket sales figures are based on an average ticket price of $64 for non-premium events and $545 for opening and closing ceremonies.