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Quantitative research of fdi in the tourism industry of the russian black sea coast.
1. 1
Quantitative research of FDI in the tourism industry of the Russian Black Sea
Coast.
If to visit the official website of the Rosstat, it is only possible to track regional
spending on tourism in the period between 1990 and 2003 years. The direct federal
investments in the touristic sphere of the Kransodar region were only 0,6% of the
total spending. However, a lot of changes happened to the touristic industry in
Russia since that period. A particularly important event that boosted touristic
activities in 2004 and aroused the interest of foreign investors was the
announcement of the fact that the Olympic Games in 2014 will take place in Sochi.
This event has drastically changed the investment potential of the city and, of
course, the potential of the entire Krasnodar region, which is located in the territory
of Russian Black Sea Coast. The international investment forum that is regularly held
in Sochi had more participants than ever in its history. Moreover, the upcoming
forum, which will be held on September 20, cannot accommodate all the potential
participants. International investors mostly direct their investment flows in the JSC
“Krasnaya Poliana”. In fact, the place of the future location of the Olympic village is
currently supervised by the joint venture of this company and the United States
Company WPHG.
The place accumulated in itself foreign direct investments from such famous
international hotel franchises as Hilton, Hyatt, Park Inn, Marriot International,
Swissotel and many others. A lot of companies plan to invest in the city. The Italian
company Todini Costruzioni Generali plans to invest $882,4 million in the
construction of hotels and shopping centers in the Sochi territory. The transport
industry of the city is also enhanced using the foreign direct investments from the
Volkswagen company.
Thanks to the upcoming Olympic games the entire Krasnodar’s region
touristic industry is being enhanced to meet the needs of the international tourists.
International hotels emerge in Krasnodar and Gelendzhik, federal investments are
directed to create aqua parks, recreational facilities, improve the existing transport
infrastructure to meet the needs of recreational and business tourism.
During the past three years, the amount of foreign direct investments in the
economy of Russian Federation increased continuously. In the period from 2009 to
2011, the amount of foreign direct investments increased from $36,500 million to
2. 2
$52,878 million, which is equal to the increase in 44,9%. 1 Russian Black Sea Coast,
which is also often referred to as Krasnodar region received a substantial amount of
the foreign direct investments. In the period from 2009 to 2012 the region received
377012,7, 492732,9, 544750,0, and 588330,0 million of Russian Rubles
accordingly.2 This means that the absolute growth of the foreign direct investments
in the region was 211317,3 million of Russian Rubles in 2012, compared to 2009. If
to use the relative indicator, the amount of foreign direct investments in the region
increased in 56,05% compared to 2009. The amount of foreign direct investments
per capita increased as well. In the period from 2009 to 2011, this balance sheet
item had a value of 39390, 45550, 42760, and 44590 Rubles correspondingly.
The factor that significantly contributes to the growth of touristic sector of the
Krasnodar region’s economy is the development of small and medium enterprises. In
fact, the investment flows in such enterprises ensure that region’s economy is
developing, in contrast to the growth of large companies that may be explained by
the growth of their subsidiaries in some other regions. In Krasnodar region, the
growth temps of foreign direct investments into the small and medium enterprises
during the past three years were 107,6%, 110,1%, 112,6% correspondingly.
Therefore, the relative growth of foreign direct investments in 2012 compared to
2009 was 10,5%.
It is important to not underestimate the importance of the involvement of local
population in the touristic activities. There is a strong trend of increase in the number
of employed citizens of the Krasnodar region, who have obtained their jobs thanks to
the foreign direct investments. In the period from 2009 to 2012, 104,5%, 105,1%,
and 105,8% of people obtained their jobs correspondingly, which means that the
relative growth was 1,3% compared to 2009.
Generally, foreign direct investments flow into the processing and
manufacturing industries of the Krasnodar region. The foreign direct investments that
flow into tourism are reflected in the balance of payments as “other investments”.
Though other investments also involve profit received from the trading activities and
some manufacturing activities, tourism is the main part of this balance sheet item,
especially if to refer to such tourism-intensive region as the Krasnodar region.
1
Cp. Balance of Payments (2012), online.
2
Cp. The report of results for 2010 and the main development directions in 2011-2012 (2012), online.
3. 3
Russian Federation’s balance of payments shows that the amount of “other
investments” activities is gradually decreasing over the last few years. In the period
between 2009 and 2011, this balance of payments item had values of $-19044, -
$12823, and $-42438 million dollars. However, this negative trend did not reflect on
the state of things in the Krasnodar region. In 2012, the amount of other foreign
investments activities in the region increased by 4,2 times and was equal to $428
million.3 Most of these investments (61%) flowed in the transport industry, which is
vital for the successful development of the tourist industry. However, a lot of funds
were invested in the development of the hotel industry as well. This may be
explained by the upcoming Olympic Games in Sochi, in 2014. In 2011, the region
also received a lot of foreign direct investments in the transport industry. They mostly
flowed from Netherlands, Sweden and Cyprus. Besides the direct investments, large
amount of equity investment activities took place. However, most of the investments
received from such activities were associated with tax evasion and money
laundering and flew from Cyprus, which is notorious by its simplified tax regime.
Such a negative trend has bad impact on the development of tourism in the
Krasnodar region.
Based on the data above, it is possible to conclude that Russian Black Sea
Coast region has a healthy investment climate, backed up by the solid legislative
framework. Many factors contribute to such growth, but some of the most important
are Krasnodar’s focus on agro-industrial sector, on its natural resources, and, of
course, on its tourism.
One of the most prominent places that are known by the tourists all over CIS
and even European countries is Sochi. Being an attractive investment opportunity,
Sochi establishes international investment forums, on which regional authorities
discuss investment opportunities with foreign companies. The forum attracts much
attention: for example, in 2010 it was attended by 569 foreign participants4 and, in
2011 by 548.5 Sochi international investment forums raise the foreign investors’
awareness about the investment opportunities that are offered by the Krasnodar
region. Moreover, some of the investors actually sign agreements within the
framework of the forum. In 2010, 376 agreements for the total amount of RUR 768
3
“The foreign companies invested in the Krasnodar region $0,5 billion.” (2012), online.
4
“Results of IX International Investment Forum Sochi-2010.” (2010), online.
5
“Results of the Anniversary X International Investment Forum Sochi 2011.” (2011), online.
4. 4
billion were signed, and, in 2011 the estimated value of the signed agreement was
457,1 billion of Russian Rubles. One of the most important agreements, that are also
important to deliver high-quality catering services in the tourist industry, was signed
at the Sochi International Investment forum 2004. It was on that forum that the Swiss
company Nestle signed an agreement, which cost was more than 7 billion rubles, to
establish a manufacturing plant in Kuban region. At the moment, Nestle is one of the
largest direct investors in the economy of Krasnodar region. 6
Despite the fact that Russian Federation is not very involved into the franchise
model of the company development, a lot of companies started to establish their
subsidiaries based on this mechanism, because of the upcoming event of the
Olympic Games in Sochi. In Sochi, such franchise has been established with the
hotel Solnechnyi Luch. It was partially acquired by the transnational company Hilton.
The franchise agreement was signed between the Hilton management and the
management of the company InvestGroup LLC. The newly built hotel has 11 floors, a
bar, a restaurant and a SPA zone. The hotel also has 16 separate bungalows on its
territory. The direct investments associated with this project were equal to 30 million
of Russian Rubles. The international company Hyatt is also planning to invest in
hotel industry of Sochi. Hyatt hotel will open in the fourth quarter of 2012; the
estimated investment spend on the construction of the facility is equal to RUR 7,2
billion.
Hilton group also invested $160 million 7 in restructuring the existing hotel in
Gelendzhik into one of the hotels of the Hilton chain, but the investment was not
successful. Hilton management concluded that the hotel did not meet the high
standards of the Hilton hotel network and denied the facility in the right to use its
brand.
One more hotel in the Krasnodar region that currently is a subject of foreign
direct investments is Garden Inn in Krasnodar. Garden Inn hotel is also a part of
Hilton group and, in case of Krasnodar, was a subject to the RUR 1,5 billion
investments. The payback period of the project is estimated to be 10 years and the
overall hotel area is equal to 12300 square meters.
6
“Agreements at the Sochi Forum: Nestle Kuban is one of Russia's biggest coffee producers.” (2012), online.
7
“Hilton terminated the contract with the Gelendzhik hotel.” (2011), online.
5. 5
Despite the healthy investment climate in the entire Krasnodar region, Sochi
receives special attention due to the Olympic Games that will be held here in 2014.
On March 8th, there will be a grand opening of the Park Inn hotel, which is a part of
Radisson group. The amount of foreign direct investments in the hotel is roughly
equal to $20 million.
The international hotel operator Marriot International has also directed its
investments in the economy of Sochi. The estimated value of investment is RUR 2,5
billion. The hotel will be opened in 2013, its overall area will be 48000 square
meters, and it will have 345 rooms in the medium price range.
The boom in the foreign direct investment activity in Sochi is naturally caused
by the Olympic Games that will take place in the city in 2014. Many international
companies open their hotels in the city including Hilton, Hyatt, Park inn, Marriot
International, Swissotel, and Capella. The overall flow of direct investments is
assessed in RUR 40 billions.8 Swissotel is expected to cost about RUR 8 billion to
the foreign investors, while Capella will cost RUR 5 billion. (See Table 13) The rest
of the costs are associated with the infrastructure development and other services
provided by the international companies.
Table 13. Foreign direct investments in Sochi hotel industry in 2012.
8
“Marriott, Swissotel and Capella will open luxury hotels in Sochi.”
6. 6
The main flow of the foreign direct investments in the hotel industry of Sochi is
directed into the JSC “Krasnaya Poliana” and supervised by the American company
WPHG. This place will become the Olympic media center and should provide visitors
with the substantial level of comfort. If to assess the overall investment trend for
three years, it is possible to see that Sochi made a great leap forward, thanks to the
JSC “Krasnaya Poliana”, which also increased the investment attractiveness of the
Krasnodar region. (See Table 14)
Table 14. Foreign direct investments in the Krasnodar region.
The overall state of the tourism industry in Krasnodar in 2012 can be
described as follows:
• In 2012, the number of the hotels in the region increased to 1813 with
241200 beds, as compared to 1612 organizations and 226000 beds in
2011.
• The flow of the tourists increased in 11%.
• The number of services provided by the tourist-related organizations
increased to RUR 7,7 billion, which is 23,2% more than in the previous
year.
• The number of services provided by health resorts increased to RUR
16,1 billion, which is 12,1% higher than in the previous year.
7. 7
• The number of the services provided by the touristic agencies
decreased to RUR 87,5 million, which is 52,8% lower than in the
previous year. 9
The increase of the touristic activities in 2011 was significant, but it was, of
course, affected not only by the investments in the hotel industry. The important
aspect of tourism is communications and transport infrastructure, which has also
improved recently compared to the previous years. Recently, Volkswagen group
provided Sochi with 44 minivans “Transporter Kombi.” The agreement, signed in
2010, between the organizational committee of Sochi Olympic Games and
Volkswagen, also implies that the company will provide Sochi with 57 more buses to
serve the Olympic guests. The significant amount of foreign direct investments was
also directed into the development of Krasnodar airport. The region also received the
substantial amount of the federal direct investments to build toll highways on its
territory. The overall amount of the investment was equal to 7,8 billion of Russian
Rubles.10 This is more than in 2009 and 2010, when Krasnodar region received only
RUR 5 billion and RUR 5,9 billion accordingly. However, due to the Olympic games
in Sochi, the federal program called “Modernization of the unified system of air
traffic” was already implemented in 2009. Since then, the amount of federal
investments in the transport industry of the region increased.
The project of building an airport in “Armavir” was proposed in 2010 and is
currently being implemented. The overall cost of the project is RUR 500 million, and
it is expected to pay off in 5 years. The city of Armavir has currently the Military Air
Force Academy, on the base of which it is possible to implement the project. The
project may greatly increase the flexibility of passenger air transportation and
increase tourism attractiveness of the region.
During the period from 1990 to 2009, the passenger turnover that used air
transport in the Krasnodar region has significantly decreased. (See Table 15.) The
slight increase in passenger air traffic can only be seen in the period between 2004
and 2009. The situation can only be remedied by the ongoing reconstruction of Sochi
airport and the construction of Armavir airport.
9
“About the socio-economic situation in the Krasnodar region in the first half of 2012.” (2012), online.
10
“Krasnodar region department of transport.” (2012), online.
8. 8
Table 15. The trend of passenger air traffic in the Krasnodar region.
One of the other investment projects that are currently being implemented to
facilitate the access of international tourists to the Russian Black Sea Coast is
reconstruction of the seaport in Anapa. The project implies reconstruction of the sea
terminal, building a five star hotel, a cinema, a bowling center and a restaurant. The
new sea terminal will also include a separate parking. Passenger piers will be
enlarged and enhanced to better suit the needs of the tourists. The overall
investment in the project is estimated to be RUR 2459,7 million, and it is expected to
pay off in no more than 8 years.
One more considerable investment project is the improvement of Sochi sea
terminal for it to fit the needs of international passenger transportations. The sea
terminal will also be updated to handle cruise traffic. The infrastructure of the sea
terminal will be organized so, that it could accept international tourists, help them to
accommodate themselves in luxury hotels and have rest. The estimated cost of the
project is RUR 4600 million.
The little cities in the Krasnodar region also receive direct federal investments
to improve their transport infrastructure. For example, Primorsko-Ahtarsk received
RUR 90,66 million to build a bus terminal. In this way, the suitable transport
infrastructure is created to help the tourists reach their destinations as soon as
possible.
As a part of the federal direct investments program, the high-speed rail route
is being built between Sochi and Krasnodar. The trains that run on this route will be
of a high comfort, and the new wagons will significantly increase the level of service.
Every wagon will be equipped with the system of air conditioning; the armchairs will
have displays embedded in their backrests. The wagons will also be equipped with
9. 9
the bio-toilets and the modern systems of video surveillance. The cost of the project
is RUR 1237 million, and it is expected to pay off in no more than 7 years. However,
railway industry demands it, as shown by Table 16, as it indicates the clear negative
trend of passenger turnover in the period from 2007 to 2009.
Table 16. Rail transport passenger turnover in the Krasnodar region.
In 2011, the overall transport industry of the Krasnodar region improved
significantly. The cost of the transport services provided was RUR 121,3 billion, the
overall passenger turnover was 473,7 million of people. The following graph shows
the distribution of funds in the transport industry of the Krasnodar region. (See Table
16)
One more important aspect that is necessary for the successful growth of the
tourism industry is public catering industry. The industry of public catering, which is
represented by the local cafes and restaurants in the Krasnodar region, grows
steadily. At the moment, there are 1478 restaurants and cafes in Krasnodar, which
brings the city profit of RUR 12,6 billion. The growth rate of this sector is also
favorable and is estimated as 107% compared to the same indicator in 2010. The
reason of the successful catering business development in Krasnodar is that, after
the prohibition of gambling, the city had a lot of free space for the small and medium
enterprises. The local cafes and restaurants occupied this space.
10. 10
Krasnodar region catering industry is mostly a subject to private investments.
Some of the most popular restaurants, such as “Kitano Chelentano” and “Holostyak”,
are the subjects to the private investments from the Russian organization “Horeka
Invest Group.” However, some of the cafes and restaurants are, of course, subjects
of the foreign direct investments.
Table 16. Direct investment projects in the transport industry of the Krasnodar
region.
The well-known international company McDonald’s has established its
subsidiary in Sochi in 2004. The restaurant has 400 seats for the potential clients,
and was a subject to the investment of more than $1,4 million. There is also a
McDonald’s restaurant in Krasnodar, which was opened in 2006. The overall
investments in the opening of this restaurant were more that $1 million.
The Krasnodar region has the subsidiaries of such famous franchises as
Pizza Hut, Burger King, Friday’s, Wag Mamma, Beer’s Tube, Federico Fellini. All of
these restaurant chains provide the same level of service as they do in other
countries. Due to their globalized strategies, their menu is also very similar in all the
countries they operate. An interesting fact is, however, that in Sochi’s subsidiary of
McDonald’s the prices are ridiculously high. However, this does not seem to affect
the competitiveness of the restaurant.
To summarize the foreign direct investments insight in the catering industry, it
is necessary to underline that the percentage of the international franchises in the
11. 11
Krasnodar region is very limited. The rough estimate of such franchises is 3-5%
depending on the city. This may be explained by the customers, loyal to the local
cafes and restaurants that can provide a high level of service.
While Sochi is the main subject for the foreign and federal investments, there
are some other cities in the Krasnodar region that deserve investors’ attention.
Tuapse city was found 150 years ago to protect Russia from the sea attacks. The
city became a popular resort facility in Soviet Union and does not lose its popularity
even nowadays. Tuapse is a middle class resort, but it will naturally become
something more with the start of Sochi Olympic Games in 2014. Meanwhile, some of
the federal investments in the city were the construction of sanatorium “Gamma” with
RUR 217 million of the direct investments, reconstruction of the indoor pool in
“Zelenyi Gay” sanatorium, the cost of which was more than RUR 93 million, building
of the ice palace near the city. The building of the palace cost the investors RUR 254
million. Some other subjects of the federal direct investments were aqua park
“Orbita”, outdoor pool and reconstruction of the medical facility in the Nebug village,
that is located near the city. The total amount of the investments was RUR 612
million. Two more aqua parks were the subjects of federal direct investments. They
are currently located in the villages Jubga and Olginka, near the Tuapse city. The
overall cost of construction was RUR 155 million. The federal direct investments also
flew in the reconstruction of the Tuapse embankment.
Despite the fact that Tuapse received a certain amount of the federal direct
investments, it certainly deserves more. The city combines in itself industrial and
touristic potential and has one of the sea terminals that never freeze. Some of the
possible investment projects are further reconstruction of the Tuapse embankment,
building of the recreational facility “Gora Semiglavaya”, which is located in the highly
comfortable area of the city. The name of the area is supposed to be “Yuzhnaya
Zvezda”. The city may also benefit from the increase in provision of the public
catering services. The current investments projects of the cafes and restaurants
include building of the café “Kamennyi Cvetok”, building of the café in the Juba area,
building of the café in the Olginka area. However, it will be very advantageous for the
city to receive direct investment in its transport industry. This way it can become an
interchange station for the tourist that will come to visit Sochi Olympic games in
2014, but for some reason, will not be able to go directly to Sochi. The enhanced
transport network will also benefit the overall wellbeing of the region.
12. 12
The city of Gelendgzik also received a substantial amount of federal direct
investments to improve its touristic potential. Over the last few years such aqua
parks as “Zolotaya Buhta”, “Delphin”, and “Begemot” were constructed. The city has
a mountain park named “Safari”, which combines in itself a nature conversation area
and a touristic attraction. The city’s seafront was also enhanced with the beautiful
fountains all along the alleys. The amount of funds invested in the enhancement of
the seafront is RUR 273 million.
The city has also enhanced its transport potential with the help of federal
direct investments. The construction of Gelendzhik airport is currently in progress,
but it already operates. The first air flight was conducted on December 25th, 2008. At
the moment, the airport can handle a passenger turnover of up to 900000
passengers a year. The overall federal investments were more than RUR 8 billion.
The airport has a class IV according to the international classifications and provides
the city budget with RUR 135 million per year.
Gelendzhik hosted MIRIM-2011 event, which was also a source of the foreign
direct investments for the city that means that Gelendzhik is a place of attraction for
the international real estate investors. The event brought the city RUR 8 billion. JSC
“Kubanskaya Marka” has become a private investor for the city and increased its
potential to accommodate tourists from all over the world. JSC “OBD-Rielt” has also
become a private investor and agreed to invest into the construction of highly
comfortable areas in the city. As a result of Sochi International Investment forum in
2005, the city received a direct investment into the construction of apartment
complex “3-Progres” that is currently completed and populated. The complex
includes 44 cottages that are located at no more than 100 meters from the beach.
The city also received direct foreign investments from the “Hermitage
Construction & Management Group” that invested RUR 9 billion into the construction
of international hotels. The federal investments in the hotel sector were equal to
RUR 1264 million, which included the construction of the “Kedrovaya Roshcha”
pension, the enhancement of the “Primorie” hotel, and the “Nadezhda” hotel. The
“Nadezhda” hotel was equipped by the congress hall, which will contribute to the
development of the business tourism in the city. Federal direct investments were
also directed to the microdistrict “Yuzhnyi”. RUR 120 million were allocated to
enhance the area and make it highly comfortable for the international tourists.
13. 13
However, it is necessary to underline that the city may have benefited if some of the
federal direct investments were allocated into the development of rail transport. A
sustainable rail connection of Gelendzhik with Sochi can facilitate the flow of tourists
between these two important touristic centers.
Another city that received a significant amount of federal direct investments is
Anapa. Anapa is the city that was attractive for the local tourists for many years, but
today it becomes something more, because of the forthcoming event of the Olympic
games in Sochi 2014. The city received a significant amount of investments to
improve its microdistrict “Vysokiy Bereg.” The micro district is situated around the
ancient monument, which is St. Vladimir temple. This temple is the center, around
which the enhancement of the micro district takes place. “Vysokiy Bereg” is a very
advantageous place of accommodation for international tourists. It is located near
the sea and consists of the resort area and park area. The resort area is currently
enhanced by the paved embankments near the sea and reconstructed areas, in
which it is possible to get access to the sea. The transport infrastructure of the micro
district is also enhanced significantly. The total cost of the project is RUR 24000
million. This money is supposed to be used to enhance the area of 80 hectares. The
microdistrict “Vysokiy Bereg” is mostly enhanced by the sanatorium facilities and
tourist objects, such as surfing center and the improved building of the hotel
“Chernomorskiy”. Moreover, the upper embankment of the micro district is being
extended to fit the needs of the enhanced transport infrastructure. The breakwater is
being constructed as well; its overall length will be 100 meters. The overall costs of
the investment is RUR 2080 million and €60 million of foreign direct investments.
The project is expected to pay off in no more than 10 years.
Reconstruction of the Anapa sea terminal is also a subject of federal direct
investments. The terminal is basically transformed into the entertainment area for
international tourists. The cultural, manufacturing and business facilities will be
unified by the common aesthetic elements to create a recognized image of Anapa’s
sea gates. The project implies construction of a modern hotel in the terminal territory,
reconstruction of the terminal itself, construction of a modern cinema, a bowling
center and a restaurant. The overall amount of the direct investments is RUR 2130
million, and the money is expected to pay off in 7,8 years.
Another place of the touristic attraction that is being implemented in Anapa
with the help of federal direct investments is the touristic complex “Etnographic
14. 14
Village”, the aim of which is to show the development process of Anapa since the
period of Ancient Greece. The project is aimed at recreating the cultural heritage of
the local habitats, including architecture, national cuisine, arts and customs. The
complex will be divided into such facilities as a hotel, a café, several chapels, 5
thematic objects, a trade center, a pond, and the stables. The estimate cost of the
project is RUR 105 million, and it is expected that the object will pay off in no more
than 6 years.
Another subject of federal direct investments in Anapa is construction of the
thematic amusement park. The park will involve 25 thematic rides based on the
myths and legends about ancient nations that once inhabited Kuban, a hotel, a few
restaurants, a skating rink, and a 3D cinema. The overall cost of construction is RUR
3500 million, and the project is expected to pay off in no more than in 6 years.
Thanks to the federal direct investments, the recreational area will also be created in
the “Yuzhniy” area and “Kavkaz” area of Anapa, as well as in the territory of
sanatorium “Desantnik.” The overall cost of the enhancement is RUR 1700,1 million,
and it is expected that these investments will pay off in no more than 6 years.
Thanks to the sources of foreign direct investments, it becomes possible to
build a Disneyland in the territory of Anapa. The territory of the park will be
subdivided into a few thematic zones oriented on both children and adults. The
overall cost of the project is €189 million. A certain portion of the federal direct
investments was used to also create a golf center in Anapa. The golf center includes
not only the golf field, but also a hotel, a few tennis courts, café’s, restaurants and an
equestrian club. The overall cost of the project was €135 million, and it is expected to
pay off in no more than 7 years.
The federal direct investments that flew in the region over the last three year
were also used to create an aqua park in the territory of Anapa. Its cost was €5
million and it is expected to pay off in no more than 3 years. The federal investments
were also used to create an ethnic village “Za okolicey”. The village is intended to
familiarize foreign tourists with the peculiarities of Russian culture. It has a well, a
chapel, a place for the different ethnic competitions, a bathhouse, and so forth. The
estimated cost of the project is €5,09 million, and it is expected that the project will
pay off in no more than 7 years. The federal direct investments in Anapa also
allowed building the SPA complex, which is currently in the process of construction.
The complex will have a sauna, a barbershop, and a beauty salon. The overall
15. 15
amount of investments is RUR 8 million and it is expected that the object will pay off
in no more than 5 years.
To conclude, it is necessary to underline that, of course, the flow of foreign
direct investments and federal direct investments in Gelendzhik, Anapa, and Tuapse
is less then in Sochi. This situation seems natural, as it is Sochi that will temporarily
become an Olympic capital of Russia. Domestic and federal investors do their best
to transform the city for it to meet the European standards of quality. The
international hotel franchises also see an opportunity of expanding their business
into the city to get their profits from the tourists that are loyal to their brands all
around the world. The works that are being carried out in Sochi truly help the city to
become a proud capital of Olympic games. However, it is very important for the city
to maintain the European standards even after Olympic games. Over the last
decade, the city experienced a major fall in touristic activity, which is gradually
restoring now. This is why, the main task of Sochi’s government should become
maintenance of the European quality of service in all touristic activities. Otherwise,
Sochi may face the fate of Gelendzhik, where Hilton group had to close their
franchise due to the low quality of service. Wise touristic policy may make Sochi a
competitive resort all the year round and, even in winter, European tourists will visit
the city to go skiing.
Despite the fact that Sochi has become the most important subject of the
foreign and federal investment in the Krasnodar region, the other big cities in it also
deserve investors’ attention. The importance of investment in these cities is
manifested in the fact that they can become an interchange point during the Olympic
Games in 2014 and will provide a sustainable basis for the development of tourism in
the future. The federal direct investments should primarily flow in the transport
industry of these cities. This way, it is possible to ensure that tourists will be able to
travel easily around the region and find places that are most suitable for them. The
fact that most of the tourists earn different profits may make some locations more
suitable for them, and the developed transport infrastructure will help them to find
such locations. For example, middle class prefers to rest in Gelendzhik, Anapa, and
Tuapse, while affluent population always chooses Sochi because of the superior
level of service in the city. The inequalities in people’s wealth make them to go to the
different restaurants, sleep in the different hotels and sunbathe on the different
16. 16
beaches. The paramount aim of the tourism at the Russian Black Sea Coast is to
make the touristic activities comfortable for all people regardless of their earnings.