Support Skift’s Independent JournalismMake a Contribution Now
The Russian government reportedly poured $51 billion into Sochi to prepare for the Sochi Olympics, and secondarily to give the region a lasting tourism benefit, but a Moody’s Investors Service report is skeptical about any ongoing tourism benefit after the Olympic torch is extinguished.
Moody’s subscription report, Sochi 2014 Winter Olympics: Uncertainty Over Long-Term Legacy Overshadows Benefits, argues “that the Russian hotel sector is vulnerable as a massive increase in the supply of rooms coupled with stiff competition from other resorts creates uncertainty over the long-term prospects for Sochi’s tourism industry.”
In the run-up to the Sochi Olympics, the hotel accommodations for the media have been pilloried, and Moody’s points out that “the high cost of the event and other negative publicity have limited the reputational benefits of hosting the Olympics.”
The Sochi and Krasnodar Krai areas attracted plenty of infrastructure upgrades for the Olympics, but after the games they will be saddled with maintaining stadiums and other facilities, Moody’s says.
There is uncertainty “as to whether these regeneration efforts will sufficiently boost revenues from tourism and other areas,” Moody’s says.
Meanwhile, the World Travel & Tourism Council forecasts [pdf] that the Russian Federation’s travel and tourism spending will increase 5.7% per year over the next 10 years to $17.82 billion.