Vladimir Potanin -- whose $2 billion of spending is among the most from the billionaires tapped to build the pistes and stadiums for the 2014 Winter Olympics -- is planning to invest $90 million more on his Roza Khutor ski area to increase capacity by 2018.
At the same time, he’s told the president a wider expansion, which may cost $5 billion, is needed to turn the Black Sea area into a draw similar to Europe’s biggest resorts.
“This is the development of small business and a tax base, tourists, new jobs,” Roza Khutor Chief Executive Officer Sergei Bachin, said in an interview.
Russia’s economic woes have helped domestic tourism as the weakening ruble raised the cost of foreign travel. International vacations dropped by more than 30 percent last year, according to the Russian Tourism Industry Union.
That was the largest annual decline since 1998, as the currency plunged about 55 percent since the start of 2014 and the government banned sales of package vacations to Egypt and Turkey.
Roza Khutor earned more than it spent for the first time ever this winter season, which ran from mid-December through April, with visitor numbers jumping 33 percent to 800,000 people, according to Bachin. The crowds swelled in January to the point where management hiked prices to control the influx. Roza Khutor and the two competing resorts in the area, one owned by natural gas producer Gazprom PJSC and another developed with backing from state-controlled Sberbank PJSC, are bumping up against the area’s capacity of about 20,000 people a day, Bachin said.
Putin ordered the government to weigh further developments, in the Sochi National Park, after Potanin wrote a letter to the president about the future of the region. Only two areas of the park are suitable for projects and each may take up to a decade to build up, costing a combined $5 billion, Bachin said.
Roza Khutor and Potanin’s Interros Holding don’t plan to invest, he said.
In the expansion planned for the next two years, Roza Khutor is planning to build four new ski lifts, bringing the total to 20, and extend the slopes to 100 kilometers (62 miles) from the current 77 kilometers. The $90 million project will eliminate bottlenecks, boosting capacity by as much as 50 percent, Bachin said.
On top of that, GMK Norilsk Nickel PJSC, the mining company partially owned by Potanin, last month approved $250 million of financing for Roza Khutor for possible projects in the next three years, bloomberg.com informed.
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