What Sochi hotels need to stay profitable after the Olympics

While the 2014 Winter Olympics are currently taking place in Sochi, Russia, the hotel industry is wondering how the city will benefit from its increased supply. According to a report released by Smith Travel Research late January, Sochi is expected to have increased its hotel supply by as much as 96 percent in anticipation of the games, which could potentially create a void in their absence.

A special market report released by Horwath Hotel, Tourism and Leisure shows that Sochi has the largest concentration of new hotel rooms and global brands in all of Russia, with more than 9,000 guestrooms opening by the start of the Olympics or shortly after their start. Where one single internationally branded property was in operation prior to new construction, now 30 new hotels have arrived in just 24 months.

Much of the construction took place in the last four weeks, with the New York Times reporting just last week that there were as many unfinished hotels as there were finished ones. On top of this, brand new transportation hubs are in place to help manage a level of congestion that the city had previously never seen.

According to Horwath, the Russian and CIS countries represent an emerging market size of 280 million people, which could potentially take advantage of Sochi's access to beaches, skiing, mountain activities and the new sports facilities left over after the end of the Olympic games. 

With all that potential, Horwath finds that Sochi must not be abandoned by Russia's federal government after the games in order to succeed. The long-term benefits of the level of development can be reaped by nearby airports and convention markets. However, an organization needs to be established for Sochi with full responsibility for promoting tourism in the region, and must use the hotel sector as a means to access the new draws that Sochi provides.