SOCHI, Russia—In just two weeks, the Olympic flame will burn in the resort city of Sochi, Russia, located on the Black Sea with views of the Caucasus Mountains.
Sochi’s population, at nearly 350,000, is one of the top resort destinations in Russia and hosts more than 3.5 million tourists every year. Sochi, beating out Pyeongchang, South Korea, and Salzburg, Austria, to host the 2014 Olympic Games, has been preparing for the swarm of people by building all Olympic venues from scratch, spending nearly $50 billion, according to various reports, a new record for the most money spent on the Winter Olympic Games.
With all the development that has occurred in Sochi, in addition to the warmer climate, hotel revenues will increase during the games. Looking back to the 2002 Olympics in Salt Lake City, overall hotel revenue was impacted by $56.6 million and $3,253 per available room, according to STR Analytics, sister company of Hotel News Now. The graph below shows the actual measure of the Salt Lake City market in occupancy, average daily rate and revenue per available room from January 2002 to March 2003.
Click chart to enlarge.
The few weeks prior to the Olympics and the few weeks that followed show a great increase on the hotel industry due to the amount of demand in the market. A similar pattern can be seen for the Turin, Italy, Olympics in 2006 and the Vancouver, Canada, Olympics in 2010.
Click chart to enlarge.
Click chart to enlarge.
On average, according to STR Analytics, during the past three Winter Olympic Games, the year-over-year percent change for ADR was 114%. There was a 33% increase in occupancy and a 186% increase in RevPAR. Based on the positive increases in Salt Lake City, Turin and Vancouver, a bright future is ahead in the coming weeks and during the Sochi 2014 Olympic Games.
To prepare for the massive influx of demand from tourists, athletes, officials and media, Sochi has added 2,808 hotel rooms over the past two years. While the majority of the hotels that have entered the market are independent properties ranging from 100 rooms to nearly 800 rooms, there are a number of upper-upscale, upscale and upper-midscale properties under construction. Ten hotels comprising 2,363 rooms are scheduled to open prior to the opening ceremonies.
Though opening and closing ceremonies will be held in Sochi proper, due to the small size of the city, the games will have two Olympic villages—one in the mountain town of Krasnaya Polyana and the other on the coast. While this might seem slightly inconvenient for ticket holders, a rail line and a major highway have been built between Sochi and Krasnaya Polyana to make traveling from venue to venue as easy as possible for Olympic game lovers.