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 Krasnodars 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 $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 regions economy is the development of small and medium enterprises. In fact, the investment flows in such enterprises ensure that regions 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 2

Cp. Balance of Payments (2012), online. Cp. The report of results for 2010 and the main development directions in 2011-2012 (2012), online.

3 Russian Federations 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 Krasnodars 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. 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.

Agreements at the Sochi Forum: Nestle Kuban is one of Russia's biggest coffee producers. (2012), online. Hilton terminated the contract with the Gelendzhik hotel. (2011), online.

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.

Marriott, Swissotel and Capella will open luxury hotels in Sochi.

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 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.

10

About the socio-economic situation in the Krasnodar region in the first half of 2012. (2012), online. Krasnodar region department of transport. (2012), online.

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 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 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 McDonalds 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 McDonalds 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, Fridays, Wag Mamma, Beers 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 Sochis subsidiary of McDonalds 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 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 caf Kamennyi Cvetok, building of the caf in the Juba area, building of the caf 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

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 citys 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 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 Anapas 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 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 caf, 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, cafs, 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 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 Sochis 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 peoples wealth make them to go to the different restaurants, sleep in the different hotels and sunbathe on the different

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.

17 Sources: 1) http://www.gks.ru/free_doc/new_site/vnesh-t/pl-bl.xls 2) http://www.investkuban.ru/dep_admref3.html 3) http://fedpress.ru/news/econom/news_business/inostrannye-kompanii-investirovali-vkrasnodarskii-krai-polmilliarda-dollarov 4) http://www.forumkuban.com/arxiv/2011/results.php.htm 5) http://www.forumkuban.com/results.php 6) http://www.investkuban.ru/en/newslist/item-719.html 7) http://www.rbcdaily.ru/2011/03/17/market/562949979876295 8) http://www.rbcdaily.ru/2011/09/16/market/562949981491992 9) http://expert.ru/south/2012/21/mentalitet-byot-poryadok/ 10) http://tskk.ru