Russia's Olympic Ambitions For Sochi Face Hurdles

The 2014 Winter Olympics may seem far off, but the southern Russian city that will host them has a huge amount of work ahead.

In Soviet times, the coastal city of Sochi became a popular resort for Russians. It is nestled on the Black Sea, about 1,000 miles south of Moscow, with a range of the snowcapped Caucasus mountains just a short drive away.

But Sochi has fallen into disrepair, and Russia has big plans to use the Winter Olympics to turn this former beach town into a world-class resort.

It's an expensive proposition — an estimated $12 billion — and Russia's international image is at stake.

Amid concerns that preparations for the games are lagging, Prime Minister Vladimir Putin on Saturday replaced the head of the state company responsible for Olympics construction. Putin is an avid skier and often travels to Sochi.

The opening and closing ceremonies in 2014, as well as ice competitions, will be held next to the beach — a first for a winter Olympics. The alpine events will be held 30 miles away in a new complex being built in the mountains.

Yefim Bitenev, spokesman for the Sochi Organizing Committee, says the goal is not only to prepare for the Olympics, but to turn the region into a year-round resort for international travelers.

"Hosting the 2014 Olympic Games will be a great catalyst in this development. This is our idea," he says.

But it is not clear whether Sochi has what it takes to be a top resort.

'Workers' Paradise' On The Black Sea

On a recent day, Anya Zhuravliova, a cashier from central Russia, walks gingerly on the rocky shoreline that passes for a beach in Sochi.

Zhuravliova comes to Sochi because it is convenient and familiar — and she doesn't need a visa. But she says most Russians believe they get more for their money outside the country in places such as Turkey or the United Arab Emirates.

Sochi has yet to attract foreign tourists. It's the kind of post-Soviet city where statues of Lenin are commonplace and people still get excited at meeting a foreigner.

The Soviets built Sochi as a "workers' paradise," ordering the construction of grandiose sanatoriums, which now line the Black Sea coast. Behind the majestic facades were dreary accommodations and few facilities.

Russians still come to soak in the foul-smelling sulfuric water springs, which allegedly cure everything from infertility to arthritis.

At the Matsesta sanatorium, a palatial and somewhat forbidding complex of mineral baths, efforts have been made to spruce up the facility. But it remains sterile and not exactly spalike. A checkup by a doctor is a precondition to a course of baths, because physicians in Sochi say the waters can have a powerful effect.

The exact color and mineral composition of the water change depending on various conditions. On a recent visit, it is greenish-black and smells of rotten eggs.

Many sanatoriums are still run by state agencies and large factories, and they still offer subsidized, Soviet-style, 21-day packages for workers.

Dr. David Gunba, deputy director at Avangard sanatorium, says the "regime" includes checkups, baths, massages and a ban on drinking. Gunba concedes that it is not "real medicine."

"We don't take guests with serious conditions. Basically, we cater to people who want to improve their overall health and rest. We're not a hospital," he says.

Gunba's sanatorium is trying to modernize — and attract full-paying guests at $160 a night. That's not cheap for a place with no swimming pool or tennis courts.

Sochi: 'No Cannes'

Hoping to turn this area into a new Russian Riviera, officials are quick to point out that Sochi is at the same latitude as Nice and Cannes in France.

Marcel Simoneau, a Frenchman who has opened a restaurant in Sochi, laughs at the comparison.

"They think that here it's like Cannes. But it's not Cannes. But they do the price of Cannes," he says.

This is a problem for potential foreign investors. Joel Goldman, with hotel consulting firm Cushman and Wakefield, says Russian officials have delusions of grandeur, dreaming of rich tourists and high-end hotels. He says they risk pricing themselves out of the market.

"The danger is that a Rolls Royce is constructed when really what is needed is a Volvo," Goldman says.

Sochi's subtropical vegetation — a lush mixture of palm, banana and cypress trees — is stunning. But unplanned, chaotic development is eating it up. Pressed up against the coastline, the city is crowded and roads are jammed. The infrastructure needs a massive overhaul.

Vladimir Ostapuk, an adviser on ecological issues to the local government, says most of Sochi's sewage plants no longer work, so 90 percent of the city's raw waste is dumped into the Black Sea. He hasn't been swimming here in five years.

Upscale Ambitions Have Putin's Backing

With its slightly tacky boardwalk, Sochi remains more Coney Island than Cannes.

Putin, who vacations in a secluded government villa here, has encouraged the country's oligarchs, who are close to the Kremlin, to invest in Sochi.

One of his billionaire buddies, Oleg Deripaska, has built the Grand Hotel Rodina, the only deluxe accommodations in town. Catering to Russia's elite, its neighbor, aptly, is a sanatorium belonging to the government security services, the heirs to the KGB.

Yelena Tumor, head of the hotel's public relations, proudly shows one of the 40 rooms; it was designed by Ralph Lauren. She stresses that the Grand Hotel Rodina is striving to provide unique services and facilities for its guests, "because we must be the highest."

At $1,000 a night, this boutique hotel may be the best. But it is also empty at the start of high season.

Hopes that international hotel chains would follow, providing necessary rooms and services for the Olympics, have not been realized.

Sochi's new slogan is "gateway to the future," but foreign investors are not yet convinced the future is here.