The Best Russian Cities for Business
Towns that were once off the grid are getting an influx of foreign investment.
The business travel industry is heating up and can be seen as an indicator of the market’s growth. With relatively few international chains outside of Moscow, hotels can be hit or miss for business travelers. That will change in the next few years. Starwood will double its portfolio in Russia and Ukraine by 2014 and will expand its presence beyond Moscow, into cities like Perm and Rostov-on-Don. “We’re seeing that affluent travelers within Russia and international business travelers are seeking global hospitality,” says Hoyt Harper, global brand leader for Sheraton Hotels & Resorts, a Starwood property. “In the past few years we’ve seen greater stability and opportunities in Russia.” Other Starwood properties have followed suit. A W Hotel opened in St. Petersburg last year, and a Four Points by Sheraton is opening in Kaluga in 2014. Hyatt plans to open properties in Vladivostok and Sochi in the next few years.
Even smaller companies like Cyclo are expanding to lesser-known cities (see slideshow). Having a presence in Moscow alone does not make it any easier for the distribution to reach other regions, says Leddy. “The roads are just terrible, and there’s no way to get from one part of Russia to another,” he says. After meeting with distributors in April, Leddy expects to expand distribution of Cyclo’s motor oils to Russia’s Samara and St. Petersburg regions this year.
The Winter Olympics has given Russia an economic boost, says Christy Nicolay, executive producer of sport production and victory ceremonies at the Sochi 2014 Olympic Winter Games. The country is benefiting from some positive global press associated with the event rather than the negative perceptions associated with the rest of the business climate. Costs for the Sochi Games are expected to run above $33 billion for total development, by some estimates. Deadlines for completion dates have been extra strict, says Nicolay, who has worked on seven Olympic Games in places like Vancouver and Athens. “They just really want to showcase Russia in a good light,” she says.
Forget Moscow and St. Petersburg. Towns that were once off the grid for international visitors are getting an influx of foreign investment. Here are six emerging Russian business hubs and how to tap in.
Alina Dizik is an American freelance journalist, born in Russia and currently living in Chicago. Her work appears regularly in The Wall Street Journal and the Financial Times.