Mechanisms for Attracting Investment in the Infrastructure of Resort
Natalya A. Berezina
V.I. Vernadsky Crimean Federal University, Prospekt Akademika Vernadskogo 4, Simferopol, Russia
Keywords: Investments, Infrastructure, Concession Agreements, Resort Regions.
Abstract: Over the past 10 years, the tourism and recreation industry has grown at a rate exceeding the growth rate of
the world economy. The Russian Federation has the potential for the development of almost all types of
tourism and the prospects for increasing tourist flows due to the reorientation of outbound tourism to domestic.
However, it is hindered by the tourist infrastructure underdevelopment. The purpose of the work is to study
the features and advantages of the public-private partnership in the form of concessions to intensify the
investment process in the tourism industry. This paper analyzes the successful experience of this mechanism
in other countries, and also provides an overview of the current and forthcoming concession agreements in
the field of tourism in the Russian Federation. The main features of concession agreements, which ensure the
attractiveness of this mechanism for both the state and the private investor are studied. The most suitable
factors for tourism and recreation are considered.
The sphere of tourism and recreation is one of the
most dynamically developing sectors of the modern
economy. The growth rate of the tourism industry has
outstripped the global average growth rate of GDP
over the past decade. The total contributions of
tourism to global GDP, including the indirect effect
on related industries, are estimated at 9.3% - 10.9%
(Statista, 2020). Even despite the losses due to the
Covid pandemic, it is expected that by the end of 2021
it will still be one of the top ten global industries and
generate more than one and a half-trillion dollars in
revenue (Ibisworld, 2020).
At the same time, the recreation and tourism
sphere is not only important in terms of economics.
It also plays a significant social role (Tkhamitlokova
Yu.O., 2016). Tourism contributes to the realization
of people's needs for rest, new impressions, personal
and physical development, health improvement
(Trofimov, E.N., Moshnyaga, Seselkin, A.I.,
Novikov V.S., Rassokhina, T.V., Sarancha, M.A.,
Kruzhalin, V.I., Shabalina, N.V., Gulyaev, V.G.,
Laguseva, N.N., Pisarevskaya, O.I., Kalnei, V.A.,
The Russian Federation has a unique potential for
the development of almost all areas of tourism.
However, the existence of a potential is not yet a
guarantee of successful development, but rather raises
the question of finding and implementing new
effective modern forms of cooperation between
various participants in the process in the
implementation of ambitious tasks (Dudin,
Burkaltseva, Tsohla, Voronin, Yanovskaya & Guk,
2017). Currently, the contribution of tourism to the
Russian Federation GDP is only 4.8% (Knoema,
2020). To a certain extent, it is related to the high
share of outbound tourism. Almost 7 million
Russians visited Turkey alone in 2019 (Association
of Tour Operators, 2020), which is comparable to the
tourist flow throughout the Crimea for the same year.
One of the key factors, determining this state of
affairs is the lack of modern, high-quality
infrastructure in Russia. Intensification of
investments in the field of recreation and tourism is a
priority task of the state. One of the targets of the
Strategy for tourism development in Russia for the
period up to 2035 (Government of the Russian
Federation, 2019) is to triple investment in tourism by
2035 compared to the level of 2017. This, in turn,
sets a task for the state to find effective mechanisms
Berezina, N.
Mechanisms for Attracting Investment in the Infrastructure of Resort Regions.
DOI: 10.5220/0010587901780185
In Proceedings of the International Scientific and Practical Conference on Sustainable Development of Regional Infrastructure (ISSDRI 2021), pages 178-185
ISBN: 978-989-758-519-7
2021 by SCITEPRESS Science and Technology Publications, Lda. All rights reserved
for attracting private investment to the industry. One
of such promising mechanisms can be public-private
partnership and, in particular, concessions. The
world experience clearly shows that the thoughtful
application of this mechanism can lead not only to
accelerated, but also to breakthrough development of
tourism and entire regions.
The study used global analytical and reference data,
data from the Russian platform for supporting
infrastructure projects "Rosinfra", conducted studies
of legislative materials. The works of Russian and
foreign scientists, dealing with tourism, investments,
public-private partnerships, including Internet
resources, were studied. When studying these
materials, analyzing the processes taking place in
tourism, and forming conclusions, a number of
methods were used: observation, comparison,
economic and statistical analysis, systemic and
integrated approaches. The methodology of the
systems approach made it possible to highlight the
key tasks, the solution of which will allow to achieve
the target indicators of tourism development. The
selection of analysis data, formal procedures, a
consistent and logical interpretation of detected
patterns, and the results contributed to the formation
of information content and to ensure the validity of
conclusions. To analyze the foreign experience in the
application of concession agreements, information
materials of the International Finance Corporation,
data from the American National Park Service were
studied, a number of projects implemented through
concessions were selected. Diagrams and tables
were used for visualized, aggregated, and holistic data
presentation. When determining the prospects for the
development of domestic tourism, as well as the
development of author's recommendations, an
integrated approach was used.
The need to intensify investment in the recreation and
tourism sphere, declared by the state in the Strategy
for tourism development, becomes even more urgent
in the context of events, occurring on the world stage.
The latest decade has been marked by complex
political and social processes, which in many respects
have significantly reduced the level of stability,
security and comfort in many countries. All these
factors steadily increase the attractiveness of
recreation within the country for many Russians. In
the context of the 2020-2021 Covid pandemic, which
was accompanied by the closure of borders, travel
inside the country remained the only guaranteed
opportunity for our fellow citizens to exercise their
right to rest. At the same time, attempts to switch
outbound tourism to domestic tourism can only be
successful if the growing domestic tourist flow is
linked to the industry's willingness to provide a
modern, high-quality and affordable product.
Figure 1 shows the target indicators for the
development of the main directions of tourism, set in
the Strategy for tourism development for the period
up to 2035 (Government of the Russian Federation,
2019). Goal-setting in each of these areas is
associated with ambitious plans to modernize existing
or build new infrastructure, its weak development,
according to some researchers, is holding back the
growth of tourism in the Russian Federation (Center
for Social and Economic Research, 2020). But a
fundamental change in the current situation and a
rapid renewal of infrastructure are impossible without
increasing the investment attractiveness of the
industry. This is a large-scale and long-term task, the
achievement of which, in addition to economic
measures, requires the consolidation of a wide variety
of interdisciplinary efforts. In particular, such as
establishment of:
A complex of infrastructure auxiliary in
relation to the tourism facilities - at least
transport and communal;
Industry-wide training system to ensure the
quality of the services and effective
management of the tourist facilities;
Recognizable travel brands, development of
marketing programs, both at the meso-level of
regions and clusters, and at the level of
individual products;
A unified system of quality standards and
management of the tourism sector. At the same
time, these efforts should be accompanied by
the adoption of economic measures to stimulate
investment activity in the recreation and
tourism sphere.
Mechanisms for Attracting Investment in the Infrastructure of Resort Regions
Figure 1: The main directions and indicators of tourism development for the period up to 2035.
The researchers identify the following measures such
active use of the mechanism of public-private
partnership in the form of concession
agreements (da Costa and Ribeiro, 2019;
Moioli, Boniotti, Konsta and Pili, 2018;
Karanatova, Khodachek and Kulev, 2017)
creation of tourist clusters and investment
management at the meso-level (Karanatova et
al., 2017).
- provision of state guarantees, direct subsidies
and tax benefits, including through the creation
of free economic zones and territories of
advanced development (Afanasyev, Oborin
and Shman, 2017).
direct attraction of foreign investment (Fauzel,
The new present challenges make us look
differently at the ongoing processes and, to some
extent, rethink the effectiveness and applicability of
various measures. So, for example, the process of
attracting foreign investment today is somewhat
complicated by sanctions, and the possibility of
providing government subsidies and guarantees in the
post-Covid period, when the state has already spent
significant funds on various types of support and
subsidies for industries and citizens affected by the
pandemic during 2020, may also be on hold. In such
conditions, there is an acute issue of finding new
forms of interaction between the state and a private
investor, effective tools for attracting private capital
to solve problems that are significant for the
development of the industry and the economy of
resort regions. The mechanism of public-private
partnership in the form of concession agreements can
become just such a tool. This mechanism allows
authorities at the federal, regional, and municipal
levels to solve urgent problems of sustainable
development of an industry or region, develop
infrastructure, create new jobs, and increase the level
of well-being of the population. On the other side, the
personalized attitude of the state towards a private
ISSDRI 2021 - International Scientific and Practical Conference on Sustainable Development of Regional Infrastructure
partner, provided by the very essence of concessions,
helps the investor to develop his business in a more
transparent, understandable, stable environment.
4.1 Features of Concessions
In its economic essence, a concession is a government
initiative to find and attract a private partner
(investor) to create infrastructure and provide
services, created and provided by the public sector
(Farazmand, 2018).
By inviting a private partner, the state receives a
number of additional benefits of a very different
saves money that would otherwise have to be
spent on investments in the creation and
reconstruction of infrastructure. Even the most
developed countries are regularly faced with
budget deficits and the need to borrow. At the
same time, tourism is traditionally not included
in the list of priority areas for spending public
funds. Attracting a private investor is in many
cases the only real opportunity for a large-scale
renovation of the tourism infrastructure.
receives all the benefits of doing business,
which are traditionally associated with the
private sector. It is the achievement of higher
economic efficiency; flexibility of approaches
and a higher degree of innovation; less
bureaucracy and faster decision-making speed;
creativity in response to changes in external
conditions and challenges of the time.
transfer of commercial risks to a partner. This
is even more valuable in the case that the state,
as has already been shown, is usually less
adaptable and less effective in responding to
emerging risks.
maximizing budget revenues. The concept of
concession agreements provides the possibility
of establishing concession payments from a
private partner in favor of the state for the right
to conduct commercial activities using the
objects of the concession agreement. The
existence of the specified payment is not
mandatory, but rather represents an additional
In turn, a private partner also receives a number
of benefits:
obtaining a commercially attractive object. In
the tourism and recreation sphere, concession
objects are often represented by hotel,
sanatorium and other facilities that have a rich
history, an advantageous location, a large
adjacent territory, an initially good and well-
thought-out infrastructure, but outdated or
desolate. Operating this facility provides a
number of competitive advantages.
concession agreements, as a rule, imply some
additional obligations on the side of the state
participant. For example, preferential
connection to public utilities, construction of
access roads, and the organization of additional
transport routes may be provided. Moreover,
concession agreements may contain clauses to
protect against changes in legislation or
competing infrastructure construction.
personalized attitude of the state towards a
private partner. Concession agreements are
concluded on an individual basis, in which each
concessionaire provides its own conditions for
the volume and timing of investments, the size
of the concession payment, and the obligations
of each of the parties. Thus, for the state, each
concessionaire acquires its own unique
features, turning from just an investor into a
partner helping the state to solve urgent
problems. That is, the concessionaire receives
that degree of attention to his activities and his
problems, which he would not have received by
entering the investment process outside the
concession framework.
4.2 Examples of Foreign Concessions
Due to these distinctive characteristics, concessions
have become quite widespread in the world economy.
Table 1 provides an overview of some foreign
projects in the recreation and tourism field,
implemented through a concession (Global Ports
Holding, 2020, Lisbon cruise port, 2020, NPS
Commercial Services Program, 2020, The National
Council for Public-Private Partnerships, 2013,
Macautripping, 2020).
Mechanisms for Attracting Investment in the Infrastructure of Resort Regions
Table 1: Examples of foreign concessions in the recreation
and tourism sphere.
Main Results
Bahamas Cruise Port of
Investments of $ 25
construction of
piers, a terminal, a
coastal amusement
ark com
Portugal Lisbon port Investment 25
million euros, new
USA 103 National
Revenue of
concessionaires for
2018 = $ 1.5 billion,
concession payment
to the state = $ 126
USA Union Station,
former Central
Investment 160
million dollars,
annual number of
visitors = 25 million
Australia Former
facility in
Investments 20
million austral.
conservation of
historical objects,
creation of
exhibition and hotel
PRC Macau Gaming
Investments over $ 3
billion, construction
of dozens of new
hotel and gaming
complexes, 39
million tourists in
2019, the share of
the total
contribution of
tourism to the
region's GDP is over
This table shows that concessions have
successfully proven themselves in various projects
and in countries with very different levels of
economic development.
Within the framework of concessions, old ports
are being successfully reconstructed and new ports
are being built, both in Europe (Portugal) and in the
Caribbean (Bahamas). In the USA, the concession
mechanism is recognized as a priority model for
operating national parks.
The concession to “reset” the former Washington
Central Station also had great success. The huge
building had been empty since 1978 and increasingly
decayed. The state was seriously considering
demolition. However, a private concessionaire
breathed new life into it and turned it into an iconic
entertainment, shopping, and business complex that
attracts more than 25 million visitors annually. A
similar process took place with the former Sydney
quarantine station.
Macau's gaming concessions also achieved
impressive success. After the transfer of the former
Portuguese colony to the jurisdiction of the PRC in
1999, the Chinese authorities set themselves an
ambitious task: to turn an essentially unremarkable,
ordinary city, of which there are many, into an Asian
Las Vegas, eclipsing its older brother in beauty,
splendor, and fame. A concession mechanism was
chosen to accomplish this task. Twenty years later, it
is safe to say that this mechanism has fully met the
expectations placed on it by the Chinese government.
4.3 Tourist Concessions in Russia
From the point of view of the Russian legislation,
under a concession agreement, a private partner
(concessionaire) undertakes at its own expense to
build or reconstruct an object of a concession
agreement (real estate), use this object in its
commercial activities, and subsequently transfer it to
the ownership of a state partner (concedent) (Federal
Law on Concession Agreements, 2005). Russian
legislation also allows the use of a concession
mechanism for tourist sites. In particular, the
following objects are included in the list of permitted
facilities under concession agreements:
health resort treatment facilities;
culture and sports facilities;
facilities used for the organization of recreation
and tourism;
sea and river ports and ships.
The legal framework and economic needs created
successful preconditions for the application of
concession agreements in the field of tourism in
practice. Table 2 shows a list of existing agreements
with an investment amount of more than 100 million
rubles. (Rosinfra, 2020).
ISSDRI 2021 - International Scientific and Practical Conference on Sustainable Development of Regional Infrastructure
Table 2: List of concession agreements in force in the field
of tourism.
Project name Region Amount of
mln. rub.
1 Cultural heritage
site "Sanatorium"
Kislovodsk "
2 Year-round
children's center
"Polar Star"
Republic of
1 474
3 Sanatorium, p.
Elton Pallasovsky
4 Reconstruction of
the cinema
5 Reconstruction
and operation of
the facility for
recreation of
citizens and
6 "Former estate of
7 "Nizhnekamsk
Republic of
8 Hotel service
facility in historic
9 Reconstruction of
the "Wa
on barn"
10 "House of the
11 Children's health
camp in
Total 6 774
Unfortunately, so far there are only 11 such
agreements in Russia totaling 6,774 mln. rubles.
However, 17 more projects totaling 71,750 million
rubles are in the stage of pre-competition
development or competition. The list is given in Table
3 (Rosinfra, 2020).
Table 3: List of projects in precompetition development.
No. Project name Region Investmen
t volume,
mln. rub.
1 International resort
"Three Volcanoes"
39 200
2 Resort cluster
Republic of
7 700
3 Reconstruction of
the sanatorium.
Ordzhonikidze in
6 700
4 Construction of an
administrative and
business center
with an exhibition
5 387
5 Reconstruction of
the Imperial Stables
3 200
6 Creation of the
tourist and
lex "Ramon"
2 703
7 Zoo construction Samara
1 600
8 Festival - park Samara
1 026
9 Resort "Krestov
10 Military - patriotic
11 Children's health
"Chernomorets" in
12 Ski complex
13 Reconstruction of a
social and cultural
14 Multifunctional
cultural and
information media
center in the city of
15 Center of gravity
"Bereg Don"
16 Reconstruction of
the facility for
recreation of
citizens and
17 "Belkino Estate" Kaluga
Total 71 750
Mechanisms for Attracting Investment in the Infrastructure of Resort Regions
Despite the relatively small number, the examples
of successful concessions in the tourism and
recreation sector prove that they are absolutely a
working mechanism in this industry. The total
volume of investments for projects at the stage of pre-
competitive development is more than 10 times
higher than the volume of investments under the
agreements already signed. It indicates the growing
interest of the regions in this mechanism for attracting
investment, as well as the significant need for such a
mechanism. Thus, all the prerequisites are being
created for concessions to play a more prominent role
in creating a modern, high-quality, affordable tourist
infrastructure, contributing to the achievement of
ambitious goals for the development of domestic
tourism in the Russian Federation.
The use of public-private partnerships in the form of
concession agreements can make a significant
contribution to the intensification of the investment
process in the field of tourism and recreation. This
mechanism is inherently universal and has been
successfully used in a wide variety of industries.
However, there are several distinguishing features
that make it particularly suitable for the travel
1) Attracting medium-sized investments.
Concession agreements imply, on the one side, that
the size of investments will be large enough to solve
some problem noticeable for the industry or region
(otherwise the state partner will simply not be
interested in its concluding). On the other side,
problem solution at the regional level may require
less investment than is necessary to attract the
attention of the federal center. An analysis of
agreements in the field of tourism and agreements
shows that in most cases this refers to investments
from several hundred million rubles to several
milliard. This is a lot in order to expect that a private
investor on his own, without initiative from the state,
will sharply intensify his investment processes. And
too few to be of interest to the federal center.
2) Reduced seasonality. One of the hallmarks of
the tourism industry is its seasonality. The uneven
tourist flow means that all the resources of the region
are worn out in the high season, and idle time in the
low season. Reducing seasonality should be one of
the targets when planning the creation of new
infrastructure. To solve this complex task, it is
necessary to coordinate the efforts of all parties: both
from private business and from the state.
Concessions are a convenient mechanism for
combining the interests of the state and business.
3) Improving efficiency and reducing costs. A
significant increase in the domestic tourist flow is not
possible without the fact that the proposed product,
on the one side, is modern and of high quality, and on
the other side, it is accessible to the general
population. It means that the field of recreation and
tourism must look for ways to increase efficiency. A
private partner is an irreplaceable participant in this
process. At the same time, the participation of the
state and the determination of the parameters of
investment projects in concession agreements will
contribute to a more thoughtful investment,
avoidance of close competition between projects, a
price war, and ensuring the diversity and
complementarity of the infrastructure being built.
These several points represent the most key
positions, the implementation of which will
contribute to both the intensification of investment
processes and an increase in the efficiency of the
provision of tourist services, an increase in the tourist
flow and the development of tourism, the provision of
year-round employment and the growth of the
economies of resort regions. The concession
mechanism has great prospects for attracting private
capital for those projects that the state considers the
most priority and significant.
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Mechanisms for Attracting Investment in the Infrastructure of Resort Regions