Tax incentives for investment projects implementation


Prospects of the tourism industry in Sevastopol p.2

Юлия Рогачова
2012-02-16

At the moment, it"s possible to characterize tourism business in Sevastopol as spontaneous due to the fact that most visitors stay at the private accommodation owners, and the question of legalization still have not been resolved. Furthermore, underdeveloped infrastructure of tourism does not bring significant revenue to the city budget. And vicious circle appears – the lack of tourism infrastructure in Sevastopol does not attract solvent tourists, and this is a reason why investors are not willing to invest in hotel and restaurant business. As a result, we have low tax revenues and not enough money in the budget to improve existing infrastructure and to attract new tourists.
In order to change the situation it"s necessary to improve the investment attractiveness of the tourism industry in Sevastopol. To engage private investors, it is important to extend the tourist season at least to 6-7 months a year. Taking into consideration that the beach season in Sevastopol is only 2.5 months in order to attraction a new tourists it"s essential to come up with something new. One of the ways is to hold festivals, which will cover a large number of spectators and participants, while ensuring the occupancy of local hotels.
For example, the Lviv is a successful provider of festivals for tourist attraction. Lviv hosts over 30 festivals a year, each of which attracts up to 10 thousand people. Due to development of event tourism the number of visitors over the past few years has increased by almost 50%, and the city's budget allocated to holding the festivals and holidays, up from 200 thousand grn. up to 2 mln. grn. Development of event tourism acted as a catalyst in creating and developing local infrastructure and support services, which used by both tourists and local people. In 2010, Lviv tourist business brought about $ 182 million, and during that period it was visited by approximately 700,000 people.
For Sevastopol it"s not necessary to engage that huge number of visitors on every festival since the fact that the city tired of the influx of tourists during the summer season. However, the city has a 3000 hotel places and 1,700 rooms that are vacant during the offseason period. But if the city using the festival will involve in the period of March, April, May, September, October, November, 3000-5000 thousand people on the regular basis, it will provide a local hotel occupancy in low season. Seeing that only under condition of permanent rather than seasonal tourists flow – a private investor would be interested to invest in the development of infrastructure of tourism. At the same time tourism is a particular industry, which can be considered as a driving force of socio-economic development of the region, since tourism business involves a lot of related industries.
It"s clear that the growth of tourism will conduce creating new work places, increasing incomes of local people and improving their standard of living. Also during events, local suppliers of products and goods are actively involved in, for instance, Lviv holds the following events: "City feast of coffee", "Feast of Chocolate", "City Beer Festival" and "Feast of cheese and wine". Each event lasts only 2-3 days, but all that leads to additional revenue to the city budget and increasing the tourist and investment attractiveness of the city.
Sevastopol is an ideal ground for various events and festivals, taking into account the favorable geographical position, mild climate, the variety of forms of relief, a large number of convenient and sheltered bays, and more than 2000 sites of cultural and historical heritage. It"s goes without saying that the organization of events need financial support from local authorities and private investors. For this purposes it"s obvious to have a clear business plan for the festival with a clear understanding of the project budget, sources of funding, target audience, the payback period of the project (3-5 years) and the effect from its implementation in the form of quantity of tourists and the revenue to the city budget. All that impossible to understand without the tourist flow monitoring, the main parameters of which will be the number of tourists, length of their stay, purpose of a travel, location, budget, and so on. This monitoring helps to identify the main target group of tourists, to get information about the workload of hotels, prices and market conditions in general. For example, in Georgia there is the National Tourism Agency, which conducts investigation on tourism regularly, which allows to monitor and edit the development of tourism in the region.
Before all, it"s important to organize a system of monitoring the Sevastopol tourists flow based on festivals. In 2012for this purpose is planned 2-3 festivals supported by the Sevastopol City State Administration. Regarding the results will be made an assessment of their effectiveness in terms of the costs of their organization.
The strategic goal for Sevastopol in the next 5 years should be the holding about 20 events in the low season (March, April, May, September, October, November). This is absolutely real, it"s shown on the successful example of the Lviv. Indeed, with proper cooperation of city authorities and the local tourist market participants it"s possible to develop event tourism, thereby ensuring workload of local hotels within 6-7 months a year. Only after understanding that Sevastopol attractive for tourists constantly a private investor decide to invest in the creation of hotel and restaurant business.