Athletes, spectators, media crews and a small army of security have begun to ascend upon the the resort city Sochi in Russia’s south Caucasus region. While it’s attracting a world-class crowd set on cheering for their home country and favorite competitors, Russia’s first Olympic Games since the 1980 summer games in Moscow are less about worldwide competition than they are about building a brand and reputation for future tourism and a higher profile in the eyes of the world.

It is no secret that the budget for making Sochi “Olympics ready” has come under heavy scrutiny for both the amount of spending and the allegations of cronyism and shoddy construction. The price tag was estimated at $12 billion in 2007 and has now surpassed $51 billion, prompting the firing of a senior government official in February of 2013 who was overseeing the project. While that sizable chunk of change is likely five times the amount Tsar Nicholas II put into building the Trans-Siberian Railway around the time of the industrial revolution [1], it is unfit to merely call this “the most expensive Olympic Games ever,” as many in the media have done.

This is supposed to be more than transformation. Sochi is a resort city, a place that Russia would like to see as a first-class tourism destination. While there is already a respectable population of around 340,000 people (around that of Anaheim, Calif.), it’s no secret that Vladamir Putin wants to see populations, property values, and tourist visas increase as a direct result of Sochi’s presence on the world stage. Already an expensive tourist destination for the wealthy, Sochi is looking to cast a wider net over travelers with disposable incomes. In a 2012 press release about sustainable development plans, the Olympic committee notes:

Approximately 80% of cities in which the Games were held after 1972 are now among the 200 most popular cities in the world. The Games in 1992 helped Barcelona to become one of the world’s major tourist centers. In just 10 years after the Olympics in Barcelona, the number of tourists doubled, and the average duration of their stay in the city increased by 110%.

It is easy to follow the flow of logic here: there are lots of tourists around the world looking for adventures. Better exposure gives your city a better chance to find and keep these tourists. It is important to note that many of the cities which have hosted the games (especially the summer games) were already prime travel destinations. Many cities which have hosted the winter games have struggled to keep hold of their place in the international sports community. More than 25 years after their winter olympics, Calgary is still trying to figure out if they have the resources to be a global sports city. So while the press release claim has merit at face value, it must be met with a large grain of salt.

Putin is smart enough to know that the deck is stacked this sort of future success. That’s why these games have been put together not only as an Olympic Village, but part of a new Sochi that would play host to all sorts of sporting events in the near future. These Olympics are not supposed to be the event, but the first in a series of events showcasing why the sub-tropical mountain city is the best places in the world to throw a party. To make it happen, Moscow is pulling out all the stops.

The master plan for Sochi makes it easy to see the long-term goals in terms of development. The Sochi municipal website gives us the following list of objectives:

Development of the infrastructure of Sochi and the creation of conditions to form of Russia’s first world-class mountain climate resort.

Provision of Russian athletes with high-class bases for training in winter sports.

Staging the XXII Winter Olympic Games and the XI Paralympic Winter Games of 2014 in Sochi.

Provision with the possibility to host international and Russian national competitions in winter sports in Russia.

Provision of a sustainable development of the urban settlements, both in the coming years, and in the long term.

Steady improvement in the quality of life for all people in the city (with a focus on providing European and Russian quality of life standards).

The formation of Sochi as a multi-functional city, a world-class resort, one that is integrated into Russian and global economies, and strengthening the position of the city of Sochi in Krasnodar Krai.

The points to pay attention to are the first and last ones, which state that Sochi is going to be a world class resort city which helps to solidify the Russian economy and their place in the world.

If Putin has his way, Sochi’s place in the world could include all kinds of events. Populous, the firm hired to design the Sochi’s Olympic Stadium is no stranger to planning and executing successful stadium design. They have put together modern stadium developments including London’s 2012 Olympic Stadium and Telstra, Sydney’s 2000 Olympic Stadium. Their website boasts that “the in-built flexibility of the (Sochi’s Olympic) stadium’s design means its capacity can change over time to provide event configurations from 45,000 seats for FIFA World Cup matches to a compact, atmospheric 25,000 for local matches.” Others haven’t stopped there, suggesting that in the someday, Sochi could be hosting future Summer Olympic Games. No host city in the history of the modern Olympic Games has hosted both summer and winter games.

The problem with making this long-term vision a reality is that there are a lot of obstacles that must be overcome in order to keep hold of that residual tourist money. This lesson was learned in Japan, where after the 1998 Winter Games in Nagano went over budget, there was no noticeable increase in post-olympic travel. Even if the games go off without a hitch and everyone has an fantastic time, there is no guarantee that they will return.

Media and guests have already taken to social media to express their distain of hotel accommodations. Complaints include being told by hotel staff that the water is too “dangerous” to use, let alone drink; guests being treated to half-naked photos of President Putin in their hotel rooms; having to wait for rooms to be finished and ready for occupancy; and being told not to flush toilet paper.

Russia built over 100 new facilities for the 2014 Games alone, and early reports suggest that many of those were built to poor quality. They also may have been built by what borders on slave-labor conditions by under-qualified workers. The new facilities are an enormous task, but one that seemed welcomed by officials. In an interview with the Moscow Times, Sochi Mayor Victor Kolodyazhny said that part of having all-new facilities was a big draw in convincing the Olympic Committee to choose his city for the games.

When representatives of the Olympic Committee talked to us, they told us how lucky we were, because we have the opportunity to build 21st-century standard facilities. Yes, they’re almost all going to be built from scratch, but to the most up-to-date world standards, in accordance with the latest demands of international sports federations…we want to organize the transport so that it’ll be possible to get between any two points in 20 minutes. And where else are you going to find snow-covered mountains by the sea? Just imagine — the sea and the Winter Olympics!

But even a world-class stadium experience won’t balance out a poor hotel experience.

Unfortunately, the situation gets worse. A 2011 study titled Engineering geological conditions and protection of Olympic park territory in Sochi brings to light numerous geological problems associated with creating a “Russian Cannes” in a location which could potentially hamper the future success of the city. The soils present in the stadium area “have very low…bearing capacity and are not good as foundation bases…they experience thixotropic loss of strength under strong dynamic impacts, e.g., under seismic shocks.”

The Caucasus mountain area is a hotbed of seismic activity, with a risk of flooding, avalanches, mudslides, and erosion as noted in the 2012 report Seismic risk assessment at urban level: example for the Black Sea region. In December of 2012, Putin ordered a ministry check of the Olympic facilities after three earthquakes were felt in the region during that month.

There’s also the very real danger of a terror attack hitting the games, as militant extremists from nearby Chechnya have a strong desire to let the world know about their disapproval of the Kremlin’s actions in recent years.

If things work out the way they are envisioned, it can be a life-changing experience for all who live in the Krasnodar Region. The Sochi Olympic Games Impact Summary talks about the wonderful economic benefits of the games. Promises are of better transit systems, communications development, a positive image for Sochi in the media, a total number of estimated jobs increase of over 560,000 for the games, increased wages, decreased unemployment, higher quality of life, and even greater nutrition quality.

All of those promises sound great on paper, but Tsar Nicolas II will be the first to tell you that throwing a lot of money at a problem doesn’t always create a workable solution with the desired outcomes. To get there, Sochi has a very big mountain to climb.

[1] This is based on an estimated cost of $10.9 billion in 2014 inflation adjusted dollars at a cost of 350 million gold rubles (1898) and 1 ruble at .0248 troy ounces of gold.

[2] Original post can be viewed here.