HOW MUCH IS A TICKET TO BAKU?

Azerbaijan has won the Eurovision-2011 international song contest, beating 43 countries, including major European powers. This is truly unprecedented. First of all, it took Azerbaijan just four years to win the Eurovision trophy - the Crystal Microphone. Secondly, it is the first country in the South Caucasus to have won such a prestigious contest.

Next year's contest will be held in the hospitable land of Azerbaijan and, according to many experts, it promises to be one of the brightest events in the music world. However, some sceptics in the international press say that Azerbaijan is not ready yet to host such major events and the country will not acquire any tangible benefits from Eurovision-2012. Is this true?

Resources for benefit

Let's start with the fact that Azerbaijan is a major oil-producing power, which plays a special role in the region in terms of production, refining and transportation of energy resources and diversification of their supplies. But apart from oil, the country also has huge gas reserves. According to the first vice-president of the State Oil Company of Azerbaijan (SOCAR), Xosbaxt Yusifzada, the country's proven oil reserves total 1.5 billion tonnes and could increase by another 1.5 billion tonnes from prospective structures. The proven gas reserves amount to 2 trillion cubic metres, and taking into account the prospective fields, this figure could rise to 5 trillion cubic metres.

In addition, today we are talking about the development of other promising oil and gas structures. Azerbaijan participates in energy projects worldwide, and among other things, it is a transit country. In other words, the profits from the transportation and transit of oil and gas will only increase. What does this give the country in addition to its status as an oil power? A lot. Energy-rich Azerbaijan is currently maximally oriented to the development of the non-oil sector and is funnelling its oil revenues into a number of large-scale projects of a social nature, including the construction of roads, bridges and other road junctions, water pipelines, numerous sports and cultural and other facilities.

In May this year, the international rating agency Fitch Ratings changed the outlook on long-term Issuer Default Ratings of Azerbaijan in foreign and local currencies from "Stable" to "Positive", and affirmed the ratings at the BBB- level. The agency notes a growth in the assets of the State Oil Fund of Azerbaijan (SOFAZ) and regards the management of oil revenues in the country as reasonable. It is also tangible at the household level: against the background of rising world oil prices, the government revised the parameters of the country's budget for 2011. Additional budget revenues will be used to address a number of social and economic problems, including increases in salaries, pensions, allowances and the amount of investment in socially-oriented infrastructure projects.

This kind of government policy is not new: the "oil money" has been used to improve the infrastructure for many years. An example is Baku, which transformed in just a few years and now resembles a metropolis, where many "glass" skyscrapers are towering over historic buildings and the old bricks are replaced with modern paved roads and even concrete highways.

There's little sense in listing all the dividends the country has received from energy in the form of thousands of kilometres of roads, pedestrian crossings, metro stations, new hotels, bus stations and cultural, education and health facilities.

The fact remains - Azerbaijan has practically all the potential to host Eurovision-2012, and the state treasury has sufficient funds to finance such projects. This year's contest in D?sseldorf cost the organizers 40 million euros. Of course, the amount is huge, and Russia spent almost as much to host Eurovision two years ago. But, speaking of such high costs, sceptics almost forget about the income Germany gained from holding this contest. D?sseldorf earned a profit of 140 million euros from tourists' spending and the exclusive broadcasting of the contest. And this profit is calculated not only in money.

Tourism is gaining momentum

To begin with, the victory at the Eurovision Song Contest is already yielding some benefit to Azerbaijan. After the announcement of the voting results, many Europeans rushed to find information about the country on the Internet, and the result did not keep us waiting. For example, visitors to the TripAdvisor travel website have begun to show keen interest in Azerbaijan. Right after the final of the contest, our country's rating on TripAdvisor jumped by 4 per cent.

"It is not clear whether such a phenomenal jump in interest is due to the fact that site visitors are looking for a hotel where they will be staying next year or they simply want to know where exactly Azerbaijan is situated. But one thing is obvious - Eurovision really helped Azerbaijan to get on the world map," the Breakingtravelnews.com website wrote. 

"As Azerbaijan celebrated its victory at Eurovision-2011, the WhichBudget.com website recorded a record number of requests for tickets to this country," TravelDailyNews said.

The number of requests for flights to Baku on Sunday, 15 May, increased by 54 per cent compared with the requests that were recorded on the previous Sunday. The founder and head of the WhichBudget.com search website, Martino Matijevic, said that "the victory in the contest will revive the tourism industry of Azerbaijan and lead to an increase in tourist traffic from Europe."

The same opinion is shared by Azerbaijani experts. "Azerbaijan's victory in the Eurovision Song Contest will have a maximum positive impact on the development of the tourism sector in the country," the national coordinator of the Azerbaijan tourism development project of the UN Development Programme (UNDP), Faiq Qurbatov, told R+.

It is likely that Europeans' interest in Azerbaijan will increase even before Eurovision-2012 in Baku, he said.

Interested in Azerbaijan, the Europeans will get acquainted with our country through the Internet - its nature, historical monuments, cuisine, traditions, customs, economic system and tourist potential. Many wish to visit the country to see our assets for themselves. With this in mind, online resources should be improved in order to disseminate more information about the country, says Qurbatov.

The expert believes that in May 2012, the flow of tourists from European countries to Azerbaijan could amount to tens of thousands and, according to the most conservative estimates, will amount to 10,000. The last contest attracted about 70,000 tourists to Germany.

Talking about the existing tourism infrastructure, Qurbatov noted that new hotels, including 5-star hotels, are currently under construction in Azerbaijan. Five 5-star hotels will be commissioned in 2012. In his view, most tourists will prefer the new facilities.

In general, the number of beds in hotels is enough to receive this number of visitors, according to Qurbatov.

He stressed that ahead of the contest Azerbaijan should improve the quality of services in the hotel and restaurant business and equip all hotels and other tourist facilities with high quality Internet access.

Also, according to Qurbatov, due consideration should be given to expanding the number of trips, training guides and organizing special courses for taxi drivers, including language courses.

In turn, the head of the tourism department at the Azerbaijani Ministry of Culture and Tourism, Aydin Ismiyev, noted that in connection with the song contest next year, Azerbaijan will be paying much more attention to the tourism industry.

"European countries will be prioritized in the country's tourism industry and Eurovision-2012 will contribute to a significant growth in the sector in connection with the huge influx of those who wish to attend the contest. During the year, we will be carrying out preparatory work and taking all appropriate measures to provide high quality services for tourists wishing to come to Eurovision-2012," Ismiyev said.

The head of the domestic tourism development sector at the Ministry of Culture, Mahir Qahramanov, believes that the country's tourism infrastructure should be well prepared to receive a large number of people wishing to visit our country. Currently the country's hotels have more than 31,000 beds. By 2012-2013, this figure will increase to 50,000, but by the date of the contest, the number of beds in hotels will be less than 40,000.

"Therefore, if necessary, during the contest, other options, including rental, are likely to be used to host foreign tourists," Qahramanov said.

Speaking of tourists who will be visiting Azerbaijan during Eurovision, we should note the high cost of rooms in many Baku hotels. This factor is emphasized by the Ministry of Culture and Tourism, too.

"The hotel business in Azerbaijan is developing dynamically, and more and more big players are actively entering the tourism market of Azerbaijan. Hotel chains are being created and actively developed. A lot of applications have been submitted for the construction of new hotels. Experience shows that investors prefer mostly 5-star hotels, which is primarily related to the minimum payback period and high rates of return. But considering that next year Baku is to host the Eurovision Song Contest, which attracts mainly young people, there is a need to develop a network of small hotels and hostels. In this direction, our ministry has already taken practical measures, and we think that investors are actively joining the construction of such facilities," the ministry said.

But apart from hostels, it is also necessary to expand the network of restaurants. This issue is also being watched by the ministry.

At the same time, independent experts note the need to open small hotels, cafes and restaurants, regulate the quality and cost of services at these facilities and optimize the transport infrastructure.

The latter point is under the close attention of the Azerbaijani Ministry of Transport. The head of the Transport Ministry secretariat, Namiq Hasanov, says that by this time, the road and transport infrastructure in Baku will be fully ready to host Eurovision-2012.

Various road junctions are currently being built in various parts of the capital - in Azadliq, Neftcilar, Parliament, Heydar Aliyev, Bulbul and Ziya Bunyatov avenues, Zarifa Aliyeva Street and Azneft Square, he said.

"By that time, a number of roads will have been commissioned. Also, intensive construction work is under way on the Mardakan-Bilgah-Sumqayit highway, and much of this work has been completed. In addition to improving the road and transport infrastructure in Baku, these measures aim to make life comfortable for the population," Hasanov said.

It must be noted that the projects listed by the representative of the Ministry of Transport were initiated long before Azerbaijan's victory in Eurovision-2011.

In turn, the Azerbaijani Ministry of Communications and Information Technology has expressed the country's complete readiness to host the contest in terms of IT-infrastructure. According to Azerbaijan's deputy minister of communications and information technology, Iltimas Mammadov, the country's telecommunications infrastructure is fully in line with customer requests, including during the peak load on mobile networks.

"Three years ago, we ensured that citizens of Azerbaijan can vote in the Eurovision Song Contest. Azerbaijan managed to develop an appropriate infrastructure in a record short time. Next year, there will be no problems with cellular communications," Mammadov said.

Expenses and revenues

But let us return to the monetary component. Let us take 40 million euros ($57.340 million) as the approximate expenses of the host country. It is known that each tourist visiting Azerbaijan spends at least 800 manats ($1,000) per week. Of course, if Baku is visited by a minimum number of 10,000 visitors, we will not be able to talk about the financial benefits of hosting Eurovision - we will only settle for a big opportunity to promote the country and obtain political dividends. If the number of tourists is, for example, 50,000, and this is the most likely forecast, an income of $50-60 million will be received. That is, the cost of the contest will be completely recouped. Adding the cost of flights to Baku, as well as other components, including income from the broadcasting of the contest, the country's economy can fetch a sum far exceeding $50-60 million.

But in addition to the global promotion campaign and revenues of the tourism sector, there is one positive thing. Specialists are unanimous in their opinion that the holding of Eurovision will give a huge boost to even more investment in Azerbaijan. The country will once again declare itself publicly, and its image on the world stage will automatically rise by several degrees. This factor will contribute not only to the flow of investments and encourage many countries to develop trade and economic relations with Azerbaijan and to open representative offices of companies in the country, etc., but also to hold even more activities in the country. Various international conferences, forums, symposia, seminars, round tables, sports tournaments, etc. will also contribute to the promotion of the country worldwide. So the Eurovision Song Contest 2012 in Baku will serve the economic development of Azerbaijan for a long time to come.