American billionaire Ronald Lauder of the Estée Lauder cosmetics empire is to embark on a $2bn venture with the Moscow city government to manage and upgrade dozens of the capital’s hotels in time for Russia hosting the 2014 Winter Olympics.

The deal is expected to be announced next Wednesday, and will see Lauder take a 51 per cent stake in the venture and the Moscow city government 49 percent. In return, Lauder will invest 31.7bn roubles ($1.1bn) into the company.

The portfolio hotels of includes the massive Rossiya and Moskva hotels on Red Square.

Lauder told the Financial Times that the deal would help rebuild relations between the US and Russia, as well as leading to greater US direct investment. He said: “There have been times when it has been very difficult for US companies to do business in Russia. I want this project to be an example of what can be done.”

The venture aims to bring in Lauder’s expertise to oversee the upgrade in order to cope with an expected influx of tourists when Russia’s southern city of Sochi hosts the Winter Olympics in 2014.

“At the moment the city is booked up even during a VTB [the trade bank] investment conference, let alone the Olympic games when huge flows of tourists are expected,” a unquoted person close to the deal told the FT. “Lauder is being brought in to help a capital of the world look like a capital of the world.”

Moscow has a lack of decent mid-range accommodation. The venture is expected to manage the 13-hectare Rossiya hotel complex, the five star 1500-roomed Moskva, the Renaissance, and the Metropol, all in central Moscow, as well as lower grade institutions.