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Russia’s domestic tourism waits for customers and really needs investors

June 2013

Russia has lost its importance in the eyes of foreign tourists. According to the statements by Dmitry Medvedev, the Head of the Russian Government, Russia has sunk in the global ranking of tourist destinations from the 59th place to the 63rd. But, at the same time, the number of Russians annually going abroad to take sunbaths under the foreign sun and spend their money at the hospitable resorts has been growing.

According to the Federal Tourism Agency (Rostourism), 15 million citizens of Russia went abroad in 2012 as tourists, which is a 6% increase on 2011. The most visited countries in 2012 were Turkey (2,516.100 people, 6% less than 2011), Egypt (1,906.600 people, 31% more than in 2011), China (1,328.800, 12% less), Thailand (885.100, 13% more) and Spain (792,000, 23% more).

As explained by Mr. Medinsky, Head of Rostourism, the average amount of money spent by a Russian tourist abroad reaches 2,000 dollars per person for each trip. “An enormous amount! It is easy to imagine how our industry would benefit if some of that money could come back to us”. The Head of the Russian Government highlighted the importance of investments into private companies and private enterprises like it happens all over the world.

So what hinders the development of this sector and where should one invest? What brings foreign tourists to Russia? Russian Survey asked Marina Levchenko, the Director General of “Tari-Tour” company, all of these questions.

Could you please tell us who tourists coming to Russia are, who are those who are interested in our country?

It might seem that foreign tourists are not numerous, but in fact their numbers have been growing annually. What’s more, we now meet the representatives of very exotic countries among them. In particular (except for tourists from the "traditional" countries, such as, for example, Germany, America, and Japan), in recent years there has been a significant increase in tourists coming from Australia, New Zealand, Taiwan. These tourists combine the journey to Russia with the trip to Europe. The majority of Australians, for instance, travel to Europe once in their lives, so they plan a 20-days tour spending 10 days in Russia.

So I am sure that the increasing trend of visitors is obvious and will continue this year, as can be judged from reservations. The new generation of foreigner tourists has emerged; they are attracted by Russian cultural attractions: the Hermitage, the Moscow Kremlin. It should be noted that foreigners are interested in Russia, read a lot about it, and therefore they want to see our country.

Which proves to be a greater attraction for tourists – big cities or the beauty of nature?

Due to the fact that tourists, especially those from distant countries, visit Russia once or twice, their routs go through Moscow, Saint-Petersburg, Novgorod and cities of the Golden Ring. The number of people traveling for Baikal, Altai, or Kamchatka, indeed, may be called a trifle compared with the number of those traveling on standard tours.

If we talk about the future of Russia's domestic tourism, it is in the automobile and bus tourism, but we need conditions for this. We need good roads, good and cheap hotels, that is to say basically, there is work to do. For instance, Moscow and St. Petersburg have achieved a really significant improvement of their infrastructure. There are hotels of almost all well-known brands such as Hilton, Marriott, etc.

I must say that prices are becoming friendlier because of competition on the market. Our travel programs are organized in such a way that tourists come to the capital for the weekend. This has its point - pricing at brand hotels is organised in such a way that weekday room rates are significantly higher than the weekend rates. In addition, the only way to see Moscow is on weekends because of our crazy traffic.

Moscow and St. Petersburg are presently very popular destinations at the present time among foreigners, because these cities are really very beautiful. For example, Moscow on a- summer warm evening after the rain, with its clean fresh pavements, beautiful lighting, is truly peerless. And even many Muscovites do not realise how beautiful our capital is.

Fotobank www.lori.ru

Evening Moscow. Building of GUM

Most daring tourists, of course, reach Kamchatka. This route is, for instance, very popular with Israeli tourists. Austrians are very fond of the North Caucasus, in particular, of course, of the Mount Elbrus. Among foreigners lovers of the Altai, Lake Baikal are also frequent, but compared to the total numbers it is still a drop in the bucket.

What are the reasons behind this situation?

The first is very expensive internal flights. Russia is a huge territory, to cross such a country is not the same as to travel from Paris to Normandy. A flight to Kamchatka takes 9 hours. And, additionally, tickets are insanely expensive, much more expensive than, let’s say, from Moscow to America.

The second reason is the infrastructure. Let us take, for example, the Lake Baikal. Yes, there is natural beauty there, but there is no infrastructure. Of course, a Russian tourist, if he wants, can live in 3 star hotels or below, but foreigners are accustomed to a certain amount of comfort. Tourist infrastructure is a fertile territory of Russia.

And also, for sure, - roads. So long as Russia will not have proper roads, the list of tourist destinations will be restricted to big cities, and, perhaps, Baikal and Kamchatka.

The same goes for Siberia - as long as there are no roads, as long as high ticket prices do not change, the idea of tourism development in these regions will remain mere contemplations, no more than that.

Fotobank www.lori.ru

Federal auto-road M56 “Kolyma”

I also want to add something about Russian visas. It is difficult enough to obtain a visa for our country, but, moreover, ,they are issued for a very limited period. For example, we are now able to get a Spanish visa for six months, for a year. But foreigners, for example, Germans coming to Russia receive Russian visas strictly for the period “from … until”. This is due to political decisions, the decisions of our Ministry of Foreign Affairs. Of course, work on relaxing visa regime is in full swing. In particular, "cruise tourists" can now obtain visas directly on the spot for 48 hours. But for those who come here for a few days to get visa becomes a big problem. If the tour is delayed by a day or two, imagine that the plane does not depart, then these people have to prolong their visa, and our system does not allow doing this easily.

The problem again are the expensive flights. Freigners always fly with foreign airlines, which are much cheaper, than Russian ones.

What can you, as a real member of this sector of service market, advise to potential investors who wish to invest in this industry?

I can say that currently bus tourism is an absolute gap, both in big cities and in the province. Every time we face a situation where it is difficult to find a modern tourist bus in Moscow What we have is an outdated bus fleet, which has existed since the perestroika times. The owners of cars bus fleets can not afford to update their buses, and travel agencies themselves do not have any extra funds to hold their own fleet.

There have been a number of attempts at foreign bus manufacturers to enter to our market, but so far there are no results. In fact, there is need to mitigate the tax and customs legislation, then the development of this market will go faster.

As for me, I can say that having some surplus funds, I would invest them in building a good bus fleet, and my services would always be in demand.

Sooner or later, normal highways will be constructed; in particular, the road linking Moscow to St. Petersburg and then tourists will be able to get from one capital to the other in 4-5 hours.

And, of course, there are great opportunities for financial and leasing companies. I repeat: to buy buses at their own expense – not all agencies can afford it. It is very difficult to get a credit at the moment because of the high interest rates and extremely onerous conditions. Therefore, the Russian tourism market requires normal offers from leasing companies.

What tourist destinations are supposed to be successful anyway?

No doubt, these are Moscow and Saint-Petersburg; they have already become centers of tourism in Russia. Baikal, if this destination is promoted. Altai has been represented in all international exhibitions, currently it experiences a rapid growth in tourism, but it will take time until we see crowds of people leaving for Altai.

Fotobank www.lori.ru

Baikal Lake in winter

What about Sochi? What do you think, will it be able to become a resort with global popularity?

I have just returned from Sochi where I visited the new hotels and other sites. Really impressive!

As a resort, it will, of course, continue to be an interesting place for Russians only if it will be able to compete with the already familiar Italy, Spain, and Nice in terms of prices.

Fotobank www.lori.ru

Krasnaya Polyana, ski resort in Sochi