Rescuing Tourism With Spas and Cheap Fares

MTTourists visiting Manezh Square, adjacent to the Kremlin and Red Square.��
At least 10 percent fewer foreign tourists are expected to visit Russia this year, and the government is hoping to convince Russians to spend their vacations at home to make up for the shortfall, Federal Tourism Agency head Anatoly Yarochkin said.

And Russians who give up their foreign vacations will have options beyond Moscow, St. Petersburg and the other usual big cities. The Federal Tourism Agency is looking to revitalize the Soviet tradition of health resort vacations.

"I predict that about 20 percent of the people who last summer flew out of the Rostov-on-Don airport to destinations like Tel Aviv, Istanbul and Dubai will this year get in their cars and drive to resorts in Krasnodar," Yarochkin said in an interview in his office last week, pointing to the main Black Sea costal cities in the Krasnodar region -- Novorossiisk, Tuapse and Sochi -- on a wall map of Russia.

Yarochkin said the number of Russians who vacationed abroad in the first three months of this year dropped by 25 percent compared to the same period last year as salary cuts, layoffs, a weaker ruble and economic uncertainty squeezed family budgets. He expects the trend to continue into the summer season.

"This year, many more people, Europeans and Russians alike, will be sticking closer to home, and it is the government's job to mitigate the effects of this on our tourism industry," Yarochkin told The Moscow Times.

The World Tourism Organization expects international tourism to fall by up to 2 percent in 2009, its first decline since the organization began tracking the industry's growth in 2003.

In 2008, 11.3 million Russians took vacations abroad, while 2.3 million foreigners vacationed in Russia, according the State Statistics Service. The figure for foreigners is contentious, however, because authorities in St. Petersburg, the country's top tourist destination, recorded 2.3 million foreign tourists last year.

The discrepancy is connected to how various state authorities count foreign visitors, and it was impossible to reconcile the difference.

The tourism industry might be even worse off than expected if St. Petersburg is any indication. The city, which claims 80 percent of the country's tourists, expects a 30 percent drop in foreign tourists and a 10 percent to 15 percent drop in Russian tourists this summer, said Mariana Ordzhonikidze, head of St. Petersburg's tourism department, citing information from local hotels and tour agencies.

The city's tourism budget for 2009 has been slashed to 73 million rubles ($2.2 million), compared with 120 million rubles in 2008, forcing it to cut advertising in the regions and abroad. About 2.5 million Russian tourists visited St. Petersburg last year.

"We are all very troubled and discouraged," Ordzhonikidze said.

"We had to downsize our stands at trade shows and even cut out countries such as Japan and major cities like Chicago and Dubai," she said.

The Federal Tourism Agency, however, is flush with advertising cash after receiving government assistance aimed at encouraging Russians to vacation at home and foreign tourists to visit despite the financial crisis.

The agency has been allocated 180 million rubles -- 50 million rubles more than in 2008 -- to advertise tourist destinations, Yarochkin said.

And the government is experimenting with other ways of boosting the flagging sector. In February, President Dmitry Medvedev said the state would subsidize air travel during the summer months for retirees and people under the age of 23 flying between the Far East and the country's major tourist destinations -- Moscow, St. Petersburg and Sochi. The government will cover half the cost of a return, economy-class ticket.

Ordzhonikidze said she is confident that the subsidized plane tickets will bring more retirees from the Far East to St. Petersburg this year.

The Federal Tourism Agency is hoping to expand the country's list of tourist destinations beyond the urban centers and is advocating measures that it hopes will revitalize the Soviet tradition of health resort vacations.

"We have asked the government to consider making summer sanatorium and health resort visits tax deductible for retirees and youth. We hope the measure is approved," Yarochkin said.

It was a widespread practice in the Soviet Union for the state to subsidize workers' vacations to sanatoriums in the sunny southern regions. Since the early 1990s, however, the number of sanatoriums has declined significantly -- few Russians can afford travel to the regions and pay for the cost of room, board and health treatments at the resorts.

It may be an easy sell for the government, which is already eyeing an unemployment rate of 8.5 percent. The country's tourism sector directly and indirectly employs about 6 percent of the working population, and a disappointing tourism season could exacerbate the already dark statistics.

For St. Petersburg, tourism is even more crucial, employing 18 percent of the city's working population, or 500,000 people. Ordzhonikidze predicted that the contraction could force the sector to cut 10 percent of its jobs.

To avoid that, convincing Russians to stay home this summer may be key.

"Foreign tour operators always used to book an entire boat for the whole season, but this year they have all said no," said Larisa Eganyan, sales manager for Turflot, one of Russia's largest river-cruise operators.

Turflot owns four boats, she said, and foreigners used to account for 20 percent of the firm's revenue.

The company is hoping that domestic demand grows to make up for a fall in foreign bookings through European tourist agencies, Eganyan said.

"Because of the economic crisis, fewer Russians are traveling abroad, so we think we could even see a growth in our Russian tourist bookings if they opt to travel closer to home instead," Eganyan said.

But so far, less than a month before the official opening of Russia's summer tourist season, there is no evidence of a pickup in sales for cruise operators.

Another large river-cruise operator, Orthodox, whose passengers are almost all foreign, said it has seen a 10 percent drop in bookings for the 2009 season from France and Germany.

"The European travel agencies that sell our tours told us they are having a hard time finding clients," said Irina Samorodskaya, the company's sales manager.

"So now, we are offering them 25 to 30 percent discounts. We hope that helps," she said.

International ocean cruise liners that dock in St. Petersburg are experiencing similar problems with advance bookings. Peter Deilmann, a large ocean and river cruise company, said its North American sales for summer cruises have dropped by 33 percent overall.

"The booking window for cruises is generally nine months to one year in advance, and that window has collapsed. We are still accepting reservations," said Richard DeSousa, the company's sales manager for North America.

Nevertheless, sales for the company's Baltic cruise, which docks in St. Petersburg and other northern European cities, have suffered the least.

"Our Baltic tour remains the strongest European segment, and St. Petersburg is the biggest draw on the tour," DeSousa said.

Tour operators and government officials are counting on that staying power to draw the tourism sector through the downturn.

"The fall is just crisis related and very temporary. Numbers will pick back up in about year," Ordzhonikidze said.