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. Last Updated: 07/27/2016

The Russians Are Coming, and They're Loaded

A New Russian walks into a bar and asks for a bottle of vodka. The bartender says he sells vodka only by the glass. "Well, count the number of glasses in the bottle and that's what I'll pay," the New Russian says. The bartender does a quick calculation: "That'll be $300."


"No problem," says the New Russian, peeling three hundred-dollar bills from his roll.


No, it's not another bad New Russian joke.


It's a true story, according to the regional director of the Seychelles Tourism Ministry. So are the tales about the Russian tourists who spent $20,000 in cash while on vacation on an island in the Maldives off the southern coast of India, or the ones who shelled out $13,000 for a private safari in Kenya -- complete with an unheard-of air conditioned jeep.


From Spain and Turkey to the Maldives and Seychelles, the world is realizing the travel potential of Russians. Last week, some 900 representatives of the world tourism industry converged on the Krasnaya Presnya Exposition Center for the fourth annual Moscow International Travel and Tourism Exhibition, or MITT. National tourist boards, hotel operators, car rental companies, airlines and tour operators all turned out, hoping to gain an even larger share of one of Russia's newest multibillion-dollar exports.


Russians tourists spent over $11 billion outside its borders in 1996, according to Andrei Shlevkov of the World Tourism Organization, an intergovernmental body that promotes tourism worldwide. "According to our figures, [Russia] is the sixth top European-spending market," he said.


According to those figures, Russians accounted for about 2 percent of the world's overall $483 billion tourism expenditures last year. That spells big growth for a group that, less than a decade ago, was mostly confined to touring within the Soviet Union.


Although deep-pocketed New Russians are leading the pack, lower-budget Russian travelers are following behind. Most industry representatives at the exposition reported at least double-figure growth in Russian tourism over the last year, with some countries reporting that business from Russians more than doubled.


One indication of the booming business Russian tourists represent is the MITT fair itself: In just its fourth year, the Moscow exposition has already become the third largest in the world, placing behind only the well-established shows in London and Berlin.


David Hammond, director of the International Trade and Exhibitions Group's Travel and Tourism division, is helping to organize market fervor through the MITT exposition.


A travel industry veteran, Hammond says that in the late 1970s and early 1980s, when Eastern Europe was isolated from the West, much of Europe's tourism focused on Mediterranean areas. Spain, Italy, Greece and Turkey were the mainstays for charter operators from Britain and Germany, he said.


But with the rising popularity of "long haul" tourism to the Caribbean, United States and Far East in the late 1980s and 1990s, the European travel industry found its share shrinking.


Then came the Russians.


"Out of nowhere, a market appeared to replace that lost tourism," Hammond said. "But not just to replace it, but to become a dominant force in Mediterranean tourism. Spain, Turkey, Italy -- they put a higher priority and focus on the spending and space at this show than at any other show in the world."


In many ways, Hammond said, Russia "has totally revitalized the industry."





Russia's travel trailblazers are the small group of New Russians able to drop thousands of dollars on destinations around the world where, industry experts say, they expect the best in hotels and service.


"The Russian market is a very unusual market, not like the European market," said Michael Petrov, the general manager of Moscow-based Alla Travels. "They have to have good service. They need a five-star hotel, limousine transfers, Russian-speaking guides."


Petrov estimated that there are only about 5,000 to 6,000 super-rich Russians who will pay top dollar for exotic, high-end vacations. These are the travelers buying business-class tickets to expensive destinations such as Seychelles and the Maldives, trying to best their friends in a game of travel one-upmanship: If Sasha went to Jamaica last year, then Masha, in the opulent dacha next door, wants to show him up and return with a winter tan courtesy of Tahiti and Bali.


"They just don't really know the destinations," said John Svengren, a regional manager for Australia's Qantas airlines, which just 1 1/2 years ago began promoting its around-the-world flights in Russia. With about 100 percent increase in sales each month from the Russian market, Svengren explains: "The travel is for mostly the status-oriented tourist, who can come home and say, 'I've done this sort of thing.'"


Even with as few as 9,000 Russian visitors to Australia, and about 2,000 to Seychelles, the revenue from those select few is enough to turn heads.


Matts Ehrenpreis, regional manager of the Leading Hotels of the World, said Russians might make fewer bookings than tourists from other countries -- about 700 reservations in 1996, accounting for about 3,000 room nights at approximately $400 a night -- but the revenue from those few bookings surpasses that of more frequent visitors from other nations.


This increasing demand -- Russian revenues for Leading Hotels grew 120 percent from 1995 -- has been enough for the Leading Hotels to plan for an office in Moscow.


"There is potential here that warrants the expansion," Ehrenpreis said.





This pool of rich Russians is more or less limited, however, so tour operators are designing packages for the growing ranks of economic-minded Russian travelers. In fact, some countries have almost forgotten about the New Russians, to whom some destinations are already passe.


"Some people spend very much, others very little," Ayman Youssef, managing director of Esadora Travel, said of the Russian tourists he sees coming into Egypt. "There's no medium."


One group of budget travelers making a name for itself is the chelnoki, or "suitcase traders," who visit countries like China -- which saw 600,000 Russians in 1996 -- or Dubai, where a vacation is actually a shopping trip for "souvenirs" that will be sold at a mark-up back home.


For Dubai, a small United Arab Emirates nation famous for its duty-free shopping, Russian tourists are big business; they have gone from a blip on the screen in 1991 to Dubai's top visitors in 1994, 1995 and 1996.


Dubai's Department of Tourism reports about 150,000 Russian visitors a year, but the number is put at close to 300,000 by Abdul Rahim Mohammed Abdulla, senior manager for Dubai's Department of Tourism and Commerce Marketing.


"The Russian market is a very important market, not just to the Emirates but to everyone," Abdulla said. "It's a matter of opening up, and there is a mass of people here in Russia."


At the travel fair, exhibitors were hard at work educating Russian travelers about potential holiday destinations.


"We believe in marketing. It's an important thing," Abdulla said. For the MITT event, the Dubai tourism department prepared a press conference, two radio commercials and a promotional contest with the winner receiving round-trip tickets to Dubai. They have also launched a month-long shopping festival designed to lure tourists to this Arab country. With retail stores offering a 40 percent discount, hotel rooms going at a reduced rate and a Lexus car being raffled each day of the month- long event, Abdulla says the festival should draw about 2 million visitors.


Others are taking a direct approach. Egypt promotes the land of the sphinx and sun by placing announcements and placards in Moscow's metro. Others simply invest in educating the growing number of tour operators about their particular destination.


"Last year we had about 350 clients because people don't know where Martinique is," said Robert Conrad, regional director for the Department of Tourism for this small Caribbean island. "Travel agents don't know Martinique as a destination, to explain why to go there."


Yet for the delegation from Martinique, and many others at MITT, the biggest increase in tourism may come through easing visa restrictions.


"Russians make a decision quickly to go on holiday, so we hope to take the decision to give a visa when they arrive at the airport," Conrad said. This process has helped bring Russian tourists to destinations such as Turkey, which offers a $10, three-month visa upon arrival.


Other major ports of call invest in expediting the visa process. Spain's Ministry of Foreign Affairs has already developed special software, licensed to some 50 tour operators in Russia accredited by the Spanish consulate, which allows tour agencies to relay application information directly to the embassy and receive visa approval within days. Tour operators using the system can sell last-minute packages rather than waiting the standard three weeks for visa approval.


With eight Spanish regional representatives and 31 private enterprises in Moscow for the travel exposition, the sheer size of the Spanish display at MITT illustrates Spain's interest in this market. Even so, the Spanish entourage's exposition site is expected to almost double for MITT 1998, said expo organizer Hammond.


"We are looking at very rapid growth over the next two years," he says, with MITT expanding by 74 percent next year alone. Hammond predicted that, in the next five years, Moscow will become the site of the second-largest world travel exposition.


The countries appear to echo his sentiment.


"Since I've been in the tourism business, starting 25 years ago, we always concentrated on Western Europe -- France, Germany, Italy, Britain. Now we want to diversify and are looking into Central and Eastern Europe, especially Russia. It is a very promising market," said Sylvestre Radegonde, regional manager for the Seychelles Department of Tourism.


With a 50 percent increase in tourist traffic from Russia during 1996, he says: "For this year, we are conservatively looking for a 100 percent increase. I think we will make it."