Domestic Tourism: The Promise and the Hurdles

28 February 2017

The discussion moderator was Maxim Filimonov, Deputy CEO and Chief Editor of TASS Russia Information Agency. Initiating the discussion, he noted that recently the tourism industry is growing faster than the average global growth rates. Even today, the tourism industry makes up 1.5% of the country’s GDP and affects 53 related industries.

Federal Agency for Tourism Head Oleg Safonov shared positive statistics from the domestic tourism industry and reported that whereas in the past tourism consisted of travel abroad, today domestic and inbound tourism is increasing, while outbound tourism is declining. “Starting from 2014, our country has seen serious changes in the tourism sector: domestic tourism has increased by 30%, including by 18% in 2015 and 15% in 2016. The total number of tour operators has grown by 10% to 4,561 tour operators,” Safonov said. In addition, he noted the effective work of the tour operator community, while recalling the events of 2015 in Turkey and Egypt, when 99,000 Russian citizens were returned to their homeland. Tour operators used their own funds for this purpose as opposed to budget funds.

Safonov believes the development of the tourism industry, as a non-resource sector of the economy, is one of the most important government projects. He stressed that the mechanism for protecting consumer rights has been strengthened this year in accordance with amendments adopted in legislation. Safonov expressed confidence that the growth rates in domestic and inbound tourism will increase and that this year will be a mile'stone for the tourism industry.

Russian Deputy Minister of North Caucasus Affairs Andrei Reznikov spoke about what areas need to be improved in order to enhance the appeal of the North Caucasus. He noted that developing tourism in the Caucasus is a strategic approach. As one of the positive results in the tourism sector in the region, he cited the establishment of a cluster type of ski resort, which has already proven itself and meets all modern requirements for tourism facilities. “We will advance the tourism strategy, which will be coordinated with the federal vector. Above all, we are assessing the potential that we can show to business,” he said. The government should also evaluate the potential of the territory for tourism development, he said.

Olga Arkhangelskaya, Head of the Transportation, Infrastructure and Government, and Public Group in the CIS at EY, cited tourism industry statistics. “According to sociological surveys, roughly 70% of respondents plan to spend their vacations in Russia,” she said. “Sea resorts in southern Russia were the absolute leader in terms of popularity at 55% followed by St. Petersburg at 9%, Moscow – 6%, the Caucasus Mineral Waters area, Altai, Baikal and Karelia at 3%, Kazan and Golden Ring cities at 2% and Kamchatka at 1%,” she said. When choosing a destination for vacation, Russians are guided by the following criteria: overall trip cost and climate.

Arkhangelskaya noted that the industry has problems in terms of the service culture, which will take a long time to change and must start with the educational system. “Universities primarily train managers, while the issue of secondary specialized education is a rather acute one,” she said. There are also gaps in awareness, she said. “New tourism products are emerging, but hardly anyone knows about them. Awareness of tourism services is a very important aspect,” she said.

Sochi Deputy Mayor Oleg Yasyusk spoke about the successful development of tourism in his region, which was heavily impacted by the Olympic Games. “More than 6.5 million people vacationed in the region in 2016,” he said. In order to retain this potential, price growth must be contained and quality needs to be improved, he said. The Association of Russian Resort Cities has been established to solve such problems and includes Crimea, Altai and several other resort zones.

Deputy Chairman of the Russian State Duma Committee on Physical Culture, Sport, Tourism and Youth Affairs Sergei Krivonosov spoke about legislative aspects of developing the tourism industry. “A Physical Culture, Tourism and Youth Affairs Committee has been established now. Serious work is under way in the State Duma to develop the tourism industry. Tourism is a sector of the economy and we are trying to put it into law,” he said.

The State Duma member also noted that today the biggest issue is investment since it is impossible to develop infrastructure without any money. “The Association of Regional Economic Interaction will be set up in the near future. As a result of the regions and federal authorities joining efforts, I am confident that the results will be more effective,” Krivonosov said. One of the hurdles for growth in tourist traffic is the transport accessibility of the regions, he said. Due to an insufficiently well-balanced policy on this issue, many regions remain without tourists. Special packages and charters need to be created and we need to pique citizens’ interest with a price-quality ratio,” he said.

“Accessible information for different segments of the population needs to be created for competitiveness and to improve the industry’s effectiveness,” National Spa Association President and Russian Academy of Sciences Member Alexander Razumov said. In addition, tourism should be associated with medicine and the price policy should be multi-tiered, he said.

Russian Union of Travel Industry Vice President Yuri Bazyrkin, on the contrary, says he is confident that there will be a downward trend in tourism and that growth will only amount to 10% this year. “The tariff and tax policy in the sector must be amended. Taxes should stimulate rather than inhibit and business is going where it is comfortable,” he said. The speaker made corrections to the statistics cited by Olga Arkhangelskaya: “Of the 70% who expressed a desire to travel, only 43% of them will go anywhere. There may be different reasons for this, but primarily it’s the cost of the trip,” he said. In this regard, air travel needs to be subsidized, while transport accessibility needs to be ensured, he said.

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