Key conclusions
Tourism needs to decide if it belongs to economic or social sphere – and develop as such
“Our issues go back to the Soviet days. We still cannot figure out what is tourism for Russia. Is it a branch of the economy? The we should measure the results in money. Is it a social branch? Then we should measure it the same way we do education or healthcare: number of customers and infrastructure units, servicing those customers,” Roman Eremyan, Head of the Center for Strategic Analysis and Development, Union of Tourism and Hospitality.
“Tourism overall needs to define its role: is socio-economic or economic and social? The entire post-Soviet period we viewed tourism as a social thing. In terms of small business, we turned into a giant field made up of hotels, tour agencies, and so on, that tried to figure out the economics on their own. We believe tourism is a branch of the economy… that can bring in respectable revenue,” Elena Lysenkova, Deputy Head, Federal Agency for Tourism.
Tourism has been growing the past two years. Both supply and demand have gone up
“Before 2019 such ample variety of tour packages and programmes simply did not exist. They were not there. We see progress that the line-up has become much wider and much more versatile. Let us be honest, it happened not just because we all did such a good job. Some of it came naturally, simply because the borders shut down. Some of the growth came from the cash back programme,” Lyubov Voronina, Head of International Projects, Sletat.ru.
“Domestic trips are very popular now. The typical voyagers are well-travelled around the world, and their demand for quality makes the tourism entities adjust their product accordingly,” Elena Lysenkova, Deputy Head, Federal Agency for Tourism.
PROBLEMS
Lack of financing in the industry combined with complicated taxation lower investment attractivity and hinder small business development
“Federal Taxation Service publishes an annual report entitled ‘Financial indices broken down by industry’. It contains asset profitability, retail profitability, and fiscal load. And what do we see there? Food and beverage, and hotels are almost at the bottom of the list,” Roman Eremyan, Head of the Center for Strategic Analysis and Development, Union of Tourism and Hospitality.
“When an investor decides, the decision is seldomly made in favour of tourism – unless it is a purely emotional choice,” Elena Lysenkova, Deputy Head, Federal Agency for Tourism.
“Let us take VAT. Great job – but why 5 years? Have you ever seen tourism projects that recuperate in 5 years? I do not think so,” Aleksey Kozhevnikov, General Director, Konstruktor Puteshestvij.
“Subsidies are a great tool. And it is great that some of them are in popular demand. However, only projects with at least 120 rooms qualify. That, alas, excludes small business from this conversation entirely,” Aleksey Kozhevnikov, General Director, Konstruktor Puteshestvij.
Convoluted visa policy stands in the way of foreign visitors
“Let us take a look at our visa policy. It is almost like it is ‘everyone gets out, nobody gets in’ kind of system… let us look at it from the reciprocity angle. Schengen countries give Russians multi-year multi-entry visas. Which visas do we give out? One entry, short term,”
Roman Eremyan, Head of the Center for Strategic Analysis and Development, Union of Tourism and Hospitality.
A large-scale resort area with a developed premium segment infrastructure is missing
“As a country, we need a well-designed resort that can offer contemporary infrastructure and meets all the requirements of a modern traveller,” Elena Lysenkova, Deputy Head, Federal Agency for Tourism.
“We need a global resort, that can compete internationally. But it is not only a mass-segment resorts we are missing: we need premium ones as well. Our travellers have been around, they have seen places, whereas Russia currently has 10 establishments that meet those demands,” Lyubov Voronina, Head of International Projects, Sletat.ru.
Low profitability leads to low wages which leads to lack of qualified personnel
“Today, regular hotel staffer wage is 20–40 thousand roubles. Why? Because profitability is low. Where am I going to get funds for better wages if my profit level is so bad? Food couriers today make more money than hotel staff – this has to be addressed,” Aleksey Kozhevnikov, General Director, Konstruktor Puteshestvij.
“Another issue is a lack of qualified personnel. There is an initiative now called Hospitality Masters. We hope it will become widely popular because there always has to be quality service. There may be a mental barrier that ‘we do not like to serve’ but it affects the overall level of the resort and it is one of potential ways to attract more people,” Lyubov Voronina, Head of International Projects, Sletat.ru.
Regions are lagging behind in tourism development
“It would be great if we could give the regions some ready-made solutions… Unfortunately, tourism management structure in Russia did not evolve. Regions still have ‘Ministry of Tourism’ at best, more likely ‘Ministry of Culture and Tourism’ or ‘Ministry of Sports and Tourism’. People’s competencies are missing,” Aleksey Kozhevnikov, General Director, Konstruktor Puteshestvij.
“We see that many regions simply do not have the infrastructure to accommodate tourists,”
Lyubov Voronina, Head of International Projects, Sletat.ru.
SOLUTIONS
Simplify taxation and clarify the law
“We need special taxation for the industry. There is nothing revolutionary in this. IT has its own taxation, so do agriculture or textile industries… there is nothing unheard of about this for our legal system. It is just a question of justification,” Roman Eremyan, Head of the Center for Strategic Analysis and Development, Union of Tourism and Hospitality.
“It is important to quickly decipher legal documents… As of 1 September, an electronic travel sheet is going to be officially introduced. How is it going to work? With which algorithms? Is it going to be free or not? Busines does not understand anything about it, yet it has to plan ahead. We need those algorithms,” Aleksey Kozhevnikov, General Director, Konstruktor Puteshestvij.
Improve visa policy
“We need a new industry tax code, we need to re-examine visa-issuing policy from the economic standpoint, we need to sort through various financing options,” Roman Eremyan, Head of the Center for Strategic Analysis and Development, Union of Tourism and Hospitality.
“We do understand that we must perfect the electronic visa process, we need to improve transfer options. We suggested this a number of times and we continue talking to our colleagues about it,” Elena Lysenkova, Deputy Head, Federal Agency for Tourism.
Increase investment attractivity of tourism
“We see a task for all of us to form a structure that will let investors first see the financial sense, and only then generate an emotional response,” Elena Lysenkova, Deputy Head, Federal Agency for Tourism.
Create a sizeable contemporary resort with high-quality infrastructure
“I would recommend Rosturizm together with the Government of Russian Federation to think of an ambitious tourism project somewhere in the South. We need a project, a well-designed one, that accounts for all modern technologies,” Aleksey Kozhevnikov, General Director, Konstruktor Puteshestvij.
“It is a worthwhile task to build a modern resort. Rosturizm is making steps towards it together with various regions: we are developing a territorial tourism strategy… Right now we are working on a master plan for tourist territories,” Elena Lysenkova, Deputy Head, Federal Agency for Tourism.
Support regions developing their tourism and support demand during low seasons
“Regions may benefit from a recommendation which minimal set of infrastructural elements do they need to possess in order to accommodate large swaths of people,” Lyubov Voronina, Head of International Projects, Sletat.ru.
“Tours to Sochi and Krasnodar Territory do not need cashback support during the summer. It would help though during low season or in other, more challenging locations,” Lyubov Voronina, Head of International Projects, Sletat.ru.
“We see our role – and cashback is used to the same end here – to level out seasonal shifts. We want to show that travelling is possible during various seasons. Grant mechanism also works towards this goal. One of the new grants we just launched aims to help build heated outdoor pools,” Elena Lysenkova, Deputy Head, Federal Agency for Tourism.
