Over the past three years, the structure of the Russian tourism industry has undergone significant changes. Outbound tourist flows are contracting, while domestic and inbound tourism is rapidly expanding.In these conditions, the industry stands a good chance of becoming a driver behind the socio-economic development of the country. The key challenge for the tourism market players is to keep the growth trend going despite infrastructural and financial constraints and the reopening of such popular external destinations as Turkey.
The global tourism industry grows at a steady pace and makes significant contributions to the development of national economies.
According to the 2016 data of the United Nations World Tourism Organisation (UNWTO), tourism accounts for 10% of the world's GDP and 7% of the global trade.
In Russia, tourism is becoming a material driver of economic growth, too. According to the Russian Ministry of Culture, the industry contributed 3.4% to the country's GDP in 2016. If the current growth trends persist, tourism will potentially contribute 5–6% to the Russian GDP (the Accounts Chamber estimates).
Since 2014, Russia has seen significant changes in the structure of the industry, with domestic and inbound tourism taking the centre stage. This change came as a logical response to the rouble depreciation and declining price affordability of international tourism.
According to the Federal State Statistics Service, the outbound tourist flow in Russia decreased by 20% in 2015 and 7.9% in 2016.
On the flip side, the Federal Agency for Tourism estimates that the domestic tourist flow rose by 18% (50 million trips) in 2015 and 10% (55 million trips) in 2016. The Bank of Russia calculated that domestic tourism expenses of the Russian citizens surged by 88% in 2016.
The projected growth for 2017 stands at 10%. The tools used to ensure further expansion in the industry include:
Introduction of package tours comprising transportation, accommodation, excursions and transfers in line with the best practices of outbound tourism.
Development of new tourist itineraries, including interregional circuits to reduce the pressure put on key destinations and establish year-round resorts.
Development of ski tourism (which has grown from 4.5 million to nearly 6 million people since 2014) and car tourism to the destinations west and south of Moscow, including Crimea.
The Government makes tourism investments under the Federal Target Programme Development of domestic and inbound tourism in the Russian Federation, which provides for the construction of 54 recreational and car tourist clusters in 41 Russian regions. However, given the current environment, budget expenses need to be cut.
The volume of federal budget funding was reduced by 30% to RUB 3.6 billion in 2017 and by 44% to RUB 3.5 billion in 2018.
Hence, the vital need to engage private investors. This year, the Government is planning to attract some RUB 22.3 billion under the Federal Target Programme from the private business.
According to the UNWTO, the global demand for international tourism grows at the annual rate of 4%. The rouble depreciation has boosted the competitive position of Russia's tourism industry, but the inbound tourist flow remains erratic.
In 2015, the inbound tourism in Russia increased by 8% (26.9 million trips) only to decline by 9% to 24.5 million trips in 2016, according to the data of the Federal State Statistics Service. Chinese tourists are the only exception to this trend: their numbers grew by 28% in 2015 and 15% in 2016.
Work is underway to promote Russia as a tourist destination in the foreign markets.
For example, there are plans to expand the network of Visit Russia tourist offices in foreign countries through public–private partnerships.
The Federal Agency for Tourism and the Russian Export Centre are putting in place a large-scale joint programme to set up channels for tour sales and promote Russia as a popular tourist destination.
That said, there are still certain barriers that can undermine the growth of domestic and inbound tourism in Russia.
The expected rise in the prices for domestic tourism services by 10–30% this year (data from the Russian Association of Tour Operators).
A high share of transportation costs in the domestic tour budget (up to 50–70% of the overall tour cost).
On many occasions, poor quality of services and infrastructure as compared to the international standards.
Labour shortages. In 2017, the Federal Agency for Tourism is planning to train 10,000 people under 15 tourism management programmes.
The resumption of tours to Turkey, which are cheaper than similar tours offered on the domestic market.
The 2018 FIFA World Cup is expected to make a significant contribution to the development of tourism infrastructure in Russia.
In the run-up to the championship, some 60 hotels will be built from scratch and over 100 facilities will be substantially upgraded. The transport infrastructure (construction and renovation of airports, stations and roads) is also set to benefit from the upcoming event.