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CRUISING ON THE SHIP OF STATE – DOES RUSSIAN TOURISM ABROAD SINK OR SWIM?

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By John Helmer, Moscow

It used to be fashionable for European tourists of high class, especially the ladies with their menfolk, to visit wars and enjoy the display of artillery at night; the clash of infantry and cavalry on the battlefield; and the morgues where the casualties were displayed in naked and dismembered heaps afterwards. Frisson tourism then, extreme or shock tourism today.

The Crimean War, for example, was further away from London and Paris than St. Petersburg, but was visited by more British and French than Russian tourists; that was because the Anglo-French side was winning. These days American tourists do not cruise the waterways of the Persian Gulf; trek in the Afghan mountains; holiday in houseboats on the Tigris; or visit the ancient ruins of Leptis Magna (Libya)  and Palmyra (Syria).  The reason isn’t want of aesthetic taste for the sights or of appetite for frisson.   It’s because the US is losing the wars in those places. Tourists, like soldiers, want value for money and they aim to return home.

In the history of tourism in the Russian Empire, war tourism was mostly in the form of Russian officers and writer-combatants reporting what they saw on the battlefield; also what they enjoyed on their rest and recreation. There were many best-sellers; they popularized the Caucasus and began the fashion for places like Piatigorsk. But Leo Tolstoy, a second lieutenant in the battles at Sevastopol in 1854 and 1855, wrote his Sevastopol Sketches to discourage war tourism; war “in its real guise,” Tolstoy wrote, “blood, suffering and death”.

It is the seriousness of purpose that characterizes the history of Russian tourism – until the revolution of 1991, that is. That’s also when the purposefulness of Russian touring was replaced by purposelessness, and the conspicuous spending of money for its own sake by the few with money to spend.

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Soviet tour posters; left, “Be a tourist! Travel along your own country!”, 1949; right, “Tourism is the best rest!”, 1950. 

Tourists, in Fyodor Dostoevsky’s 1847 opinion, were prejudiced,  crass foreigners. A century later,  when the Communist Party was in power, there was lively debate in the party media and among the apparatchiki on what tourism should mean, what forms it should take, and what the proletarian tourist should do to correct  the misconduct of his bourgeois predecessors.  The Soviets argued over the priorities state planned and financed tourism should serve – collective experience or individual?  rugged exertion or rest?  minimum amenities or maximum comfort? education or entertainment?  All types were experimented with, but on one principle Soviet tourism concentrated – it should serve labour, not consumption. For more details, read Turizm [3], a history of the Russian and East European tourist under capitalism and socialism. The history stops before Boris Yeltsin got started.

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Left: President Yeltsin visiting Deidesheim, Germany, May 12, 1994; right: the Irish Prime Minister, Albert Reynolds, waits at the foot of the passenger stairs at Shannon Airport on September 30, 1994, to welcome Yeltsin. He failed to appear because inside his aircraft he was too drunk to be roused. 

American historians of Russian tourism report that before the 1917 revolution and also during the Soviet period, Russian tourists demonstrated “a national inferiority complex vis-a-vis the West”. As evidence they point to guidebooks and tour manuals published in the 1960s by Intourist and travel columns in party newspapers with advice on how Russian tourists should dress and behave when abroad.  

Today a well-known Cyprus hotelier says: “There is no instance of loutish behaviour by middle-class Russians. In Turkey for all-inclusive package tours, they do come to drink and drunk they remain. But the worst behaviour and violence among middle-class tourists in Turkey and Cyprus is from the Brits. They are the hooligans of Europe. Also, it is the super-rich Russians who continue to surprise European hotel-owners with their excessive spending and their over-the-top behaviour.”

The latest research by the Russian Public Opinion Research Centre (VTsIOM), released [5] on May 23, reveals that tourism at home is the choice of one out of every two Russians. Lack of the means to afford travel is the reason cited.  Those who say they will have no summer holiday and will work instead amount to 17%. A year ago, just over one in three Russians polled by VTsIOM said they would spend their summer vacation at a  country dacha. This proportion has retreated to 29%, and there is a corresponding increase in the numbers planning to travel to other cities in Russia, the Black Sea coast, Crimea, and the Caucasus.

Crimea is the most preferred holiday destination – for 37% of Russians. It is followed by the Black Sea coast; foreign destinations rank third in favour. But in planning, according to the new poll, only 6% of Russians say they will take their holiday abroad. That’s just one Russian in seventeen – not exactly a middle class or class at all;  more like an elite.  

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Left: beach at Yalta, Crimea; right: beach at Sochi, Black Sea.

VTsIOM reports that this year a significantly larger amount of cash is planned to be spent on the summer vacation – Rb39,806  ($700) per person is the average this year, up 18% over last year’s average. Residents of Moscow and St. Petersburg say they plan to spend an average of Rb53,328 ($940).

Does this spending measure amount to a sign that Russians are earning more money and plan to spend it on vacation,  and so are more optimistic of economic recovery after two years of recession, devaluation,  and war sanctions?

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Source: https://www.tradingeconomics.com/russia/consumer-confidence?continent=africa [8]

A report [9]  by Rostourunion (RST), the tourist industry association,  indicates there were already signs of loss of tourist confidence in 2013. “In September-October 2013 the Russian leadership has made clear to citizens that they should not expect improvement of the economic situation in the near future. This immediately affected consumer behaviour. According to Rosstat [the state statistics agency], by the end of 2013 the consumer confidence index in Russia had dropped significantly. 2014 proved to be for the travel industry much worse than even the financial crisis had been in 2009, when the decline in outbound tourist flow amounted to 20%-25%. In 2014, the collapse of demand for foreign tours reached 50%-70%.”

 As sanctions against Russia multiplied, the Russian government issued a foreign travel ban for the military, police and security services,  though this was not made public. One estimate of the number affected was 4 million.  The Foreign Ministry issued a travel advisory to all other Russians “to refrain from trips abroad, especially to countries which have concluded treaties with the United States on mutual extradition.”

 RST reports “the most serious impact on outbound tourism was caused by the fall of the ruble, which by December 2014 had depreciated against the dollar and the Euro by almost 50%. This led to a twofold price increase on outbound tourism products for Russians.”

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“In these conditions it proved impossible to sell tours, the prices of which were denominated in foreign currencies. Even offering discounts and various promotions didn’t allow tour operators to recover the demand. The most affected were tours to Europe, the price of which was pegged to the Euro. Also significantly down was the demand for long-haul destinations, where there was a  fall of more than 50% – Thailand, the Caribbean, Latin America.”  RST says that between mid-June and mid-December 2014 a total of 18 tour operators went bankrupt, five of them major companies. About 150,000 Russian tourists were left either stranded abroad or stuck with worthless vouchers at home.  Distrust of tour operators in the marketplace has been permanent.

By the spring of 2015, RST was cautious in predicting recovery of tourist demand. “The recovery of demand will not begin before 2016… Comfort takes second place when planning a holiday. Now all decisions on the choice of directions and the subsequent booking will be focused on value. Tourists are ready to fly again with some changes, or on uncomfortable night flights if the ticket price is significantly cheaper. The choice of accommodation is also affected. If before it was how many stars and the prestige of the hotel that were important, now customers are more focused on the rate and consider budget accommodation options: apartments, hostels or guest houses. In order to save, they are also reducing the duration of their rest.”

Ruble appreciation and improvement in income in the second half of 2016 have begun a process of hesitant recovery.  The year-end result, however, reported by Rosstat, was that foreign travel was down by 8% compared to 2015. But Rosstat counts all private travel, including business, medical, family visits, and the like. The border control service counts tourist trips according to what travellers declare as they cross the border. By that measure, the result in 2016 was down 18.5% on 2015, and totalled 10 million trips – 2 million fewer than the year before. 

This year is looking up.  “Russians”, reports a Cyprus tourist sector source, “have been taking advantage of the stronger ruble in the last three months and Greece and Cyprus are the main beneficiaries. Turkey reservations are up as well. Russians will holiday a lot this year, and the main destinations will be Greece and Turkey, followed by Cyprus. In Europe, Finland is the big loser, followed by France and other European countries.  Asian destinations, especially Vietnam and Cambodia, are big winners because Russians [who can afford it] are looking for more exotic destinations.”

Still, this week’s report from Rosstat warns that growth in individual income in April has been modest.

RUSSIAN MACRO-ECONOMIC GROWTH, APRIL 2017 RESULTS COMPARED TO MARCH 2017 AND THE YEAR EARLIER

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CLICK ON TABLE TO ENLARGE
Columns:  percentage growth (decline) compared to the same month of 2016
Translation key to the left-side row terms:
GDP
Industrial production
-- extraction, mining
-- processing
-- electricity and gas supply
-- water supply, recycling
Freight turnover
Construction
Agriculture (Farming)
Retail trade
Real income
--real salaries
Unemployment

Compared to a year ago, real income was actually contracting in both months, but faster in April than in March. This was the effect of the federal government’s one-time pension bonus and indexation petering out. Real salaries for those in employment continue to grow, though by 2.5% year on year in April, compared to growth of 3.2% in March.  Pensioners spend their extra cash in supermarkets, not on holidays abroad. According to VTsIOM’s polling this month, 55% of Russians aged 60 or older say they can’t afford to leave home for a vacation.

Only a small minority of their juniors currently say they will be spending a summer holiday outside Russia. A survey of internet tourism searches just published [12]  by the Association of Tour Operators of Russia (ATOR) reveals that the volume of searches in April has jumped by 25% compared to a year ago. Almost half of those looking for package tours are aiming at Turkey, Greece and Cyprus. Since package tourism is the cheapest of the foreign travel options, this means that of the small minority of Russians, 6%, who can afford tourism abroad, those with least means are opting for the eastern Mediterranean because it is the lowest-price option. Package-tour demand for western Europe has dropped by 18% this year, compared to a year ago. In popular demand after Turkey, Greece and Cyprus, the favoured search destinations for package tours are Thailand, Russia, Tunisia, Spain, Vietnam, UAE and Bulgaria.

“As Russians get poorer they are looking for better value,” comments the Cyprus hotelier. “And terror attacks do not deter Russians for long.”

Between 2010, the first year of recovery after the 2008-2009 recession, and 2013, there was little change in the popularity of the main foreign destinations. Since then RST reports show that Finland, Germany, Italy, and the Czech republic have all suffered in relative terms. Turkey suffered after the travel ban was imposed following the shooting-down of a Russian warplane in November 2015. Gainers at Turkey’s expense in 2016 have been Tunisia (where there was a beach hotel terrorist attack in June 2015), Cyprus, and Greece.

TOP-20 FOREIGN TRAVEL DESTINATIONS FOR RUSSIAN TOURISTS, 2013-2016

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Source: RTS [14] March, 23, 2017

At the same time as the one-in-seventeen Russian elite competes to save money in taking their foreign holidays this year, the Russian oligarchs compete with one another to spend on stretching the length of their motor-yachts. The liquidity of Suleiman Kerimov, as registered by the number of his boats and also his villas ashore on the Cote d’Azur, has been detailed here [15]  and here [16]. Kerimov’s collection of beachside villas, according to the results of recent French police raids, can be counted as something of a Russian record; click here [17]

But Kerimov ranks only 12th on the oligarch table by length of his appendage, er yacht. The longest, stem to stern, belongs to Roman Abramovich, who has also set the record for buying the most yachts – five to date. Ranking second and just six metres shorter than Abramovich – 156m compared to 162m — is Alisher Usmanov with his third yacht, the Dilbar (lead image, 2nd row, right).

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Left: Abramovich at a portcall in Ireland, July 2015; centre, Usmanov; right, Andrei Melnichenko, 3rd ranked by length in a portcall at Cannes.  For the story of Melnichenko’s yacht troubles, read this [19]

A detailed listing of yachts for oligarch cruising can be clicked open here [20] and here [21]. Usmanov dominates the Russian oligarch table in one other category of conspicuous consumption – girth. At 175 metres tall, Usmanov is reported [22] to weigh 103 kilogrammes. This makes a body mass index of 33. 6 – well into the western obesity range for Usmanov, making him the fattest of the Russian oligarchs. Usmanov’s spokesman in Moscow was asked to clarify the numbers.  He requested an email but has not replied.