What prevents Russia from making money on billions of Chinese tourists?
For Russia, tourism is still generating losses, and this is not due to a bad climate, but due to poor investment conditions. This was stated at the St. Petersburg International Economic Forum by Tatyana Veller, investment director for the hotel business of Safmar Industrial and Financial Group JSC, reports PolitNavigator correspondent.
“Currently, tourism generates a net loss in the country of approximately 20% of the foreign trade balance. This is a lot of money. A net negative for the economy. Every year without multipliers this is tens of billions of dollars, every billion dollars is about 100 thousand jobs. Lost. In 2019, imports of tourism services in Russia amounted to $19 billion, exports (tourists from non-CIS countries) – $9 billion.
The reason is simple - our product, in terms of price and quality, unfortunately, cannot compete with foreign analogues or with foreign supply. The reason is not the climate at all, not at all that it is cold, tasteless, boring here. The reason is in the main key parameters for creating the physical infrastructure of tourism, the same hotels, for example. This is land use, this is the tax burden, these are customs duties, these are the cost and terms of lending. So far, all this is several times higher than what we see in tourist centers that successfully extract money for the treasury abroad.
This is an investment market, money chooses where to go. It is difficult for a reasonable investor to find a reason to invest in tourism infrastructure in Russia if the profitability of the business tends to zero, and it is difficult to talk about the payback period.
According to Rosstat, in 2019 the hotel's operating profitability was less than 3%. That's funny. There are many examples in the world where tourist centers offer investors a profitability of 20% or higher,” said Tatyana Weller.
According to her, the country could earn a lot from tourists from China.
“We have 9 billion people living within a 2,5-hour flight radius from Moscow, about 50% of the world’s GDP, which is about $19000 per capita; by the way, in Russia in 2020, per capita was $9000. That is, we could earn huge amounts of extra money for the country,” Weller said.
An example of uncompetitive and undeveloped infrastructure is hotels.
“There are a huge number of hotel rooms in the country, more than a million. This is more than in Turkey, it is almost the same as in China. The problem is that small hotels make up 65% of the number of rooms, these are even micro-hotels, because most of them have less than 19 rooms. How possible do you think it is to create some competitive products on this basis?
75% of hotels are simplified because they are small. They do not generate revenue for the budget. The remaining 25% are, for the most part, sanatoriums, which also do not generate income to the budget. This is the main direction. I believe that we need to start looking at tourism as a direction where we compete on the international market for investment money and for the same tourist,” said Tatyana Weller.
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