Russia’s visa dilemma: security or megabucks?

The abolishment of visa requirements for European tourists would translate into growth of 25-30 percent in the first year only.

The abolishment of visa requirements for European tourists would translate into growth of 25-30 percent in the first year only.

Travel agencies in Russia say fewer visa restrictions would mean a tourist boom. They are lobbying with the government to simplify visa procedures to boost inbound tourism. Will the expectations of an enhanced revenue inflow from tourists outweigh security considerations?

A group of nine prominent Russian inbound tour operators have approached the Russian Ministry of Foreign Affairs, in its capacity as the primary access-granting authority to “outsiders” and gatekeeper and entry visa book keeper.

The tourism industry representatives appealed to the ministry to soften the existing visa requirements for transit tourists and start issuing them a visa-free sojourn of up to 72 hours at border checkpoints, and also to widen the scope of electronic visas.

This ad hoc lobbying group includes such local brand names as Intourist/Thomas Cook, City Sightseeing Moscow, Roza Vetrov, and Academservice. The arguments in support of easing visa issuance are as many as they are convincing and compelling.

Untapped moneymaking opportunity

Inbound tourism currently registers a modest annual growth of around 4-5 percent, if counted in numbers of travellers. Senior figures in Russia’s tourist industry stress that this represents a huge missed opportunity, while claiming there is verified potential for an exponential surge.

Removal of visa requirements for European tourists would translate into growth of 25 to 30 percent just in the first year, said Leonid Marmer, CEO of Intourist. This optimistic extrapolation gains substance from the calculated end results of Russia and South Korea cancelling their mutual visa regime in 2014. The number of visitors to Russia from Korea surged from 40,000 tourists in 2013 to 70,000 in 2015. The increased volume of tourists have brought much-needed cash to the regions receiving the visitors.

To welcome more foreigners coming on non-business trips to Russia, another adjustment is essential. A single-entry visa to Russia currently costs an average of $100, marking a formidable barrier for conventional middle class travelers, making them money-conscious and thinking twice, obliging them to look for economy-class accommodation.

If the visa is priced around $20-30, it would be a powerful stimulus for many foreigners on the lookout for a new holiday destination, said Oleg Safonov, head of Russia’s Federal Agency for Tourism (Rostourism).

Yet lowering visa fees would diminish revenues earned by the Russian Foreign Ministry. This tariff is not unilateral; it is subject to bilateral arrangements concluded, as a standard diplomatic practice, on the basis of reciprocity.

The appeal of tourism is rooted in an unbeatable argument:  cutting through the red tape would unchain a dynamic sector of the Russian economy capable of generating sustainable revenues and filling the state coffers through taxes. This is all on the upside.

Matching ambition with ammunition

On the downside, the appeal by the tourist agencies is to target “Western” visitors, despite the apparent lack of interest from North Americans, a fact supported by statistics. It also comes against the relative decline in the numbers of Europeans over the past two years who are eager to explore and/or vacation in Russia, still subject to EU sanctions and demonization by some media.

Russia also needs to do its homework and upgrade the hospitality sector’s infrastructure; in particular, it needs to ensure that there are sufficient hotel rooms across the price spectrum.

Despite the fact that some new hotels are being built to host visitors coming for upcoming sporting tournaments like the 2018 FIFA World Cup, infrastructure is inadequate. According to Business Monitor International, the weak ruble affects the interest of major international hotel chains, which are profit-oriented and assess “occupancy rates and potential room revenue returns.”

Check, identify, deter or welcome

Another key objection comes from law-enforcement agencies, which have raised security concerns. The ongoing multiple-front conflicts in West Asia and the “migrant crisis” still unfolding in Europe jeopardizes the effectiveness of existing filtering procedures.

Oleg Safonov of Rostourism disputes this. Simplifying visa formalities does not contravene security requirements that have been tightened because of a terrorist threat. 

“When e-visas are issued, all necessary security checks are conducted with regard to potential tourists,” said Safonov.

The ball has been set in motion. Foreign Minister Sergei Lavrov spoke in February about cooperating with Arab countries to promote tourism and liberalize the visa regime between Russia and them. In early March, Maria Zakharova, the Foreign Ministry’s official spokesperson said Russia was negotiating with 40 countries to ease the visa regime, and with 24 countries to cancel visa requirements altogether. She did not name the countries, but it appears that China, India and Japan are in talks to soften travel restrictions both ways.

Riding on the back of a weak ruble

It seems to be clear that the move to ease visa restrictions will pay off for Russia, given that foreign entrepreneurs have already capitalized on the weakening of the ruble.

One Delhi-based company specialising in travel to Russia, for instance, has come up with a lucrative offer: a three-night package to Moscow, including return airfare, visa fee, 4-star accommodation, and sightseeing at an affordable price.

“Earlier only luxury clients and niche travelers were travelling to Russia because it was unaffordable,” said Charu Makin, director of Delmos Aviation, which operates a tourism business under the Visit Russia brand. “Now the idea is to increase the numbers by bringing the destination within reach of mass travellers, and the ruble is helping us do this.”

A senior Chinese diplomat recently disclosed that in the last two years the number of Chinese people visiting Russia has doubled, reaching 1.1 million. Beijing is aiming to raise the flow of tourists to five million. Each traveler spends around $2,000 on a trip, according to the diplomat, so Chinese tourism alone would bring Russia $10 billion in annual revenues. 

Cash flow and soft power

Russia as a tourist destination has much to offer in terms of spellbinding natural beauty, an exotic environment, and a rich cultural heritage. It would be unwise not to turn it into a source of revenue, especially since it enhances Russia’s soft power.

This argument could prove to be the royal flush in the argument between those who seek more openness and those responsible for national security. There is a chance of establishing the correct, delicate balance between the two positions. 

The government, in particular the Foreign Ministry, appears determined to find the balance, and enhance soft power while ensuring security and a sustainable cash flow.

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