Closed borders and the suspension of the E-Visa have paused inbound tourism. Alexei Vengin, CEO of Profi.Travel, talked about how it will change after the pandemic ends and how to expand the geography of foreign travel in Russia with Sergey Korneev, Chairman of the St. Petersburg Committee for Tourism Development.
— In 2019, out of 10 million tourists who came to the northern capital, almost half were from abroad. According to the forecast, this year the city will be visited by 3 to 5 million guests, that is, the internal flow will soon recover to pre-pandemic levels. But he still does not compensate for the absence of foreigners?
— The main result of last year was that the flow of tourists to St. Petersburg was not interrupted for a single day despite the pandemic — hotels worked with restrictions, but did not close, tour operators also continued to work in difficult conditions. This allowed them to maintain the core of the staff, and therefore the quality of services. Last year, we received 2.9 million tourists, of which 500 thousand were foreigners who managed to come to St. Petersburg before the pandemic at the beginning of the year.
According to the results of the first half of this year, 2.5 million Russian tourists have already visited the city. This is much better than in 2020, but much worse than before the pandemic. The last-minute booking trend continues. There is no depth of sales at all; the confirmed loading of hotels for September is now only 15-20%. And the epidemiological situation can still change in any direction. In June and July, everything was fine with loading, but August will be worse - this is a traditional beach holiday time, earlier at this time foreign tourists came to us.
Of course, it is impossible fully to replace foreign tourist with a Russian one. St. Petersburg is the largest international tourist center in Russia, a city that has always served as a bridge between Russia and the rest of the world. This is our competitive advantage, but it also gives us the largest drawdown in closed borders. Who has climbed higher is sicker to fall.
The Russian market has not yet fully recovered, at least in large cities. For example, we do not have school tourism, which occupied an important share in the tourist flow in the off-season. St. Petersburg is an open-air textbook; the most important events in the history of our country took place here. There is almost no business tourism — the St. Petersburg Economic Forum took place this year, but on a smaller scale and in a hybrid format. Most other events are either cancelled or postponed due to restrictions, but this is the highest average check — a business tourist leaves four times more in the city than a usual tourist. The cash back program, which was developed to stimulate the demand in a low season, helped us a lot. Although we can say that the whole last year was a low season for us.
— How does it influence the economy of the city? In terms of spending, is a Russian tourist less interesting to the region than a foreign one?
— Now any tourist is interesting. And the spending of tourists depends not so much on geography, but on their capabilities, interests and the products that we can offer them. Of course, purely economically, foreign tourist flow brings 10% more to the treasury - this category of tourists had average checks as a whole higher. According to statistical studies, Europeans are most profitable for us. American tourists who arrived in the city on cruises also turned out to be very solvent, although it was previously believed that this category was less interesting to the city. They are ready to buy works of art, spend on exclusive things, author's souvenirs.
The average check of cruise tourists has grown dramatically when we implemented new services. Therefore, we are now expanding the so-called tourist geography, promoting in addition to the classic program new options: sightseeing, museums, events, gastronomic and many others.
This year we have practically no foreign tourists, there are small groups from those countries with which air traffic has been restored - these are primarily the countries of the Persian Gulf, the first tourists came from Germany and France, but so far the issue of moving between countries has not been resolved in the world, this is rather, single visits.
— As we understand, while the borders are still closed you are not going to sit idly by. What is St. Petersburg doing to develop inbound tourism now?
—We continue to cooperate with our foreign partners to maintain their interest to Saint Petersburg so that it will be implemented as effectively as possible after the borders begin to open. We see that all major tourism centers are competing for tourist flows now, conducting marketing campaigns and advertising campaigns, filming videos with Hollywood stars. Everyone understands that there is a deferred demand, according to WHO, last year the global tourism industry lost more than 1 billion people, these people have not gone anywhere.
At the same time, we understand that world tourism will not recover in one day, people will be cautious about international travel for a long time. The crisis has hit the wallet of families throughout Europe, and this cannot but affect tourism. But in this we have a competitive advantage - the price, which, according to exchange rates, now plays in favor of inbound tourism to Russia.
We are one of the few cities in Russia that is capable of reaching a qualitatively new level of development of the inbound tourism — organized and individual, creative, in its various forms — from gastronomic to art and educational. This is our new tourist geography - to analyze all products and emerging trends and tell about a thousand reasons to come to St. Petersburg with different budgets and reasons. And we are also doing this in cooperation with business now.
— You said that by the end of the year you are planning to open 3-5 new hotels with a total fund of 300 rooms. If now we are talking about a drop in demand, why is there an increase in the number of rooms? What hotel segments are currently lacking in St. Petersburg?
— This year at least five new hotels will be opened, their business models are built taking into account the pandemic and are aimed at further increasing of tourist traffic. New facilities were opened last year as well, although it would seem that they could wait for better times. And you know, investors say they don't regret — the results of the launch load in today's conditions are generally satisfied.
But, in general, our infrastructure is more diverse with its structure and capability than in other regions of our country. And now it is a big challenge! For example, during the May holidays, 232 thousand tourists visited Sochi and the load was 100% up to overbooking. During the same period, here in Saint Petersburg, we’ve hosted about 300 thousand people, but the number of rooms was, on average, 65-70% loaded. What is a lot for colleagues from other regions is not enough for us.
At the same time, the city still lacks 3* hotels and new youth formats – co-living, which are in great demand this year. As well as small concept hotels 5* in the luxury segment. We hope for a further qualitative breakthrough and are creating conditions for this. Therefore, we need varied, but high-quality hotels.
Of course, firstly we need to recover, and it could take 1.5-2 years. It’s necessary to restore not only the tourist flow, but also the economy – much of financial cushions are already over. This process should simultaneously be accompanied by the growth of offers, because new tourism products are emerging. For example, public spaces – Island of Forts, Sevkabel Port, New Holland, Lenpoligraphmash – all together about 50 actively developing new zones and territories that citizens like and which could gain popularity also among guests.
Our tasks are to increase the number of tourists, who return to visit the city again and again, to increase the average check, to expand the boundaries of the season and the product line that will attract new categories of tourists.
— There must certainly be some reasons as to why investors approach the hospitality sector even during the pandemic.
— Upon the end of the first wave last year, by order of the Governor of St. Petersburg Alexander Beglov, we joined hands with the industry representatives in developing a set of support measures, which was eventually approved and implemented. As of the time of its formulation, the total extent of financial assistance for 2020 and 2021 was estimated at 4 billion rubles. By the beginning of this year, we have already provided tax incentives for more than 3,000 enterprises at a total value of 1.5 billion rubles.
Federal Tourism Agency recognized these strategies as unprecedented, and they remain such to this day. We used every solution within the limits of regional legislation: we abolished all possible local taxes – on property, land and transport – and reduced the tax rates of the simplified taxation system to the minimum. Moreover, we introduced these benefits not only for last year, but also for this year, although it was still unclear at that time how the pandemic situation would unfold. In addition, the rental fee was cancelled or reduced for more than 500 tourism organizations located in the St. Petersburg municipal fund; 84 easy loans worth 255.8 million rubles were issued to preserve 1,800 jobs. As far as I know, such measures have not been implemented in any other regions of Russia yet.
Needless to say, this increased the investment appeal of the city immediately. Right after these decisions had been made, I was bombarded with phone calls from other regions’ entrepreneurs asking me if this was true. They said that for them it means that in St. Petersburg we have a strategic approach to the hospitality sector and understand that tourism is one of the city’s core industries. Therefore, these decisions are serious and long-haul. Knowing that tourism is the city’s priority is very important for investors. All of this strengthened our hopes that the hospitality industry will recover as quickly as possible, and then make a qualitative step in its development. Of course, these support measures are not a cure-all. We will have to endure hard times until our foreign guests, business events and conventions return. If there is no gas in the car, you can fix and upgrade it all you want, but it just won’t start.
— Thanks to the UEFA European Championship, St. Petersburg had a unique chance to compare foreign audiences of 2019 and 2020. How much has it changed compared to the World Cup? And can fans be set equal to tourists?
— This year there were several times fewer foreign guests due to the reduced occupancy of stadiums and other restrictions in Europe itself. These numbers are incomparable, but they still helped us to increase the utilization of hotels and infrastructure. The hospitality industry’s lack of interest in football fans is a myth. As a rule, if fans come from far away, they stay for a few more days. Guests from southern European countries (Spain, Italy) often come with families, and while the husband goes to watch football, the wife takes the children to explore the city or vice versa. This time fans could not bring their families, but the demand for excursions was still high.
We organized a complete system of tourist information support and assistance for fans right from the airport and up to the stadium – there were specialized stands everywhere, the Ask Me mobile service operated around the city, and all in all there were a lot of tourism-related questions.
The second thing – by experience from the previous international events that were held in our country, we know for sure that many people, having once come to see football, often return later as regular tourists. With this in mind, for example, the FAN-ID validity was extended after the World Cup until the end of the year. Football once again allowed us to show the whole world that the hospitality industry in St. Petersburg is safe, efficient, affordable and works on a full scale, so we will be able to welcome guests after the pandemic.
— Zarina Doguzova has recently announced that it is no longer possible to delay issuing of electronic visas. What is your opinion – when will the system start working and which countries should be on a first-priority basis in that respect?
— It will happen as soon as the pandemic allows. We hope that it will start working as quickly as possible for all the countries that participate in the system, or at least for those countries with which air connectivity is being restored. It is a modern instrument. According to the agreement between the Governor of St. Petersburg Alexander Beglov and the President of Russia, St. Petersburg was chosen as one of the cities where the e-visa was tested in 2019. It showed very good results at that time. Of course, tourists mostly came from bordering states and other European countries, but still there were guests from all countries on the permitted list. Right now, a single visa is valid for 16 days, which is enough for a full-fledged journey with alternative combinations: St. Petersburg plus river cruises and Moscow, or the routes of the “Silver Necklace” in the northwest of Russia. This is one of the reasons why St. Petersburg and Moscow launched a joint marketing program “Two cities – a million impressions” not only in the domestic but also in the international market.
The simplification of the visa regime has already made significant headway. Both St. Petersburg and other tourism-oriented regions are interested in developing this process further – all countries are moving along this path. Firstly, it is advisable to simplify the questionnaire, which looks like a whole puzzle at the moment. Secondly, taking into account the booking pattern, the e-visa should have a longer period of validity and in the future it should become multi-entry. These are the goals that we, together with the Federal Tourism Agency, have repeatedly voiced as proposals during our discussions with the Ministry of Foreign Affairs.
This travel format is not just new, but also very relevant at the moment: these days, many people are trying to minimize personal contacts due to the pandemic, and e-visa helps them with this. Last winter, during the lockdown period, we started an information campaign on the Euronews channel announcing the launch of an e-visa. We received incredibly positive feedback – it was obvious that people showed strong interest in St. Petersburg and they needed new and more detailed information. Many think that the very fact of the introduction of a single electronic visa made it famous. Unfortunately, this is not the case. Just as we, for example, do not know how China’s visa regime has changed over the year, most foreigners do not know about this possibility, and we need to inform them.
— Inbound tourism in Russia over the past 50-60 years has developed according to the same scenario – receiving groups, often consisting of a 65+ audience. Do you think the ratio between group and individual travel will shift and the role of tour operators will change with the introduction of an e-visa?
— This ratio changes with the global structure of tourism and demand. Especially so, as more and more travellers believe that they shape the journey themselves. I say “believe” because most of the aggregators are much the same as the tour operators, they are just behind the screen. Even Booking.com, while making deals with hotels, does the typical work of a tour operator. Major global tour operators are moving along this path, creating their own reservation systems and information resources.
As the previous UNWTO Secretary General Taleb Rifai noted, there are two revolutions taking place in the world now: the new technology revolution and the tourism revolution. And when they come together, they will change the world for the better. It is absolutely true. Tourism is progressively becoming an industry of impressions, shaped by newsworthy events. Travel decisions are becoming more impulsive and emotional, as well as more individualized – some people want to go to the mountains, while others want to see the World Heritage Sites. Some like to walk the well-trodden paths, some don’t. And we have to keep up with this. High-tech solutions help us do this and the electronic visa is the missing element here. Nowadays, not only hotels but also excursions are booked via the Internet. Obtaining visas via the Internet is the next logical step, which will boost all industry segments, but the trend shows that people are becoming more and more particular about their travel. And then competition and customer care skills will show who will develop more efficiently.
— Which is more important for promotion — support for distribution channels that already exist, or creating an image of Russia and St. Petersburg in particular?
— One is impossible without the other. There are conventional channels, they are effective and they work, they should not be abandoned, but there is also an emotional perception and informational background, which greatly influence this. You cannot just drop out of this narrative, because others will immediately take your place. Why do we have international information campaigns and will continue to do this — we understand that if not us, then someone else will do it. And they will! For me, the carnival in Venice was very indicative — this year it was not cancelled, but held in an online format. Why did they do that? It was to keep themselves in the information field and declare that the carnival will continue to be in the future, come to visit us.
— You talk a lot about the new tourist geography of St. Petersburg. Let's talk about the new tourist geography of Russia. Foreigners traditionally travel to Moscow, St. Petersburg, the ancient towns of the Golden Ring, and along the Trans-Siberian Railway. What are the chances for other regions to receive foreign tourists in the near future, in your opinion?
— Everyone has got a chance. The world is very large, and people also have many interests. There are sports, industrial, ecological, ethnographic, gastronomic tourism, and each has its fans. Quality, safety and marketing are three things that can take people anywhere. But this is systematic work.
All the Nordic countries are a prime example of this. About 30 years ago, going on vacation to the north for Europeans seemed fantastic and absurd. Nowadays, the Arctic and northern tourism is a new trend, a breath of fresh air. It's trendy. In neighbouring Finland, it was because of Russian tourists that a modern tourist infrastructure has been created. Now, they are embracing the world. Norway and Iceland depend largely on tourism as well.
Yes, even Turkey 30 years ago was not seen as a tourist destination, not to mention the Emirates. Tourism today is a vaccine against globalization. Most travellers are residents of large metropolitan areas; they do not need another one of exactly the same metropolises. Yes, they need, very loosely, easily understandable and familiar navigation, coffee and McDonald's, but first of all, they are looking for something other than everyday work life, real and authentic, and they can find all of this here! We are the most multicultural and diverse country. In this regard, Tatarstan is an excellent case showing how all this can be actively developed.
— And Murmansk is a good example of northern tourism.
— Absolutely. Our possibilities are endless, you just need to be able to use them, responding to the changing world and demand. Tourists are looking for something different, new, unknown, and real. We can give them all of this; all that remains is to make it into a tourist product. Today's experience tells us that with a successful start, mass tourism will sooner or later come after the first individual tourists. How to do that? Let's think and work on this together!
Text and photo: profi.travel