Tourism, recreation

Dubai, the Great Barrier Reef, Antalya…Plyos?

11 Mar '11
Oleg Kouzbit, Online News Managing Editor

Another lavish private-public investor partnership to promote Russian rural tourism has been announced—this time a $345m recreational cluster in Plyos, a small, ancient city outside Ivanovo on the Volga. The project is part of an on-going government-led effort to upgrade ‘Russian pearls’ to attract international and high-end Russian travelers. But expecting Russia’s tourist market to sextuple—a five-year goal set by the RF—will take more than money.

A $345m tourism and recreational cluster has been announced for a small, ancient city in the Ivanovo region, Plyos. According to Ivanovo Deputy Governor Andrei Chuzhbinkin, the town’s touristic value will be significantly augmented, “doubling a flow of tourists to Plyos by 2016 to 600,000 people a year.” The project owners are the region and a number of yet-undisclosed private investors, he said.

A naturally beautiful area located on the right bank of the Volga on hills dotted with birch trees and pretty wooden houses, Plyos has long been plagued by the lack of proper infrastructure to attract high-end travelers. Just a few years ago Plyos had a dilapidated quay that could barely moor a ship larger than a hydrofoil, but planners have promised a 21st century river port terminal as well as construction of several hotel complexes to cater to both ‘deep pocket’ and economy-class guests.

The surrounding hilly terrain has prompted project initiators to also announce the creation of a Plyos-based winter sports center with a focus on skiing. Once home to one of Russia’s most renowned landscape painters, Isaac Levitan, the ‘new’ Plyos will even offer tourists a variety of new museums, including eco-museums, and a center of Russian literature and language.

A privately led PPP

Mr. Chuzhbinkin emphasized the new cluster would be a private-public partnership (PPP) with private investors purportedly committed to putting up as much as $240+m over the next five years. The RF is also kicking in an estimated $70m, he added.

The prospective cluster is expected to be up and running by 2016, creating a reported 1,500+ new jobs in the area.

Creating new luster for ‘Russian pearls’

Plyos is just one of 15-20 tourism and recreational clusters that the RF wants to develop across its nine time zones. At least eight projects from six regions have already been approved for co-funding from Russia’s 2011-2015 Tourism Development Program. These include clusters in the Altai, Ivanovo, Yaroslavl, Ryazan and Rostov regions.

One of those, the up-market $330m Golden Ring health and recreational resort in the Yaroslavl region, broke ground last year. When completed, it will offer an array of services to as many as 3,000 tourists at a time. The Yaroslavl and other such projects in European Russia are expected to help jump-start Russia’s decades-old Golden Ring tourist program and lure thousands of sophisticated Russian and international tourists.

According to RF Minister of Sports, Tourism and Youth Policy Vitaly Mutko, the new government tourist initiatives will affect 77 Russian regions. For this year and next, a reported $276m has been earmarked to support the effort, and much more is coming, the minister said.

An uphill battle

Mr. Mutko has been promising that “in three or four years Russia’s tourist sector will see a breakthrough,” boosting its worth by 2016 from today’s modest $5.5bn to an estimated $31bn. Currently, tourism generates almost 3% of Russia’s GDP, but the goal for the sector is a hefty 10%.

Tourism is the world’s largest business and despite global financial uncertainty, it’s still capable of generating enormous revenue and employment. But the tourist business in Russia—one of the few dominated by SMEs—is a global laggard and has been trying to overcome its reputation for bad service and poor infrastructure for decades.

Although Russian tourism employs a reported one million people and is technically capable of serving up to 40 million foreign tourists and even more domestic travelers, the sector is riddled with systemic problems.

There are only 8,000 hotels in Russia—and Western-style four and five star properties are still rare outside major population areas. Notorious visa regimes, abysmal infrastructure and the homely level of Russian service have kept the country a tourist backwater.

More Disney, less Russki

Less foreign travelers (three million, most of whom just visit Moscow and St. Petersburg) come to Russia in a year than visit Euro Disney in three months—and Euro Disney is one of the company’s poorest performers.

The 20 million or so Russian tourists who vacation domestically are habituated to spotty services and poor infrastructure. But low-priced junkets to sunny foreign shores (Turkey, Egypt and Cyprus are teeming with Russian vacationers) and the willingness of middle-class Russians to spend a little more to get world-class service already attracts an estimated 15 million Russians a year. The number is growing; with 40% choosing beach resorts rather than hinterland naturalist venues like Plyos is planning.

Experts do agree that Russia does have a star tourist attraction that continues to attract both domestic travelers and international tourists alike—the popular Moscow-St. Petersburg river cruise route. Some Western companies have even invested in brand new boats that offer such unheard-of luxuries as queen-sized beds and all English-speaking staff.

Undeterred by their locale, the planners of the hilly Plyos cluster on the Volga believe their field of dreams will bring home the bacon. But it will take more than millions for even such picturesque and historically significant places like Plyos, Rostov Veliky, Vologda, Pskov, Irkutsk or Ulad-Ude to compete with ‘new pearls’ like the Emirates, China, New Zealand, Croatia and other destinations.
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