Tourism Managernent, Vol. 19, No. 6, pp.

555 565, 1998

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Tourism in Russia: background and

structure
Peter Burns
Department of Tourism and Leisure, Luton Business School, University of Luton, Park Square, Luton,
Bedfordshire LU1 3JU, UK

As Russia transforms itself from the largest partner in the command economy that was the
Union of Soviet Socialist Republics to the largest member of the post Cold-War Common-
wealth of Independent States, political, social and economic structures and institutions are
undergoing rapid and fundamental change. Included in this is tourism, its role and how it is
organized. This paper provides a snapshot view of the official structural arrangements for
tourism in Russia as of summer 1997. It is hoped that the paper will prove useful for
scholars as they track these changes over time. The paper commences with a brief
geographic, demographic and economic profile of Russia, turns to a discussion of the
function of tourism in the former Soviet Union and goes on to examine the structural
arrangements for tourism. The paper concludes with some observations about the problems
and prospects of tourism and some suggestions for further research. © 1998 Elsevier Science
Ltd. All rights reserved.
Keywords: Russia, Soviet Union, tourism planning, political economy of tourism, tourism organization

Introduction large information gaps. The extensive restructuring

The general purpose of this paper is to provide a
view of the official structural arrangements for the
organization and planning of tourism in Russia as its
society, politics and economy continues to undergo
dramatic changes. The research was carried out
through fieldwork during spring 1997.
The political and social situation in the Common-
wealth of Independent States (CIS) has been well
described by Vaclev Havel, President of the Czech
and Slovac Federal Republic and cited by Lavigne':
The notion of the second world is now losing its
substance. What remains is a huge amount of debris
and ruins which is a combination of the first and third
worlds: by its aspirations and longing to create a
democratic political system and prospering market
economy it relates to the first world ... however, by
the state of the economy and the types of national
and social problems it often resembles the third
world.
The phrase 'Shock Therapy' to describe the rapid
attempts at transition from command economy to
free markets and capitalism is in common usage by
academic observers of the former Soviet Union. 2,3
Under these conditions, statistical data proved diffi-
cult to get, the rapidly changing government priori-
ties in gathering and disseminating economic
intelligence has created a situation where there are
that has occurred as a result ofperestroika has had:
(1) the effect of squeezing government depart-
mental budgets to the extent that the cost of
gathering statistics has become a burden; (and)
(2) the development of a business culture whereby
new entrepreneurs feel little obligation to supply
the kind of economic and operational data to
government agencies that would normally be
used to profile a complex sector such as tourism.
The highly regarded Moscow Times reported that
the State Statistics Committee (Goskomstat) "is
using a new methodology to calculate economic
statistics, essentially 'cooking the books' to create
the illusion of economic growth"? The accusation
was founded on the method by which Goskomstat
changed the way in which "it counted the 'grey'
economic activity this year--without recalculating
the figures for last year--exaggerating the under-
lying improvement in the economy, if there is any"?
Given Russia's political history, it is understandable
that a culture exists that is not always responsive to
research questions; there is also an air of embarrass-
ment amongst senior and junior officials in that they
now know the extent of the economic, political and
social chaos that exists in Russia at present and that
much of this has arisen out of distorted reporting of
the Soviet Union's economic 'successes.' Before

555
Tourism in Russia: P Burns
dealing with tourism, a brief geographic,
demographic and economic context is set.
Geographic, demographic and economic
profile
At 17075000 sq. kin, Russia is by far the world's
largest country, and with a population in July 1995
of 149909089, ~' the 6th most populous. After the
break up of the Soviet Union, Russia's geographic
balance shifted so that it became a northern
country, that is to say that about two-thirds of its
territory is within the same zone that includes
Finland, Sweden, Norway, and Alaska. It is
important to understand that more than half the
country is located in a permafrost zone. This has
produced not only development and production
difficulties, but a very significant imbalance in
population distribution (though extractive industries,
especially oil, have produced pockets of high
population in otherwise 'empty' zones). About
three-quarters of the population live in European
Russia. This is the geographical term for that part of
Russia which is defined by its boundaries with
Finland, Norway, the Barents and White seas, the
Baltic states of Estonia and Latvia in the north;
Belarus and the Ukraine to the west and the Black
and Azor seas towards the Caucasus (the border
with Georgia, Armenia and Azerbaijan) and south
to the Caspian Sea. The southern part stretches
along the coast of the Caspian Sea and the border
with Kazakhstan; to the east it is bordered by the
Ural Mountains, which makes the natural division
between European Russia and Western Siberia. In
late 1991, following a series of political crises, the
former Soviet Union as a political entity gave way to
a loose alliance called the Commonwealth of
Independent States (CIS). The CIS is comprised of:
the Russian Federation, Ukraine, Georgia, Armenia
Uzbekistan, Azerbaijan, Belarus, Estonia, Moldova,
Latvia, Lithuania, Tajikstan, Kazakhstan, Kirghizia,
and Turkmenia. The Russian Federation (Russia) is
politically divided into 89 territorial units, comprised
of 21 ethnic republics, 66 autonomous territories
and regions and the two cities of Moscow and St.
Petersburg. The relationships between the Federal
Government and these territorial units are very
complex and are undergoing subtle changes in
orientation and nature.
Russia possesses an abundance of natural
resources, a well educated population, and a diverse
industrial base underpinned by well-founded scien-
tific research. However, moving from the old
Marxism-Leninism system to a capitalist economy
at the unrelenting pace that has characterized the
changes in Russia (and the former Soviet Union)
since the initial perestroika reforms of the late 1980s
has proved formidable. Major challenges continue to
be: the government's inability to collect sufficient tax
556
revenues; the provision of effective law, order and
administration; and the payment of social commit-
ments such as state salaries and pensions. Even so,
tangible progrcss in the restructuring proccss has
been achieved through eliminating price controls
and the old centralized distribution system, while at
the same time privatizing state monopolies through
vouchers and decentralizing foreign trade. However,
at least five factors will continue to dominate the
development agenda:
(1) inflation (although this is getting under control,
down from 2500% in 1991 to 20% in January
1997);
(2) real wage levels which in April 1997 were 50%
of their 1990 levels
(3) the extent of criminal or 'grey' activity in
business and corruption in local government
(mafiosi);
(4) tensions between shareholders (stockholders)
and the unfinished business of privatization; and
(5) the issue of unemployment which has doubled
since 1992 and looks set to continue rising.
For example, in 1994, firms put an estimated 4.8
million people on unpaid leave or short-time hours.
This workforce problem is complex, so that while
privatization has been judged, in quantitative and
timescale terms 'a big success' and that by July 1994
"15000 medium- and large-scale enterprises,
employing over 70 per cent of the industrial
workforce ... [and] 70 per cent of state-owned small
businesses in retail, catering and consumer services
had been privatised ''7 (which by 1997 had risen to a
total of 100000 state owned small businesses trans-
ferred to private hands) to a large extent, managers
in recently privatized industries have not yet taken
effective cost-cutting decisions based on realistic (as
opposed to the traditionally inflated) workforce
requirements. Ironically, this last point, from which
it may be deduced that many of the old state firms
continue to provide a disproportionate amount of
social welfare to workers, may (in its own way) be
contributing to stability during a transitional period
in which the development of a social safety net has
not kept pace with the speed of reforms. In
addition, the legal framework necessary to support
free capitalism (something not necessary under a
centrally planned economy) is only now emerging in
any substantial form.
These uncertain conditions have led to incon-
sistent economic development and growth. The
GDP for 1994 was $392 billion¢ but the 1996 figure
fell 6% against 1995; there is little evidence to
indicate that this will rise. During the period
1985-1994, Russia experienced a real decline in
GDP of 14.8%. During the period 1991-1995 infla-
tion was 222.1%, with the year 1994-1995 producing
inflation of 197.7%. This last point, together with a
reasonably well-founded fear of banks, has led to

capital flight, as those with the ability send their
money overseas; some $60.9 billion was sent
overseas during the five year period from 1992 to
1996." While the actual figure could be argued (the
World Bank and US Institute for International
Finance estimates differ), it is clear that massive
amounts are involved. It has been estimated that as
much as 5% of G D P - - o r a third of all domestic
savings, ~' has been either sent abroad (in a literal
sense) or 'stored' in US dollar notes within Russia
as a hedge against the embattled rouble. The conse-
quence of the flight of capital is twofold. First, a
potential source of investment in the expanding
economy is being lost and, secondly, the absence of
sufficient domestic savings as investment has
enabled foreign investors to take an even stronger
grip on ownership than might have been thought
possible (though this is countered somewhat by the
favoured attitude shown towards insiders and local
companies on the privatization issue). The labour
force in 1993 was 85 million. Of this, 16.1% was in
government employment. The unemployment rate in
1994 was 7.1%, and 9.3% in 1996, but these figures
conceal the structural irregularities indicated above
in the comments on the old state firms and social
welfare. Having examined these issues, the discus-
sion turns to the function and structure of tourism
in Russia and its roots in the former Soviet Union.
Function and structure of tourism in
Russia and the former Soviet Union
In examining the structural arrangements of the
tourism system in Russia special attention has been
given to three sets of relationships:
(1) between the Federal Government (i.e. Russia)
and the territories that constitute the Federation
(i.e. Ethnic Republics and Regions);
(2) within and between government departments;
(and)
(3) between Federal Government and various
industry sectors (mainly the travel trade).
The rapidly changing socio-economic and cultural
political spheres that characterize post-perestroika
Russia have given rise to great difficulties in
calculating and reporting the economic indicators of
tourism. The metaphor of the matryoshka doll serves
well for the complexities of conducting both qualita-
tive and quantitative research into Russia's affairs.
To give an example of the difficulty of this, one
striking statistic may be cited: in the decades up to
perestroika, there were only two significant travel
agents dealing with tourism, Intourist and Sputnik
(with an additional market player being the Trade
Union's Central Council for Tourist Excursions). In
1997 there were some 10,000 tourist enterprises
leading to a situation which has been described by
key industry figures as 'chaotic'.'"
Tourism in Russia: P Burns
Historically, international tourism in the USSR
had three functions. First as inbound international
tourism allowing foreigners to see certain aspects of
the Soviet Union (mainly Moscow and St. Peters-
burg), secondly in a political sense in that tourism
was used to promote the Soviet Union's image
abroad and, thirdly, the state organization and total
control of tourism allowed a framework for
monitoring foreigners' movements (many parts of
the USSR were restricted as being militarily or
industrially sensitive) and contacts with Soviet
citizens. Overseas tourism was not normally avail-
able to citizens, and travel outside the Eastern Bloc
seen as functional (i.e. for a specific purpose, such
as sports, culture or political).
Tourism was formerly seen as a non-productive
industry, mainly focused on recuperating the
workforce, thus Trade Unions were heavily involved
with social tourism: health spas and medical treat-
ments were (as mentioned above) given something
of a priority. Trade Unions would deal with the
Ministries of Health and Social Welfare in getting
vouchers for their members to take medical treat-
ment and recuperate. The highest percentage of
domestic tourism was, however, for sports and
recreation (Black Sea, Caucasus, river cruises) and
culture and citizenship (Moscow, the Golden Ring,
and St. Petersburg museums together with exhibi-
tions of Soviet achievements). As an indication of
the extent of Soviet domestic tourism, in 1990 the
Central Council for Tourist Excursions (a branch of
the Russian Union of Trade Unions) was respon-
sible for some 52 million tourists. The cost of such
tourism was heavily subsidized (up to 80%) by the
various trade unions and enterprises. I'
Great emphasis was placed on children's camps
and holidays. Like other tourism, such leisure activi-
ties had a clear purpose: to build healthy bodies and
to create good citizens, notably through the Young
Pioneers (Communist Party youth group). Travel to
these camps would be by bus and, while the vast
majority of such tourism took place within the
USSR, travel overseas was not unknown. A vast
network of facilities grew up to meet the needs of
this particular sector.
Distribution of Russia's tourism
Leaving aside the most obvious and frequently
visited centres of Moscow and St. Petersburg, there
are at least two ways of dividing Russia into touristic
regions (Tables ] and 2) that add to the official
division of touristic regions (Table 3). The first of
these allows a country-wide perspective, while the
second enables a clearer focus on the current
tourism situation. Neither of these first two divisions
carry any official status, they are interpretative:
The following (Table" 3) shows the official way that
Russia is divided up for touristic purposes. It also
557
Tourism in Russia: P Burns

Table 1 Broad geographic/conceptual distribution of tourism

Region Description Characteristics

Southern European Russia
Central European Russia
North European Russia,
Urals to the Yensei
River
Russian Far East
Highly developed tourist region, between the
Black, Azov and Caspian Seas
Stretches west front the eastern borders of the
Baltic states to the Urals; Volga region
Western Siberia
Eastern Siberia, north towards Alaska
(effectively between China, Korea and Japan)
Seaside (Sochi); Caucasus mountains (Dombay,
Baksan Valley); skiing
Volga-Don cruises (Volgograd, Nizhny
Novgorod); includes Moscow and St.
Petersburg; culture
Lake Baikal; ecotourism; ethnic/culture tourism
Nature/geology tourism (volcanoes, glaciers esp.
in the Kamchatka Peninsula

Source: Noble et al.'"

uses a threc figure scale to give a broad indication
of the state of infrastructure and facilities able to
serve tourism. This list demonstrates quite clearly
that, even in the 'new' Russia, medical treatment is
seen as intricately bound up with domestic tourism.
This list may also be a reflection of the relationships
between the State Committee for Sports and
Tourism and the Regions and Republics, thus far
only about 15-20 have signed or are in the process
of signing formal agreements with the Committee
with regard to co-operation on tourism matters.
The situation regarding accommodation for
tourism purposes is yet another rnatryoshka. There
are two main reasons. The first reason is to do with
the unusually high proportion of spaces given over
to spa, medical and health treatments (cf. Table 3).
This means that the dividing line between vacation/
leisure use and medical care is fuzzy. The second
complexity is due to the ownership patterns in the
former Soviet Union. Accommodation units were
owned by Intourist (which dealt with inbound
foreign tourists), Sputnik (which specialized in child-
ren's holidays and youth travel), the central Union
of Trade Unions, professional unions such as those
for scientists, writers and artists, the Communist
Party itself, various state enterprises (factories etc.),
the military, the KGB and police. Most travel was
'paid' through vouchers from trade unions or the
State. This being the case, there is no central
register of accommodation for the country as a
whole, though the State Committee for Sports and
Tourism has attempted to address this challenge by
conducting surveys. Nor are there are any consistent
standards; some hotels/accommodation units are
simply not of a sufficient standard to be relevant to
incoming tourists, and as aspirations and outside
experience of Russian travellers is increased, such
facilities will not meet the new demands for quality.
For the Russian Federation, the overall accommo-
dation picture is illustrated by Table 4.
These data do not include the extensive networks
of hostels, children's camps, private dacha etc. It
was unclear the extent to which the above figures
include medical centres and spas. It is important not

"Fable 2 Tourism distribution by products

Region Description Characteristics

The South
Volga region
North-West (including
Kaliningrad) and North
Lake Baikal
Russian Far East
Golden Ring (Zolotoe
Koltso)
Source: field survey (1997).
Highly developed tourist region, between the
Black, Above and Caspian Seas
Stretches north-east along the course of the
Volga from Astrakhan in the south via
Volgograd and Kazan to Nizhny Novgrod
Stretches from the borders with Estonia and
Latvia. beyond Lake Ladoga northwards past
the Finnish and Norwegian borders to the
East and the White and Barents seas to the
East
Southern Siberia, is important enough to be
recognised as a tourism region in its own right
(has UNESCO World Heritage status)
Bordered by China to the west, the seas of
Japan and Okhotsk to the south and east
A loop of very old towns to the north-east of
Moscow (product devised by Intourist in
1970s)
Seaside (Sochi); Caucasus mountains (Dnmbay,
Baksan Valley)
Volga-Don cruises; cave viewing; traditional
houses and churches; culture/ethnic tourism
Nature and sports-based tourism, includes the
Kola Peninsula and Karelia; ancient churches
and buildings (Kizhi Island and Petrozavodsk)
Nature based tourism; scientific nature reserves;
unique ecosystems
Includes Kamchatka Peninsula 'the land of ice
and fire' (Volcanoes, glaciers)
Suzdal, Sergiev Posad, Vladimir, Bogolyubovo.
Plyos, Kostroma, Yaroslavl, Rostov-Veliky,
and Pereslavl-Zalessky; traditional wooden
architecture; monasteries, a 'picture of
Russian village life,' museums (often
featuring iconography and handicrafts, and
churches)

558
 Tourism in Russia: P Burns

to underplay the extent to which these were (and
continue to be) integrated into accommodation
facilities.
Arising out of the three ways of classifying the
distribution of tourism described above, it may be
deduced that, in addition to the traditional cultural
tourism (as epitomized by the Zolotoe Koltso
'Golden Ring' of old towns, monasteries and
museums to the north-east of Moscow), nature-
based tourism, in various forms, is likely to play a
key role on the future development of Russia's
tourism. For this reason it is worth briefly examining
two other classifications: National Parks and Nature
Reserves. These are two separate categories and run
by two different government departments. The first
category, National Parks, consists of 25 sites, 13 of
which were established after 1990.12 They are run by
the State Forest Service. The Nature Reserves
(zapovedniks) are run by the Ministry of the
Environmental Protection and Natural Resources.
Budgets for both organizations are low and getting
worse, reflecting the Federal government's
increasing difficulties with collecting tax revenues. In
the past, the _+160 zapovedniki were mainly centres
of very high quality scientific research and flora/
fauna protection not necessarily open to the public.
However, this may change due to the post-
perestroika financial crisis. The following two tables
list some of the most significant parks/reserves for
tourism or with tourism potential provided scientific
research can be enlarged to include tourism carrying
capacity studies.
Table 5 and 6 show the significant parks and
reserves in Eastern Siberia and the Russian Far East
areas.
Karpovicz '2 suggests that the growing strength of
regional governments, a generally favourable global
attitude towards nature-based tourism and the

Table 3 Officially designated Federal Zones of Tourism Development

Region Grade ~' Description Locations recommended for tourism

Northern territories
North-West territories
Baltic/Kaliningradskaya
Moscow and environs
'Golden Ring'
Volga
3 Sightseeing, ecotourism, cruises, fishing,
hunting, heliskiing, trekking, pilgrimage
1/2 Sightseeing, business/conferences, cruises,
self-drive
2 Business tourism, cruises, medical treatment
1 Sightseeing, business/conference, self-drive
2 Sightseeing, business, medical treatment,
self-drive
2 Sightseeing, business, medical treatment,
river cruises, fishing
Arkhangelsk, Solovky, Vologda, Volgo-Baltic
channel, Kizhy, Valaam, Sortavala
St. Petersburg, Vyborg, Lomonosov, Pavlosk,
Petrodvorets, Pushkin, Novgorod, Staraya
Russa, Valday, Pskov, Pechory, Pushkin
Hills
Kaliningrad, Zelenograd, Svetlogorsk,
Rybachye
Moscow, Vereya, Sergiev Posad,
Zvenigorod, Kolomna, Istra, Ruza
Kostroma, Yaroslavt, Rostov, Tutaev,
Uglich, V. Volochek, Tver, Ostashkov,
Lake Seliger, Torzhok, Pereslavl-Zalessky
Nizhni Novgorod, Boldino. Astrakhan

North Caucasus:
Caspian coast
Black and Azov coast
Caucasian Mineral Vody
Cabardino-Balkariya
2 Leisure vacation, sightseeing Derbent
1 Leisure vacation, medical treatment, Anapa, Eysk, Sochi, Gelendgik, Azov
sightseeing
1 Medical treatment, leisure vacation Kislovodsk, Pyatigorsk, Zheleznovodsk,
Minvody
2 Medical treatment, skiing Dombai

Siberia
Gornyi Altai 3 Leisure vacation, medical treatment, skiing, Teleskoe Lake, Belokuriha resort
ecotourism, trekking
Gornaya Shoria 3 Leisure vacation, medical treatment, skiing, Mezhdurechinsk, Tashtagol
ecotourism, trekking
Baikal 3 different purposes'" Irkutsk, Lake Baikal, Ulan-Ude, Kyahta
Yakutia 3 Sightseeing, business, ecotourism Yakusk. River Lena

Far East
Primorye 3 'different purposes' Vladivostok, Nakhodka
Sakhalin, Kuily 3 Leisure vacation, medical treatment, Aniyskiy Gulf, Kurily
sightseeing, business, hunting, fishing,
ecotourism
Kamchatka, Komandory 3 Ecotourism, hunting, fishing Petropavlovsk-Kamchatskyi, valley of hot
mineral springs, Komandorskie Islands
Source: Gulyaev. >
'This grade gives an estimate of the level of infrastructure, accommodation and facilities. 1 is high, 3 is low. (Worked out in association
with senior officials of the State Committee of Sports and Tourism).
"This is the category as listed by official sources.

559
Tourism in Russia: P Burns

Table4 Distribution of accommodation by official 'Economic f r e e d o m to travel within Russia for nationals and
Regions' of the Russian Federation (1996)
foreigners alike all indicate the possibility of
Economic region Beds '000s % realizing the obvious p o t e n t i a l s for a new tourism
p r o d u c t range b a s e d on nature. H o w e v e r , Karpovicz
Northern 49.6 4.0 goes on to argue that these positive indicators n e e d
North-Western 92.9 7.8
Baltic/Kaliningradskaya 14.6 1.2 to be offset against existing difficulties. T h e s e
Central 291.9 24.4 include: "very primitive infrastructure . . . no legisla-
Volgo-Vyatskiy 54.0 4.5 tion [and] . . . lack of e x p e r i e n c e in m a n a g e m e n t and
Central-Chernozemny 36.6 3.1 c o m m u n i c a t i o n . . . e c o t o u r i s m strategy, unknown
Volga Region 100.9 8.4 markets, inter-sectoral barriers, unstable e c o n o m i c
North Caucasus 211 17.7
Ural 123.4 10.3 situation". Even so, evidence seems to suggest a
West Siberia 91.9 7.7 viable and locally useful future for n a t u r e - b a s e d
East Siberia 64.2 5.4 tourism if institutional s t r e n g t h e n i n g is given to:
Far East 66.2 5.5
Totals 1198.0 100.0 (1) policy making, m o n i t o r i n g and i m p l e m e n t a t i o n ;
(2) n a t u r e - b a s e d tourism strategic planning;
Source: State Committee for Sports and Tourism, 1996 (trans-
lated by Natalia Volodamonov). (3) scientific and visitor m a n a g e m e n t (including
carrying capacity studies); and
(4) marketing.

In s o m e areas (notably L a k e Baikal) this is

Table 5 National parks and nature reserves in eastern Siberia
and Russian far east
Barguzin North-east shore of Lake Baikal (sable,
flying squirrel etc.)
Central Siberian Reserve of virgin taiga on the Yenisey
River
Kronotsky Kamchatka Peninsula (bears, sea lions,
sea eagles; volcanic activity)
Lazovsky Monsoon forest reserve on Pacific Coast
100 km north of Vladivostok (Siberian
tiger)
Sikhote Alyinski Ussuri region (birds and Siberian tiger)
Taymyr Peninsula Tundra north of Norilsk (red breasted
goose and musk ox)
Ust-Lensky Largest reserve. Tundra at the mouth of
Lena River
Wangel Island 140 km off coast of far-north Russia
(polar bears, walruses, snow geese)
Sources: Noble et al?'; Karpovicz.'~
Table 6 Examples of other significant national parks and
reserves
Altay Western Siberia, stretching east of Lake
Teleskoe to the Khakassia and Tuva
borders
Kandalaksha Kola Peninsula (sea birds)
Lapland Spans north and west from Monchegorsk
towards Norway and Finland (reindeer,
wolves, complex flora)
Nirbnezvirsky
South-eastern shore of Lake Ladoga
(north-east of St. Petersburg)
(migratory birds, ringed seal) including
mouth of Svir River (salmon spawning)
Przhevalsky 60 km from Smolensk (hiking, camping,
riding, fishing)
Sources: Noble et al.[19]; Karpovicz."
a l r e a d y h a p p e n i n g with i n t e r n a t i o n a l technical
assistance. T h e r e m a i n i n g challenge is to b r e a k the
catch-22 infrastructure/investment/product cycle
w h e r e b y the p r o d u c t r e m a i n s of limited a p p e a l
b e c a u s e the s u p p o r t i n g infrastructure is poor, which
in turn m e a n s that the level of visitor arrivals is
insufficient to c r e a t e significant e c o n o m i c impact.
Russia's tourism economics
Piirainen t3 has suggested that the r e s t r u c t u r i n g of
Russia's e c o n o m y has resulted in the decline of
official e c o n o m i c activity as p e o p l e r e s p o n d to infla-
tion and the t h r e a t of u n e m p l o y m e n t to the shadow
('grey') economy. " A growing share of e c o n o m i c
activity is t h e r e f o r e out of reach of taxation, legal
control and public r e g u l a t i o n " (p. 241). This has led
to u n r e g u l a t e d and u n c o n t r o l l e d m a r k e t activity
which does not o p e r a t e within the f r a m e w o r k of the
law. A f u r t h e r result o f these e c o n o m i c and political
c o n t r a d i c t i o n s is the difficulty of using the tax b a s e
to r e d i s t r i b u t e wealth to those unable, by age or
o t h e r circumstances, to e n g a g e in the m a r k e t
economy. Thus it may be a r g u e d that r e v e n u e and
tax collection has p r o v e d o n e of the most
challenging areas, along with legislation, for the
Russian F e d e r a t i o n as it t r a n s f o r m s its economy.
T h e r e is little statistical d a t a on the c o n t r i b u t i o n
of tourism to government revenues. Since
p e r e s t r o i k a , G o s k o m s t a t has n e i t h e r the b u d g e t n o r
the facilities to collect d a t a from an industry which
is m a d e up of so m a n y sectors and which includes a
high p r o p o r t i o n of small businesses. A n e s t i m a t e
was given that in 1995, 3.5 trillion R o u b l e s w o r t h of
direct services t u r n e d over in tourism (at Rs. 5000 to
US$ 1, the 1995 exchange rate, this was equivalent
to US$ 700 million). ~4 T h e s a m e source e s t i m a t e d
that for 1996 the figure was 6.2 trillion (at 1996
exchange rates this is US$ 1088 million).

560

The Presidential Decree for tourism (1284, dated
22 December 1995) sets certain targets for tourism,
stating that implementation of the tourism develop-
ment programme outlined in the Presidential
Decree will need some Rs. 2044.2 billion (1995
prices), comprised of Rs. 6.2 billion from the
Federal budget and a further Rs. 2029.6 billion from
non-budgetary sources. This investment has been
linked to expectations of additional annual tax
revenues of Rs. 300-350 billion and US$1 billion in
foreign exchange. Special note was also given to
developing linkages between various economic
sectors, such as construction, agriculture, transport,
communications, consumer goods and trade.
However, it should be noted that discussions with
local hotel operators revealed that, while in
principle locally manufactured goods are available,
standards and reliability of delivery give cause for
concern--the same applies to agricultural products.
At present, some larger operators prefer to import
goods rather than risk failure in the Russian supply
chain.
As noted above, meaningful data for domestic
tourism are difficult to obtain. The main reason is
that dramatic changes in ownership patterns, i.e. the
privatization process, has meant the collapse of
consistent reporting of statistics. For example, the
Central Council for Tourism Excursions (part of the
Union of Trade Unions) estimated domestic leisure
travellers for 1995 to be no more than 5 million.
This figure was arrived at by multiplying the avail-
able bed spaces by the occupancy rates for accom-
modation most usually taken up by domestic
tourists. While acknowledging that ownership
patterns and full market prices may have led to a
downturn, evidence from the field research
(including interviews with senior private and public
sector tourism officials) seems to suggest that this
was too great a fall from the only other available
statistic of 52 million for 1990.
However, these statistical difficulties do not cloud
the reality that the State Committee for Sports and
Tourism (SCST) still places great emphasis on
domestic tourism in general and social tourism in
particular. The Presidential Decree 1284 (1995)
states the need for "the creation of an up-to-date
domestic tourism market ... [and] the development
of social tourism in Russia ... [and to give] support
to domestic tourism businesses and small businesses
in particular." The Decree continues very clearly:
Socially, the Program will result in providing favour-
able conditions for people's rest, health improvement
and enjoying cultural values. In this respect,
particular attention shall be given to the problems of
tourist and recreational activities of the most needy
sections of the population (Presidential Decree 1284,
1995).
The section on expected outcomes reiterates this
list, adding "educating and upbringing children."
Tourism in Russia: P Burns
Currently much of domestic tourism remains health/
sun/beach and spa related. Increasingly, it will
include trips to such areas as Lake Baikal and
Kamchatka, the so called "land of fire and ice,"
although interviews with the Intourist Holding
Company revealed that their one hotel property was
"quite empty! ''15.
In addition to the usual facilities, such as hotels,
camps and hostels, national parks etc., the recrea-
tional facilities for domestic tourism remain
segmented, to some extent, in a way characteristic of
former structures:
(1) sanatoria and holiday homes with medical
treatment;
(2) children's excursion bureaux and tourist hostels;
(3) hostels and grounds of hunter's and fishermen's
societies;
(4) sports and recreation camps for teenagers;
(5) summer houses of kindergartens and nurseries;
(6) hotels and facilities belonging to trades unions;
(7) rest facilities specifically for the writer's artists'
actors' and musicians' unions.
This segmentation has become irrelevant to the
proposed future shape of tourism and entered a
process of transformation in line with changes in
social and consumer attitudes towards tourism,
During 1997, the Union of Trade Unions was
developing an idea that it hoped would eventually
replace the former system of vacations being
arranged by state enterprises, but keep to the ideals
of social (i.e. subsidized and organized) tourism.
This scheme is called "Holiday Cheques for Russia",
whereby employers and employees save in tandem
with the subsidy element created through tax relief.
The same situation applied to the law on Social
Tourism which was also being considered by the
Duma. So, while the philosophy of the proposed
scheme is clear, the legal framework is not.
Administrative and legal framework of
tourism
During the period of field research, it appeared that
Committees (i.e. ministries) were not working in
harmony to promote tourism; there was a lack of
co-ordination between, for example, departments
responsible for visas, aviation, and customs. Thus,
efforts to promote inbound tourism were hampered
by excessive visa requirements (a lesson apparently
learnt by many of the other former Eastern Bloc
countries). Evidence from the field research suggests
that these procedures were more related to foreign
policy reciprocal arrangements motivated by the
difficulty Russians experienced in obtaining travel
visas for certain Western European countries.
One of the fundamental requirements for the
effective functioning of a capitalist market is for
consistent, clear and enforceable legal frameworks
561
Tourism in Russia: P Burns
covering contractual obligations and the right to
legal redress. This is not yet the case in Russia. The
Financial Times of London summarized the
situation:
Weak and untested property and contract safeguards,
endless regulations enforced by hostile and often
venal [i.e. corrupt] bureaucrats, and a playing field
made uneven by trading and tax favours granted to
the Kremlin's friends are complaints frequently
cited."
Insofar as tourism is concerned, new laws dealing
with a tourism act, tourism fees, insurance, tourism
development, standardization and certification were
being drafted and some had been presented to the
Duma. At the time of writing, no translation of
these laws was available.
A number of professional associations have
sprung up since perestroika. This growth in social
institutions is a characteristic found elsewhere in the
former Eastern Bloc and can be seen as a product of
the processes of democracy and the development of
a broad civil society. The following list shows the
situation in April 1997; however, the political and
social turmoil evident in Eastern Europe means that
this should be treated as a snapshot in time, the
situation is changing and new groupings will emerge
to satisfy a range of needs as business and political
sub-systems develop new relationships and under-
standings. Given this volatile tourism sector situa-
tion, which is not being extensively written about or
even reported in the public domain, actual names of
officials are listed (where available). This unusual
step is intended to provide scholars of Russia's
tourism to keep track of what happens to the key
actors over time:
(1) Russian Hotel Association (RGA) (Mr.
Yakovlev)
(2) National Tourist Association (HTA) (Mr.
Konovalov)
(3) Russian Association of Social Tourism (RAST)
(rooted in Trade Union) (Mr. Laptev)
(4) Russian Association of Travcl Agencies
(RATA) (Mr. Shpilko)
(5) Tourism and Sports Union of Russia (TCCP)
(6) Association of Travel Organisations of Russia
(ASTOR)
Each of these groups acts in different ways and
has different objectives. The common theme,
however, is their uncompromising agreement on the
need for regulation and clear market conditions. In
this they separately lobby various organs of govern-
ment. Interestingly, this goes against the general
thrust of the World Travel and Tourism Council
which makes consistent demands for deregulation/
self-regulation, even in the face of growing evidence
that this does not provide sufficient security for
business in restructuring economies.
562
Following perestroika it was the industry, through
RATA, that took the lead in promoting the idea of
a regulated travel industry market from about the
middle of 1996. RATA sees regulation as being
through three factors: standards, certification and
licensing. By forcing the pacc and (in a sense)
setting the regulatory agenda, RATA was able to
counteract the relatively weak position of tourism
within the newly formed State Committee for Sports
and Tourism (where sports had the dominant role).
RATA worked with the Tourism Department to
develop the new tourism legislation.
Legislation and regulation have emerged as the
key issues. At present, some 10000 tour operating/
travel agency companies are operating in a chaotic
'free' market. Only the top 10 or 20 companies are
acting in a responsible manner in terms of proper
business arrangements, contracts and relationships.
Field research revealed a clear demand from these
larger operators for state standards and legal frame-
works with which to define procedures and require-
ments necessary for the operation of travel
businesses. For example, the League for the Protec-
tion of the Rights of Travellers, a voluntary group
financed by the main travel companies and organ-
ized by the Director of Certification of Tourist and
Hotel Services (Department of Quality Services,
Government of Moscow) is aimed, in the long term,
at developing a situation whereby non-compliance
with the standards will mean withdrawal of licence
and removal from the market place. This demand
for enforced regulation as a way of controlling
rampant excesses is particularly interesting in the
light of the WTTC's efforts to promote self-regula-
tion within the industry rather than government
legislation.
Relationship between Federal Government
and the Regions
As noted earlier, the State Committee for Sports
and Tourism has signed formal agreements with
between 15 and 20 territories within the Federal
Republic. These agreements offer financial and
technical assistance with marketing, collateral
preparation (brochures etc.), participation in trade
shows (ITB, Moscow and Spain), and tourism
planning. However, this centre-periphery relation-
ship is not structured to encourage strategic
alliances between territories to develop new
products. There was some evidence to suggest that
the State Committee remained quite satisfied with
such arrangements in that they bolstered its position
at the centre: it might be argued that dynamic
relationships, including regional co-operation,
between territories actually endanger the State
Committee's central position and are thus not,
perhaps, viewed in a particularly positive light by
them.
 Tourismin Russia."P Burns

[Mr. Sokolov [~. ~ ' e g i,~li°2;n~, ac ts ~

Government of the
Russian Federation
(Department of
Culture & | k State Committee for / kRATA; RHA; NTA:
Information) |~. N,~ports ana t o u n s m / / ',ASTOR etc.)lobby
Mr. Shapdurasulov I -''''-. _ ...... ~ ...... .~lgO;i~lmatme
2 t2Od reg~/2ti on,

State Committee for

Sports & T o u r i s m
Mr. Tyagachev
I
Overseas
Representatives o f
State Committee for
Sports & T o u r i s m

Division of Resorts [
Mr. Storozhenko [

,1
Tourism/Sports/
[D i v / s i ~
Tourism Market Development

Certification & Licensing

[

Culture Departments
of the 89 territorial
regions b
i Statistics and Economics

Tourism Development Coordination [

Source: field research

Notes: (a) The State Duma is the elected lower house which has responsibility for overseeing economic and social
legislation (at the time of writing the relationship between the two houses and the power of Presidential decree was still
evohing).
(b) The territorial regions comprise 21 Ethnic Republics with elected presidents, 66 Regions and the 2 cities of Moscow
and St. Petersburg each of which have full Regional status with elected governors).
(c) In addition to this structure, the Chairman has advisers of corresponding status with divisional heads.
(d) Russia Association of Travel Agents; National Tourism Association; Russian Hotel Association: Association of
Travel Organisations of Russia
Figure 1 Structure of public sector tourism administration in the Russian Federation (April 1997). Source: field research. (a) The State
Duma is the elected lower house which has responsibility for overseeing economic and social legislation (at the time of writing the
relationship between the two houses and the power of Presidential decree was still evolving). (b) The territorial regions comprise 21
Ethnic Republics with elected presidents, 66 Regions and the two cities of Moscow and St. Petersburg, each of which have full Regional
status with elected governors. (c) In addition to this structure, the Chairman has advisers of corresponding status with divisional heads.
(d) Russia Association of Travel Agents; National Tourism Association; Russian Hotel Association; Association of Travel Organisations
of Russia

563
Tourism in Russia: P Burns
Figure 1 illustrates the complex set of relationships
between the State Committee, the Regions and
industry pressure groups. Once again, for the
reasons explained earlier in this paper, it is seen as
appropriate in this transient situation to include
names of officials so as to allow tracking over time
as the events unfold.
New trends in airlines
In 1992, the US State Department put out a travel
advisory recommendation urging US citizens to
think twice about travelling on domestic Russian
airlines with their reputation for poor service and
safety record. In 1997, a similar position existed with
the smaller airlines being described as "the ones
with safety problems, the over-age pilots (almost 200
over 60) and lack of funds for repair". ~: During the
field work, man)' Russian officials described the
move as part of a conspiracy to shift business to
foreign airlines so as to deny Russia foreign
currency. The major problem remains that no
separate agency exists to monitor air safety stand-
ards, thus the job is, in effect, done by Aeroflot
itself.
The creation of domestic airlines in Russia grew
o u t of the institutional chaos that followed the break
up of the Soviet Union. Up until that time there was
only one carrier, Aeroflot which owned between
3807 and 5467 aircraft, many of which were first
delivered in the late 1960s (II 62s, Tu 134s, Yak 40s,
An 22/24s) and some as early as the 1950s (I1 18s,
An 12s) (EIU, 1992). Domestic airlines in Russia
can be categorized into two groups. The first group
consists of about 200 operators which 'own' between
one and 10 aircraft. '~ No legal ownership agree-
ments or payment settlements concerning these
aircraft and the supporting assets have been
achieved between the new carriers and the progeny
of the former ministries of Aviation and Transport.
The more significant of these domestic carriers are
based on those 33 geographic divisions that
comprised the former Aeroflot network and which
remain Russian territory. Examples of this group
include: Baikal Avia, Pulkovo Airlines, KrasAero,
Aviaprima, and Unukovo Airlines. The second
group consists of a limited number of properly
organized carriers, private, joint-stock and govern-
mental, which operate regular and frequent
domestic flights, international flights and inter-
national charters. The most significant of these is
the former Aeroflot, now officially called Aeroflot-
R1A which dominates the hub at Moscow's Shere-
metyevo airport. Others include Transaero and AJT
Air International.
C o n c l u s i o n s and further research
Emerging from the chaotic system described above
are two distinctly conflicting trends. On the one
564
hand there is clearly a dynamic tourism business
market characterized by about 20 main players in
the travel trade sector, a handful of hotels in the two
main cities and a number of airlines (some with
dubious reputations), while on the other there is a
lack of faith in current legislation and busincss
which is holding back Foreign Direct Investment
and foreign partnerships. Individual officials are
coming to terms with thc 'truth' of their situation,
the heavy pollution, the gangsterism, while at the
same time trying to promote their particular region
(many of which arc characterized by very poor infra-
structure) and work out their position within the
Commonwealth of Independcnt Statcs. This has led
to a burgeoning resurgence in ethnicity: a state of
being that was, for the most part, denied by Soviet
authorities in thcir search for a unified Soviet
Republic. This alone demands detailed ethnographic
study on the way in which official tourism promotion
and nationalism are, in certain conditions, seemingly
converging in a way not seen before. On the part of
foreign advisers and aid donors there has been a
mounting fecling of despair as the projects they
propose are seen as cash cows, a sort of commoditi-
zation of aid, again a useful area of research.
However, for social/political scientists the most
interesting area for research is in the way tourism is
playing a part in reconstructing local history,
although its contribution is overshadowed by the
nationalism displayed in the virtual (and in some
recent cases, actual) state of war that exists between
Moscow and certain regions within Russia and the
CIS.
It is quitc apparent that the process of change
must be supported in ways that go beyond material
infrastructure, but also includes the development of
NGOs, and cultural support that (in a sense)
re-invents the local cultural traditions that were
repressed, or objectified during the Soviet era.
Tourism, both domestic and international, clearly
has a role to play in this, provided that officials can
recognize (as in the past but for a different set of
reasons) that tourism can be thought of in terms far
wider than the mere cconomic.'" ~''
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Tourism in Russia: P Burns
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565