Russian travel agencies are going bankrupt as the Ukraine crisis clips the wings of tourism and keeps Russians at home. Many who have ventured abroad have found themselves stranded.
MOSCOW — Clients of the respected travel agency Labyrinth found themselves grounded at airports around the world last weekend because the company went bankrupt without paying for their plane tickets. The Federal Agency of Tourism estimated that about 25,000 Russians were unable to return home, and as just as many had to abandon their holidays plans.
In the Turkish city of Antalya, a group of 100 Labyrinth clients organized a protest and — as Russians often do — asked President Vladimir Putin for his help. "We sleep on the floor, have no food, and only Russian tourists traveling with other agencies provide us with water," one tourist told a Russian radio station.
Labyrinth's bankruptcy is not an isolated case, as several other agencies have also gone belly up over the last few weeks amid a Russian tourism industry crisis resulting from its political isolation over the Ukraine conflict.
Two weeks ago, Russia's oldest and very popular travel agency — Neva, based in Saint Petersburg — went bankrupt, leaving more than 7,000 people stranded away from home. A week later, clients of the Wind Rose World agency shared the same fate.
Experts say the devastating downturn in the Russian tourism industry this time around is much harsher than five years ago, when the 2008 global economic crisis hit.
According to Russian Tourism Association spokesperson Irina Tiurina, there are three main factors driving it: the conflict in Ukraine and the sanctions that have resulted in Russia's involvement; devaluation of the ruble; and anti-Russian sentiment that is deterring Russians from traveling abroad.
Blame the government
In fact, the Russian government has officially asked citizens not to travel to foreign countries, with the Russian Ministry of Foreign Affairs warning that Russians could be taken into custody and handed to U.S. authorities to be put on trial.
Police officers, prosecutors and others in public service have been advised by their superiors not to travel abroad this year, and some of them even had their passports confiscated. Because these professions tend to pay well in Russia, people in this workforce comprise a big chunk of the tourism cake, which is now being left untouched.
Russian media outlets have been repeating for months that the rest of the world has adopted an attitude of hostility towards Russians, prompting many to decide against sending their children camps and courses abroad.
Russian citizens are also earning less than they did last year, which is another reason so many are opting to stay at home instead of traveling. In April 2013, average monthly income was $1,000 — but today it’s only $840. As a result, the number of people bankrolling vacations abroad has dropped by one-third compared to last year.
The local market isn’t doing well either. Vacation season in Crimea was a flop by any objective measure, as the number of tourists was just half what it was in recent years. Ukrainians stayed away from the territory that Russia recently annexed, and Russians feared using the most convenient access through Ukrainian territory. Meanwhile, the alternative route across neighbor countries and the Kerch Strait was so overcrowded that travelers had to spend up to 48 hours in line for the ferry boat to get to the Crimean peninsula. And plane tickets are prohibitively expensive for many would-be Crimean vacationers.
Crimea became even less accessible Aug. 4 when Dobrolet — the main airline carrier connecting Moscow and Crimea's administrative center Simferopol — was subject to sanctions, leading to American withdrawal from airplane leasing contracts.
Even the city of Sochi, which recently hosted the winter Olympic games, is part of the losing streak. Newly constructed high-end hotels are empty because locals cannot afford them and foreigners aren't traveling there. In an attempt to rescue the resort, the government has announced that Sochi soon will become a gambling center.
In other words, Putin's promise that no casinos would ever appear there has shriveled right along with the Russian tourism industry.