In Russia, estimates put the value of losses in the range of US$4 billion per quarter, with more than 400,000 jobs in travel and tourism at risk. This does not include the jobs indirectly linked to the tourism sector that are also impacted.
Tourism is among the industries most affected by the crisis, making tourism companies eligible for a range of federal support programs.
Russia started to respond to the pandemic at the end of January 2020. The government’s anti-crisis measures adopted to date amount to roughly RUB 3.231 billion, or approximately 2.9 percent of GDP. Under these measures, tourism companies are eligible for loan and tax payment deferrals, zero interest rate loans to pay salaries, subsidized loans for other purposes, and subsidies for travel operators to refund payments to tourists and to bring tourists back from foreign countries due to the coronavirus outbreak.
Additional measures are being provided to support the aviation sector.
State aid will be provided to the aviation sector, with Russia’s Aeroflot group alone eligible for more than US$100 million in financial support. Other major airlines, including S7, UTair, and Ural Airlines, are also eligible for support. Data on Russia’s airline industry show that passenger traffic has declined by more than 90 percent compared to the previous year.
It is difficult to know when a recovery will be possible. In the immediate term, governments and private companies are implementing crisis measures to protect the tourism industry as much as possible. Some examples include:
Continue to support viable tourism businesses through the crisis.
The recovery of the tourism sector cannot begin until travel restrictions can be safely lifted. As of May 29, the World Tourism Organization reports that 100 percent of all destinations (217 destinations worldwide) continue to have COVID-19-related travel restrictions in place, and 75 percent of those remain completely closed to international tourism. In the interim period, businesses that depend on tourism will face growing pressures on their solvency, with some form of state support likely required to prevent widespread business closures and loss of jobs. This support could build on existing measures, such as subsidized lending and deferred loan payments and tax obligations, and/or include additional tools, such as the examples cited above on redeploying assets or providing liquidity support. Finally, designing measures to incentivize domestic tourism could help firms begin to recover in the initial period while international travel remains limited.
Accelerate the recovery with measures aimed at facilitating tourism and addressing barriers to competitiveness.
The Russian Federation ranks 39th of 140 economies overall in the World Economic Forum’s Global Competitiveness Index but 123rd on the indicator for international openness, a measure that includes visa policies and procedures. Russia could follow up on its experience with the simplified visa measures used during the 2018 World Cup to introduce permanent measures to expand visa-free regimes, accelerate the planned introduction of e-visas, and expedite visa processing. Another way to improve the tourism sector’s competitiveness while stimulating an economic recovery is to invest in infrastructure. The government’s most recent COVID-19 response plan does include this kind of accelerated infrastructure investment. Targeting some of this investment on the tourism industry could help accelerate a mid-term recovery and the sector’s long-term competitiveness.
Reopen smartly to build confidence and mitigate risks. Gradually reopening markets to tourism will require investments in coordination and confidence building:
Do not neglect investment in a more resilient and sustainable tourism industry going forward. If every crisis also contains an opportunity, the COVID-19 pandemic could be a catalyst for innovation in the tourism sector and a shift toward more sustainable solutions. These could include investments in the digital transformation of the industry, a shift toward greener tourism value chains, and greater coordination within destination management.
Last Updated: Jun 11, 2020