Russia is positioned as Europe's biggest retail market and it's betting on tourism to drive growth amid global economic uncertainty. Our Xia Cheng is in Saint Petersburg, a major tourist hub and Russia's second-largest city, to find out how authorities are planning to attract more international tourists and spending in Russia.
Tourism is at the center of reviving Russia's economy, and, more crucially, improving its image overseas. Russia saw a 10-percent surge in international tourist arrivals last year, dominated by visitors from China, Germany and South Korea seeking value for money and attending the FIFA games. Russia needs a cash boost in infrastructure investment to maintain the momentum.
A better business climate has strengthened Russia's hotel, restaurant and retail sectors. That bodes well for overall tourism revenues. But the low-profit margin in the tourism sector remains a headache, due to high taxes and inefficient service delivery. That's a blow to Russian tourism's competitiveness in the face of increasing competition from Turkey. Another issue is the general lack of knowledge about Russia's tourism destinations. FIFA 2018 turned out to be a successful marketing campaign for Russia and now the country is searching for more spending from sports fans in Europe's largest retail market.