Introduction

Thinking about Russia, particular associations come to mind immediately. Ideas such as vodka, communism, Putin, snow, and cold are prevalent. When trying to picture Russia as a person, the usual image is a grumpy old man in a thick coat, wearing a Ushanka on his head and holding a shot glass with vodka - not particularly an attractive image. What about warm weather, vibrant and colorful culture, art and a local cuisine? The existent difficulty is that these aspects are rarely considered when thinking about Russia - an absolute shame. The destination of Russia has been chosen, because of its vast unused tourist potential. The country has many resources for the tourism industry. Despite various problems, including discrepancies in ideology, which results in fewer Europeans visiting and safety concerns (Bazenkova, 2015) among others, the tourism industry in Russia is growing rapidly. As one of the BRIC-countries, Russia has growing economic potential and opportunities that consequently can lead to the growth of their tourism industry.

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We aim to make Russia attractive for German City Breakers, while still maintain its attractiveness for the Chinese Group Travelers. The specific goal of this report is to increase German travel to Russian cities, like Moscow and St. Petersburg, by 10 percent through the implementation of strategies, which are planned to make Russia more attractive by the end of 2025.

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Destination Competitiveness of Russia

For identifying Russia's competitiveness, it is necessary to specify internal and external objectives as well as their success. In the following touristy strengths, weaknesses, opportunities, and threats are going to get highlighted.

 

The first step is to enumerate strengths, which built a decisive internal factor of the analysis. Historical and world heritage areas demonstrate the high cultural potential, emphasized and promoted throughout several Committees mainly based in Moscow and St. Petersburg. Over the past 15 years, the content and quality of the education system improved. Resulting in highly qualified tour guides and other service personnel, which is also necessary for visitors planning a city trip, for example to Moscow as a leading tourism destination regarding visitor numbers. Additionally, scientifically interested tourists are satisfied by the rare and unique scenery of national parks all over the country, consisting of wild nature and animals. A well-established infrastructure enables good accessibility. In the field of ecotourism, which is supported by the Government, Russia offers a variety of possibilities to discover. All those mentioned facts make Russia a stable and tourist-friendly country with many internal strengths. Russia’s weaknesses demonstrate negative internal factors.

 

For Russia to become a quality international tourism destination, there are a few concerns that will be addressed as weaknesses. The Russian tourist product is less competitive, with infrastructure and service quality lagging behind international standards, which eventually has led to the decline of Russia’s tourism. According to Andrades Caldito and Dimanche (2017), Russia faces five challenges. Firstly, the marketing, commercialization and distribution policies and strategies need to be planned and coordinated. Another necessary development is the distribution of tourism services and products. Thirdly, the infrastructure needs to be improved to be able to support the expanding tourism. Russia was ranked 93rd globally in quality of overall infrastructure in The Global Competitiveness Report 2013–14. Professionals working in the tourism industry have a lack in management- and communication training and their levels of service and quality are also far from satisfactory. The fourth challenge is to set up a "coherent and flexible legal framework" that can make sure the economy can advance in a balanced way and make sure the legislation and regulation of the tourism sector take the incoming needs of the companies into consideration. Russia should also remove the excessive visa restraints to make it easier for tourist to visit. The fifth challenge is dealing with issues regarding seasonality, seeing the country's proximity to the Arctic Circle. Therefore, innovating and diversifying tourism is encouraged. Lastly, Russia should build up and maintain cordial relationships with neighboring countries.

 

Opportunities like events and festivals can be proposed as an additional product alternative for tourists. They are designed to make the destination dynamic and to create additional value for tourists. Events can also be planned to be the main attraction and the main reason why tourist may visit a destination. An upcoming event that provides Russia with a great opportunity is the 2018 FIFA World Cup, which could be beneficial for its image. Russia's main competitive advantage are mostly socio-cultural and natural aspects. Even though the devaluation of the Ruble has been a severe issue for the Russians themselves, it is a blessing in disguise by becoming a cheaper and therefore more attractive destination for tourists.

 

Threats built the negative external factor. Some critical threats suppress Russia's international tourism industry opportunities. Political conflicts, like the Crimea issue, pose a danger and led to the deterioration of the relationship with Western countries. Further damage to the image of Russia is owed to negative Western media coverage. This sharply reduced the flow of tourists from Western countries. Another threat was the Russian financial crisis in 2014, which was driven by some factors, including falling gas and oil prices and economic sanctions. Trade sanctions and inflation are also serious threats to Russia. Nowadays, the economic situation in Russia is relatively stable, as no new financial crises occurred and now Russia is recovering gradually. Forecasts are predicting the end of the economic recession, which should be in 2018. Regarding cultural aspect, in spite of Russia's unique character, many similarities still exist. Ukraine's culture, for example, is similar and the country is more easily accessible due to visa regulations.

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Demand

For a long time, Chinese travel was not allowed and did not fit into their behavioral patterns, since "[...] culture and leisure had no place in people's lives as being considered part of a bourgeois lifestyle and contradictory to the communist frugal living doctrine" (Bi et al. 2016). According to Xiao (2005), the tourism that occurred after the Cultural Revolution was mainly for business purposes. After 1978 the opening up and reform policies were implemented and provided the Chinese with the opportunity to travel for leisure purposes.

 

For regulating Chinese travel, the government implemented Approved Destination Status (ADS) agreements in the 1990's. These agreements insisted the Chinese tourists traveled in groups only to foreign destinations with ADS. From that time on, Chinese Group Travelers was allowed to visit, but just in strict and controlled groups. This could explain the phenomenon of Chinese group travelers. According to COTRI (the Chinese Outbound Tourism Research Institute), Chinese travelers can enjoy visa-free or visa-on-arrival access to 62 countries, including Russia, making it very easy for the Chinese Group Travelers to go to Russia. Another reason for the CGT to go to Russia is the flourishing political and economic relations between China and Russia and the devaluation of the Ruble, making it a cheap Destination. Fast forward a few years and the number of outbound travels between 1994 and 2013 has increased from 6.1 million to 98.2 million, while annually growing by 15.7%, making it the fastest growing source market, with no intention of slowing down. From an economic standpoint, Russia should keep up its efforts towards China for staying attractive. As Chinese travelers get more experience, there is a possibility that they lose interest Russia. The number of Chinese travelers is increasing overwhelmingly and will remain a valuable market.

 

When choosing a future target market, the decision is often made for those with a similar historical or cultural background. Germany and Russia do not have a shared history and culture. Germany's political history represents many different ideologies resulting in different social standards. Due to its turbulent history and the role Germany played in the First and the Second World War; thus, there was no place for traveling for Germans either. Nowadays, Germany is a democratic country. This political development has grown a robust middle class with people in an economically well-arranged lifestyle, resulting in a high potential for stimulating tourism.

 

Although there is not much common ground between Russia and Germany, German travelers, especially city breakers, were identified as an attractive target group. The reasoning is twofold: Germany is a high yield market. A robust middle class and a high medium salary allow many Germans to spend money on traveling (Statista, 2016). In average, the planned travel budget for the year of 2017 is 2.313 Euro, according to ADAC Reisemonitor (2017). Germans, in general, take short to medium haul flights to get to their destinations, and it only takes 2.5 hours to reach Moscow by plane from Berlin, making Moscow an easy choice. Direct flights leave daily to St. Petersburg as well. Most Germans prefer to stay in hotels or rented apartments. The variety Moscow and St. Petersburg can offer on accommodations is quite broad and ranges from all kinds of hotels and emerging private accommodations. City breaks are Germany's second most sought out way of vacation. The main reason for city breaks is to escape the daily routine and experience the historical and cultural sights of the city, as well as leisure activities.  About 35 Million Germans prefer city breaks in general, for which Moscow and St. Petersburg are very suitable if efficiently approached. Although not much data has been found on the travel behavior of German City Breakers, it can be assumed that city visitors belong to higher income and better-educated classes. More research needs to be done in this field.

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Conclusion

This paper aimed to assess the competitiveness of the Russian tourism industry. The underlying theoretical model consists of the collective attractions, especially of the cities of Moscow and St. Petersburg. The model was created to evaluate Russia’s tourism potential and name an existing and a future target market. We believe that the Chinese market will keep increasing, as long as no significant economic (e.g., currency fluctuations) and political (e.g., visa complications) changes occur. Nonetheless, marketing towards Chinese Group Travelers should continue. Getting German travelers to come to Russia will prove difficult. Some significant structural changes have to be done by the Russian tourism professionals.

 

One of the main conclusions that can be drawn is, that the destination faces several challenges, but also offers opportunities for a flourishing tourism market. A severe challenge is that the overall tourism infrastructure, especially the service quality, is in need of improvement. Initiatives have been started, but need to be expanded and implemented, so that Russia can compete with European tourism destinations. The existing, but idle and not very established DMC needs to be built up and utilized. Russia has numerous resources that are not being marketed. A functioning management organization should communicate Moscow’s and St. Petersburg’s assets more efficiently. One focus of the marketing activities should also cater to global trends, that, in relation to Russia’s destination attractions, can lead to a higher competitiveness level of the destination. Chances to improve Russia’s image should be taken by the DMC marketers. One of those opportunities might lie in mega events and storytelling.

 

It can be concluded, that Russia, especially the cities of Moscow and St. Petersburg show the potential to become competitive in the future. It will require improvements especially in the field of marketing, image, product development, and tourism infrastructure.