Ukraine Conflict Clouds Outlook for Russia’s Tourism

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The Cathedral of Saint Basil and the Kremlin on Red Square in Moscow.

The Ukraine crisis threatens to reduce tourism to Russia by more than a fifth as perceived risks drive customers away, according to one of the largest tour operators working with foreign visitors.

The flow of foreign tourists may drop 20 percent to 30 percent this year, said Alexander Maklyarovsky, head of incoming tourism at Moscow-based KMP Group.

“Most tourists visiting Russia are pensioners from the U.S. and Europe who are very sensitive to risks and to what they hear in the news,” said Maklyarovsky. “No matter how safe and nice it is here, tourists are driven by sentiment, and their image of Russia now is uncertainty and danger.”

Russia’s annexation of Crimea last month and the continuing standoff with NATO countries over the fate of Ukraine caused the U.S. and the European Union to introduce sanctions against Russia. The dispute is threatening growth in the $2 trillion economy, including tourism in the country, which attracted 2.67 million visitors from abroad last year.

Several dozen clients from the U.S. and Scandinavian countries have canceled trips, billionaire Vladimir Lisin’s UCL Holding, which controls a third of the river cruise market in Russia, said by e-mail. Sales of new tours have slowed because of geopolitical tensions, said UCL, which operates services between St. Petersburg and Moscow.

Chinese Growth

At Moscow’s Radisson Royal Hotel, in a Stalin-era skyscraper known as Ukraina, whose exterior decorations include Soviet symbols of hammers and sickles, some tourists from Western Europe and North America have canceled bookings.

“It’s very much because of what’s going on politically,” General Manager Jesper Henriksen said in an interview.

Business customers from Russia and ex-Soviet republics may help to offset declines in tourists. Cancellations because of Ukraine account for less than 1 percent of the business, and the hotel’s new conference center has bookings for several months ahead, Henriksen said.

Increasing visitors from China may also help to fill the gaps. The number of tourists from the east and Asia has grown “a bit” this year, according to UCL.

Tourist numbers from China rose 8 percent last year to 372,000 people, second only to Germany’s 380,000, according to Russia’s Federal Tourism Agency. Special attractions targeting Chinese tourists such as the USSR Museum in Vladimir Lenin’s home city of Ulyanovsk are being developed, according to the agency’s press office.

To contact the reporter on this story: Ilya Khrennikov in Moscow at ikhrennikov@bloomberg.net

To contact the editors responsible for this story: Celeste Perri at cperri@bloomberg.net Robert Valpuesta, David Risser

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