The Urban Tales of Tourism

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For the first time in many years, all eyes will be on Russia – not for its political controversies but for something almost wholesome. Eleven Russian cities will be hosting FIFA’s marquee event, a first for any Eastern European country.

By official accounts, 683 billion rubles ($11 billion) have been poured into World Cup preparations, with transport infrastructure ($6.11 billion), stadium construction ($3.45 billion) and accommodation ($ 680 million) accounting for the lion’s share of expenditures. The Russian government estimates an increase of between $26 billion and $30.8 billion to the country’s GDP from 2013-2023, fueled by a boost in tourism, large-scale infrastructural improvements and returns on longer-term government investments.

More than 1.5 million foreign tourists are expected to visit Russia during the World Cup. According to the 2018 FIFA World Cup website, USA, Brazil, Colombia, Germany, Mexico, Argentina, Peru, China, Australia and England make up the top ten foreign ticket buyers, while the country accounting for the most ticket sales is Russia itself. In the first week of matches alone, more than 2.5 million fans have watched games in designated viewing areas across the 11 host cities.

Russian officials hope that the World Cup will generate interest in its lower-profile cities, such as Kazan, Samara, Saransk and Nizhny Novgorod. In Saransk, the government has already invested hundreds of millions of dollars into constructing a stadium, building more high-rises and developing transport infrastructure. Nizhny Novgorod – long barred to foreigners because of its connections with military production and weapons manufacturing – has seen an almost-overnight makeover with vibrant graffiti courtesy of the city’s local artists. Even the popular Black Sea resort of Sochi received a summer boon with a spike of visitors from Brazil and Australia.

Experts, however, remain cautious. Weeks before the first kickoff, Moody’s Investors Service predicted the event to make only a short-term contribution to tourism industry revenue, despite the World Cup windfall. Host cities off the beaten path are unlikely to draw tourists after the event, as some locations are too remote, their weather too harsh, and their overall appeal falling well short of other, more established destinations.

LOOKING BACK-

BRAZIL AND SOUTH AFRICA
The long-term economic impact of mega-sporting events are difficult to foresee and tourist influxes hardly paint a full picture. During the 2014 World Cup in Brazil, government figures put the number of foreign tourists at 1 million, far exceeding the pre-tournament projection of 600,000. Despite the increase in foreign tourism, the Wall Street Journal reported an 11% fall in Brazil’s domestic travel industry from 26% down to 15%. Ultimately, the revenue generated by foreign tourists represented only 2.5% of the $15 billion invested in hosting the event.

In South Africa, 309,000 visitors entered the country during the 2010 World Cup, a figure less than half of the monthly average of 620,000 for the rest of the year. Similar to Brazil in 2014, World Cup returns were only a fraction of the total investment — little more than 10% ($323 million) of the $3 billion spent.

Dr. Andrew Zimbalist, a sports economist and economics professor at Smith College, summarized the tourism conundrum thus: “every time you get a World Cup tourist, you get one less regular tourist. Generally speaking, the World Cup does not benefit the hosts’ tourism industry.”

That’s not to say mega-sporting events never generate significant gains in tourism. Since hosting the Summer Olympics in 1992, Barcelona has seen a tenfold increase in foreign visitors but the rise can easily be attributed to institutional factors. Perceived tourist friendliness of destinations, based on safety conditions, visa regulations, flight connectivity and visiting costs, greatly impact incoming tourist flows. For Russia, post-World Cup tourism may well be constrained by crime rates, relatively high travel costs, lack of suitable mid-tier accommodation, stringent visa regulations, and political tensions with other nations, such as the UK.

Industry experts argue that any economic boost arising from the World Cup will be a mere blip in the radar compared to the nation’s $1.3 trillion economies. According to Moody’s, overall credit impact for the Russian corporate sector would be limited and “sectors (hotels, trade, transport, etc.) that will benefit most from increased tourist flows are not key growth drivers in most hosting local economies.” So what’s really in it for Russia?

A Multi-Billion Dollar Charm Offensive
Hosted three months after the presidential election, the World Cup will showcase Russia’s revival under Putin’s leadership, especially as the country attempts to recoup its reputational losses from its biggest trading partner, the EU. Since the annexation of Crimea in 2014, Russia’s wrangles with the West have only multiplied. In March, relations with the UK became more tenuous following Russian involvement in the poisoning of Sergei Skripal, a former double agent in exile in Salisbury, and his daughter, Yulia. After briefly considering boycotting the World Cup, England eventually demurred to barring high-level representatives from attending the event. In May, Dutch-led investigators announced that the missile system that brought down Malaysia Airlines Flight 17 over eastern Ukraine came from a Russia-based military unit.

Conscious of its reputation and wary of the unsavory global attention brought on Brazil during the 2014 World Cup, the government has made piecemeal attempts at detracting from its negative international image. Movie theaters were given the go-ahead to screen Leto, a new film by Kirill Serebrennikov, who has been under house arrest since August 2017. Putin’s most vociferous critic, the leading opposition leader, Alexei Navalny, was released hours before the World Cup, following a 30-day sentence for staging illegal protests. While the world may be willing to look past politics this month, it will take more than a sporting extravaganza to rid Russia of its bad juju.

Political notoriety aside, Russia as a travel destination has often been likened to a cold, intimidating tourist trap. Link Russia with football and you get hooliganism (à la Russian crowd violence in Euro 2016) and racism from a small but all-too-visible cross-section of Russian fans.

As part of its rebranding efforts, the Russian government has taken great pains to project a friendlier face to incoming arrivals. Hordes of English-speaking volunteers roam the streets in each host city to aid wayward travellers and actively promote the various attractions of each city. Russian police and the National Guard have been directed to patrol the cities to ward off hooligans. Russian workers in key companies such as FIFA, Russian Railways and Moscow Metro have also been trained on how to smile at customers. As former sports minister Vitaly Mutko noted, “we want to show the world the new Russia, open and hospitable in every sense.” But whether the World Cup goodwill will persist – and more importantly whether Russia’s massive PR campaign will fool anyone – remains to be seen.

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