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Business tourism in Russia is a young and promising industry
Experts say that the best is yet to come, especially considering forecasts of an investment boom in the tourism industry as Russia continues its integration into the world economy. Business tourism, which kicked off in the 1990s when foreign firms and joint ventures started up in Russia, is capital intensive but also highly profitable. Business tourists tend to spend three to four times as much as leisure tourists, or an average of $1,200 per day. A business-tourism trip combines market studies with more relaxed pursuits, including everything from air tickets and visa registration to negotiation sessions and cultural events, etc. The number of firms catering to business clients is booming. These companies do everything including design of exhibition stands, the gathering of information on potential partners, provision of security and PR support, and advertising in various languages. Some even provide banking and consulting services, economic surveys and deal brokering. However, not many companies yet deal exclusively with business tourism. Although promising, the industry is still unpredictable, and for most firms it currently remains a side-line. Western experience has been important. In this respect established international companies showed the way, as the first to promote business tourism to Russia. Since then, business-tourism associations and centers have appeared, alongside competent specialists and publications. Seminars and conferences on the topic are held. Also following Western examples, Russian companies have started to offer business cruises that combine business concerns with entertainment. International forums and fairs now have a noticeably broader agenda. New organizations and venues continue to appear, and business meetings are increasingly popular for sponsors. In brief, Russia is aware of the benefits of business tourism, namely, that it stimulates economic growth and that major international conferences are good for the country's image and bring in investment. In addition, business tourism leads to promising deals and the establishment of new contacts. However, at present only major cities with strong economies - Moscow, St. Petersburg, Yekaterinburg, Novosibirsk, Irkutsk, Vladivostok, Murmansk, Arkhangelsk, Samara, Toliatti, Sochi, etc. - have the necessary infrastructure. These cities are seeing a boom in 4- and 5-star hotels with the right resources for business tourism, and travel agencies are taking advantage with increasing confidence. Still, more Russians visit exhibitions and conferences abroad than foreigners come to Russia. About 1.5 million Russians travel to Europe annually on business, while 1.4 million Europeans visit Russia; for the United States the figures are about 300,000 and 100,000, respectively. This is not surprising, given that visiting Russia is often more expensive than getting to other countries, while cost-quality ratio for services in the country are often unsatisfactory. Internal business tourism is also growing, with some estimates putting the proportion of business tourism at as high as half of the total travel volume in the country. Abroad, Russians go everywhere to see exhibitions ranging from aviation to flowers and elite watches - although the most impressive delegations are usually seen at events dedicated to the raw-materials sector. Three or four days of work at a conference are usually combined with one or two of rest and relaxation. During trips, Russians spend more money than their foreign colleagues: 58,000 Russian business tourists spent $83 million in Britain in 2003, for example. Russian delegations usually stick out in this respect among other participants at economic forums such as Davos and international film festivals like Cannes. Their previously notorious behavior, however, has improved: Business is becoming civilized and serious formal trips are coming into fashion. Most popular destinations for Russian businesspeople are Germany, France, Italy, Scandinavian and Eastern European countries. With the exceptions of China and India, Asia comes bottom of the list. Specialists from across Russia go to India for exhibitions and conferences in areas such as aerospace, textiles, and construction materials. For example, Su and MiG producers visit Bangalore for its biennial air show. Worldwide, business tourism accounts for 25-30% of the total figure, while in Russia the figure is under 20%. Of global business tourism, individual trips account for 70.8%, trips to conferences and seminars for 12.6%, and trips to exhibitions and fairs for 10.9%. Congresses and incentive tourism (rewards for good performance at work) account for about 3% each. In Russia, the structure is somewhat different. Trips to exhibitions, conferences and congresses are very popular, while the share of incentive trips is negligent, but growing rapidly. Only the richest companies can afford expensive trips for their staff: Usually this is restricted to senior managers. Most commonly, these trips are one-off visits to countries where a firm has partner organizations. And despite organizing stands at all major international tourism forums and producing commercials promoting Russian hospitality, the country has yet to see the desired results. Experts say that by 2020 annual business-trip numbers will treble from 564 million to 1.6 billion as globalization continues, and that profits will increase five times over, from $399 billion to $2 trillion. It is hard to say what Russia's share by volume will be. It is hard to win the confidence of the business class, because it is conservative and mistrustful. But experts are quite optimistic about Russia's chances, considering its sustained economic growth and improving investment ratings. Russia is unlikely to become the world's tourism leader in the next few years, but it could well be in the top ten
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