RUSSIA: Attracting health and wellness investors and tourists to Russia

The tourism industry in Russia is expanding with health resorts a popular choice for vacations, says the Federal Agency of Tourism. Tourism is growing at a rate of 7 % a year and one in three Russians favour health resorts as their vacation destination. Grigory Sarishvili of the Federal Agency comments, "Health resorts are gaining popularity and in certain regions are fully booked all year-round.”

Russia is to spend up to $60 million on a six-year advertising campaign to bolster its image as a tourist destination, as part of the government's programme for the development of tourism through 2018. The $60 million earmarked for advertising will be spent on subjects and programmes about Russia on federal channels, promotion on social networks, exhibitions, the organization of presentations about Russia in foreign countries, promotional campaigns and the organization of press tours.

While the campaign is directed at both domestic and foreign tourists, the total number of foreign tourists visiting in 2011 is disappointing as European economic problems are affecting the chief suppliers of visitors to Russia: Germany, France, Britain and Italy. Of the 22 million foreign visitors in 2010, only 2.1 million were tourists.

Northern Caucasus Resorts Company (NCRC) is developing a massive system of ski, beach and natural heath spa resorts covering 50,000 sq km in the North Caucasus Mountains, stretching 1,200 km from the Caspian Sea to the Black Sea and bordering Asia. It is attracting Asia-Pacific investors seeking to diversify outside their domestic markets in a new national strategy to use public-private initiatives in tourism to spur much-needed economic growth in depressed regions of the Russian Federation.

Moscow-based NCRC was established last December to drive the massive tourism project, which will create up to 300,000 new jobs. A collaboration with the federal government, the development is part of a long-term strategy to address the economic lag that underlies social tensions in the North Caucasus region. The ten-year project is anticipated to require up to $30 billion to complete all phases, including a cluster of five world-class skiing and five modern seaside resorts, as well as an array of health spas that will take advantage of the area's legendary healing mineral and hot springs. The eventual aim is 150,000 visitors a day.

The Russian government has designated the entire 50,000-sq-km development area a special economic zone. State guarantees will cover up to 70 % of investments for three to ten years. The state will impose no corporate or transportation taxes for the first ten years, no land taxes for five years and no VAT tax will be applied on equipment imported into the SEZ. The project offers opportunities for foreign companies interested in hospitality, health and wellness, food and beverage, retail, real estate, logistics and warehousing industries.

The French state-owned banking group and long-term investor Caisse des Depots et Consignations (CDC) has signed a strategic joint venture with NCRC to provide advanced technical, legal, planning and environmental expertise to support the project. 20 French companies have already expressed interest in investing in ski lifts, hotels, airports, mountain tunnel and other construction projects.

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