The Russian invasion of Crimea is putting the peninsula’s $5 billion tourism industry under threat. Once the playground of czarist royalty and Soviet elites, it is still a major destination for nearly 6 million tourists each year, a quarter of whom are Russian regulars.
But as the tense standoff between armed Russian
invaders and the Ukrainian military bases they have besieged continues,
hospitality and service providers are fretting about the upcoming tourism
season.
Currently pre-paid travel packages – a key indicator
of expected travel – are down a whopping 90 percent year-on-year, reports
Oleksandr Burdonov, director of Kurorty Krymu (Resorts of Crimea), a local
tourism industry association.
Acting Minister for Resorts and Tourism of
Crimea Alexander Liev told the Kyiv Post that the flow of tourists to Crimea
could drop by 30 percent, or to 4.1 million people, because of the ongoing
political crisis. This is the most optimistic prediction for the Crimean vacation
season this year.
Tourism is one of Crimea’s biggest economic
sectors, worth an estimated $5 billion annually, according to the Crimean Resorts
and Tourism Ministry, and an industry that is especially vulnerable. There are
well over 100,000 people employed in tourism-related businesses who rely on
four months worth of revenue to cover their yearly income, said Galina
Amarando, press secretary of the Resorts and Tourism Ministry. She added that
in addition to the 100-odd major hotels and resorts, over 20,000 private flats
and cottages, and 4,000 mini-hotels service tourists.
Yet, the estimated annual value of tourism for
Crimea is far less than the true number because of massive underreporting of
income and low registration of small businesses, said Armarando. The seizure of
power on the peninsula by pro-Russian politicians followed by the military
occupation threatens to bring this vital industry to a crashing halt.
A record six million tourists came to Crimea in
2012 and 5.9 million last year. Russians make up 25 percent of the tourist flow
to Crimea, while Ukrainians comprise 70 percent, according to Liev. In a letter
to the new Crimean government Burdonov and several other businessmen charge
government officials with being “not only incapable of assessing the situation,
but also incapable of answering the calls to deal with the issues facing
resorts and tourism.”
The view by small businesses directly
affiliated with the tourism trade is more pessimistic, to the point that some
are expecting cancellation of the tourist season altogether. A woman, who
wished to remain anonymous, who rents out a cottage in Yalta, said “The
situation is very bad and we are fearful. No one has told us anything and we
have not received any information from any government department. We are
expecting the worst.”
When asked if she anticipates any kind of
summer holiday season, her response was a curt “no”. Other renters in Yalta and
other popular tourist areas have similar expectations. Flat and cottage renters
and mini-hotels take upwards of 80% of accommodation bookings, according to the
Resorts and Tourism Ministry.
Pensioner Oleksandr Karpenko, 73, plans to go
to Crimea this summer despite the political tension. Though he admits the high
season in the peninsula will be a bit damaged.“Most Ukrainian youth, however,
will go to Turkey, Croatia, and Bulgaria… Ukrainians cannot afford Crimean
resorts. Russians will be able to cope with the high prices,” Karpenko
concluded.
VeronikaDovbnya, 23, a designer who used to
visit Yalta says she is not going there this year, because the situation in
Crimea is unpredictable and she doesn’t agree with the political opinion of majority
of the peninsula’s residents. “Most Ukrainian tourists will avoid Crimea this
year. A lot of my friends say they will never visit Crimea again,” she
emphasized.
Besides tourist resorts, Crimea is home to
several large businesses, including Massandra Wine, Inkerman Wine, Titan chemical
plant, Crimean Soda Ash Factory, Medoff Distillery, and the oil and gas driller
Chornomornaftogaz. They are facing risks and uncertainty.
Chornomornaftogaz, a subsidiary of state-owned
oil and gas giant Naftogaz, has already felt the impact of the Russian
invasion. On March 4, the separatist government of Crimea announced the
appointment of a new company director– Andriy Ilyin, who replaced Serhiy Golovin.
Naftogaz subsequently challenged Ilyin’s appointment. On
March 6, Chornomornaftogaz reported that its territory in the Armyansk region
had been surrounded by armed units saying the territory is mined.
Kyiv
Post business journalist Evan Ostryzniuk can be reached at [email protected].
