Sochi’s budget is not elastic

Sochi’s budget is not elastic

Due to the threat of the coronavirus spread, the Russian resorts are closed until June 1. All the hotels and resorts stopped accepting reservations, restaurants, parks and tourist facilities closed. For Sochi that hosts over six million tourists every year, such a ‘silence’ is ominous. The EcoTourism Expert correspondent has found out how the Russian resort fares without tourists and what it hopes for.

Tourism is put under quarantine          

Out of the 52,000 tourists who were in Sochi when the quarantine was announced, no more than 1,500 guests remained in the city. Valentina Bogdanova, the chairman of the Board of the AMOS Hoteliers Association (Sochi Small Hotels Association), says that only the hotels with the guests arrived before the announcement of the lockdown continue to work today. Most of the employees stay at home due to the forced downtime with the payment of two-thirds of their salary, or are on a lockdown. Only several staff persons work remotely; those who receive calls and answer the guests’ questions about rescheduling the dates of their hotel stay, or make reservations for future periods.

- the hotels’ management does not yet know the way to get the money to pay even these smaller salaries. It is also interesting that under the ordinary law, non-payment of salaries entails various liabilities, up to a criminal one, which is actually nonsense, because there should be a guilt for a criminal offense, and in this case, the heads of the hotels a priori are not guilty,” Valentina Bogdanova says.

The market players already understand that this year will be not just bad for Sochi, but awful. Despite the bright forecasts of powerful tourist flows that will inevitably rush to the Russian resorts due to the closure of borders, the industry experts understand that this miracle will not happen. The quantity of the corporate clients - from oil, gas and other companies - has already declined, which means that a huge, gaping hole appeared in the market - a large number of unoccupied hotel rooms. Moreover, many hotels were forced to return all prepayments, but taking into account that the money was used to renovate the rooms and facilities, and in fact, has already been spent, it is not clear now where to get the money from.

- The downtime of one hotel room for one day a month means minus 3.5% of the potential profit. In a good situation, a single room usually is vacant a couple of days at the beginning of a month, two days in the middle, and two-three days at the end, which means that the hotel is already losing about 15%, or even 25% of the potential profit. Given our today’s reality, the estimated losses are definitely higher. Also, one can neither deny nor ignore the fact that the purchasing power of the population has already fallen sharply. A huge number of yesterday's tourists lost their jobs, their future is uncertain, and today most of them have no money to make payments towards their loans. We definitely cannot expect that people would suddenly decide to postpone all their urgent loan payments and go on vacation,” Valentina Bogdanova explains.

According to the Sochi tourism market experts, if the hotels begin to open by May 1, it will take about two years to recover. If they open on June 1, the revival of the tourism industry in Sochi could be expected after five years only.

To solve this problem, one cannot do without the state support. Everyone understands this perfectly well. However, the prudent proposals put forward by President Vladimir Putin are surrounded by a huge number of reservations and nuances locally. So, almost all banks are waiting for new procedures from their head offices, and so far, the requirements for loans and deferrals remain the same.

 “The AMOS Association of Hoteliers has made a number of requests and suggestions at all levels, but we cannot yet say that our work has brought any practical results,” Valentina Bogdanova says.

The South will be open in September

Between the end of March and the end of May, the tour operator RosYugKurort canceled over 3,000 bookings at the Sochi resorts. The company mainly focuses on tourists who come to the Sochi resorts in the offseason, so, the cancellations were at the peak of sales.

- We adapted in time, and four days before the city was put under quarantine, our office had already been switched to remote work, so that at the ‘hottest’ moment of the cancellations, there was no need to make efforts to organize the work. For two weeks, we have been extremely busy accepting the booking cancellations from our customers,” says Valery Sychyov, deputy director general of the RosYugKurort tour operator.

Meanwhile, the company continues to receive cancellations and analyze them. the solution to the problem - receiving money after cancelations - is still ahead.

- There are some hotels and holiday centres that are ready to return the money, these are corporate health resorts, for example, the Zapolyarye health resort, the health resort of the Department of the Administrative affairs of the President of the RF, and a number of other facilities. It remains to receive money only. For many other facilities, the money has been ‘frozen’ in the construction or renovation projects, or already spent on core operations,” explains Valery Sychyov.

At the same time, the tour operator notes that although the situation is complicated, there is light at the end of the tunnel. Many Sochi holiday centres do have a large number of prepaid bookings.

“We opened sales from June 20, we want to wait until the long-awaited June 1 comes, the hotels, resorts will start working and then we can tell that the resort ‘has started working’, we don’t want to face a new wave of cancellations,” the representative of the tour operator shares.

The company mainly places its stake on the autumn season. Many representatives of the tourism industry who rely on the summer season, do not take into account several factors. First of all, the cancellations for tours in the summer that were paid. Many guests who planned to come to Sochi are now put on enforced leave. The corporate customers that so far simply ‘did not get round’ to cancel the summer reservations are not taken into account.

- People decide on their vacation usually a month before the trip. Many will wait for the stabilization of the situation even after the resorts are opened, so, people will choose to spend their vacation near the place where they live. Therefore, even the resorts are open in the summer, there will be no great demand for the Black Sea coast,” says Valery Sychyov, deputy director general of the RosYugKurort tour operator company.

The reserve without tourists

Not only hotels, resorts are without tourists in Sochi now, but also the natural areas. Today, all the attractions of the Caucasian Biosphere Reserve are closed in the city. The quarantine unexpectedly affected it.

- On the one hand, the closure of tourist routes is a kind of relaxation for the nature. Even when we just close the hiking trail for some reason, we see that soon, the trees ‘unfold’ their branches towards it. Now, all attractions are closed. Our inspectors began to notice wild animals there. So, in the Yew-and-Boxwood Tree, a jackal and a roe deer were seen. On the other hand, spring is the blossoming season. And it’s a pity that tourists do not see now the blooming magnolias or sakura in the ‘Southern Plants Park,’ said Olga Pegova, deputy director for environmental education and tourism of the Caucasus Nature Reserve.

At the same time, the financing of the reserve comes from the budgetary and extra-budgetary sources. Considering that more than 2,000 people visit the Southern Plants Park alone per month, the financial losses are significant.

- We perceive the quarantine period as a time to prepare for the summer season. We are working as per the schedule at all our facilities. We also got the opportunity to update the information, to work with the photo archives,” Olga Pegova clarifies.

Thanks to the landscaping and the improvement of the territory, almost all the reserve’s employees are working now. About 90 inspectors are busy with the route monitoring every day.

- Recently, a group of tourists who were checked out from the hotel - they should have gone to Moscow - decided to spend the quarantine in the forest. They set up a tent, bought food. The unusual guests were discovered by our inspectors. But this is a rare case, - Olga Pegova notes.

The reserve officials explain that today, their inspectors try to prevent violations. They are on duty at the borders of the conservation area. They try not to fine those who decided to take a walk in the reserve, they ask them to return home. However, it is very difficult staying at home in Sochi in the spring time. Up to 100 people try to go for a walk in the reserve every day.

Planes are flying

Aeroflot has reduced the number of flights from Moscow to Sochi. However, you can still fly to the resort. But what will happen next?

Olga was born and lived in Sochi and she worked as a journalist in one of the federal publications, but lately, she has been living in Moscow for more than a year. When the quarantine started she decided to return to her apartment in Sochi.

“I knew that upon arrival, I would have to observe a two-week quarantine and not leave my house, but still it would be more pleasant to be on a lockdown in Sochi in the apartment with the Arboretum view,” Olga explains her desire to come to Sochi.

She bought an air ticket without any problem. However, the Sheremetyevo Airport was surprisingly deserted.

- In principle, everything was as usual, only all the employees were wearing face masks and gloves, they tried to touch our things as less as possible. On board a plane, all of us were seated near the windows; nobody was embarrassed by the fact that we were breathing in the each other’s back. Every passenger was wearing a face mask and gloves, and there was a smell of alcohol in the cabin. But it was better that way, Olga says.

Upon the arrival in Sochi, no one suggested to measure the temperature. All passengers gathered in the arrivals area near the tables, at which the representatives of the Federal Service for Supervision of Consumer Rights Protection and Human Welfare sat and the police officers stood. Naturally, nobody observed any social distancing. Having shown a passport with her Sochi registration, Olga signed several papers about staying at home during the quarantine period.

- I asked how I could get home, it turned out that I could use any way I liked. I took a taxi. People who did not have a residence permit were sent to the observation room. Despite the warning signs about this, many were not ready for such a turn of events. The situation was very nervous, people quarreled and were even eager for the fray,” Olga says.

A few days later, the girl got a call and was told that a doctor would come to her soon to take tests for the COVID-19. Those who were not lucky to have a Sochi registration were sent to the observation facility. One of the hotels in the Imereti Lowland was turned into an observation site. Today, there are over 140 people. At the expense of the budget, the guests get meals three times a day, a doctor regularly comes to examine them. It turns out to be a kind of vacation in Sochi. Unfortunately, the sea can only be seen behind the fence.