Bashkortostan special report: Tourism - Natural advantages

Bashkortostan’s pristine parks and snow-capped mountains make it a magnet for visitors from Russia and beyond – and offer a wealth of opportunities for investors.

Euromoney special report: Bashkortostan

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Summit delegates will not be the only visitors to Bashkortostan next year. The Republic’s diverse natural resources and well-developed infrastructure have long drawn tourists from Russia and beyond, and the sector’s rapid recent growth is now attracting the attention of both local and international investors.

Traditionally, Bashkortostan’s main appeal for visitors lay in its highly-regarded sanitoria. These continue to see substantial demand today. More than 250,000 tourists visited the Republic’s 24 facilities in 2013, accounting for close to R4 billion of revenue ($113 million) and putting Bashkortostan at number four among Russian regions for healthcare tourism.

In recent years, however, the Republic has also been rapidly developing as a major national centre for skiing and mountain sports. Of the 32 ski resorts in the Urals, 19 are in Bashkortostan – including notably Abzakovo, Bannoe and Mratniko – and the Republic attracts more than half of the region’s 1 million ski tourists a year.

Rich landscape

Bashkortostan’s varied landscape of mountains, lakes and rivers is also a key draw for tourists, as is its rich cultural heritage. An estimated 200,000 people a year visit the famous Qandrykül Lake, while the Shulgan-Tash Zapovednik in the Urals has also earned an international reputation for its dramatic river gorges, rich wildlife and the Paleolithic cave paintings at Kapova.

The Shulgan-Tash, indeed, has been designated as part of the newly created Bashkir Ural Biosphere Reserve. The reserve, which was accorded International Protected Status by Unesco in 2012, covers a total area of more than 345,000 hectares and also includes the Bashkiria national park, the Muradymovskoe Ravine nature park and two wildlife sanctuaries.

Key to Bashkortostan’s touristic appeal is its excellent transport connectivity. The Republic is crossed by the M5 and M7 federal highways, as well as the Trans-Siberian Railway, making it easily accessible from neighbouring regions and countries. Intraregional travel also received a boost in 2013 from the introduction of 50% government subsidies for flights within the Volga Federal Region.

Meanwhile, more than 40 Russian and international carriers serve Ufa’s international airport, including Turkish Airlines, Czech Airlines, Fly Dubai and Air Berlin. The list of destinations accessible from Ufa is also increasing rapidly, with flights to cities including Yerevan, Kiev, Nizhny Novgorod, Samara and Perm being added in 2013.

This improving connectivity has been a key factor in the rapid rise in Bashkortostan’s tourist numbers in recent years. In 2013, around 450,000 visitors stayed in the Republic’s hotels, an increase of 36% on the previous year, while income generated by tourism services grew by 10.1% over the same period.

Room for growth

Nonetheless, tourism currently accounts for barely 1% of Bashkortostan’s gross regional product and policy-makers see room for substantial further growth in the sector. Artem Kolesnikov, head of the Agency for Tourism of the Republic of Bashkortostan, cites ecotourism and adventure tourism – including activities such as horse riding, trekking, snowmobiling and rafting – as promising areas for development, along with more traditional sectors such as healthcare and winter sports.

He notes, however, that harnessing Bashkortostan’s tourism potential will require significant further investments in infrastructure, particularly in the hotel and healthcare spheres. Growth in the latter, for example, is restricted by the fact that the Republic’s sanitoria are running at close to 100% occupancy.

The challenge, adds Kolesnikov, is to develop facilities that will meet the higher standards now expected by Russia’s expanding middle class and by foreign visitors. "There is huge demand in Russia today for high-quality healthcare and sporting facilities," he says. "If we can construct such facilities, we will have no problem in filling them to capacity."

Investment incentives

To speed up this process, the Bashkortostan government is offering substantial incentives to private investors in the tourist sector. The Hampton by Hilton hotel under construction in Ufa, for example, has received "priority project" status from the Republic’s government, resulting in tax breaks worth nearly 10% of the R2.4 billion cost of the project for construction company Kesko-Ufa.

Kolesnikov adds that the government is also ready to offer potential investors extensive non-financial assistance. "Whether investors need help in choosing an investment project, finding a suitable location for construction or negotiating the procedures for infrastructure development, we can provide it," he says.

Policy-makers are also keen to promote public-private partnerships (PPPs) within the tourism and infrastructure sectors. "We are currently in negotiations with national development bank Vnesheconombank concerning the feasibility of a number of projects in Bashkortostan," says Kolesnikov. "We are fully convinced that future large-scale infrastructure investment in the Republic will only be possible within the PPP framework."