Travel Firms Feel Turbulence From Russia

Among the current victims of the Russian economic upheaval are companies catering to visitors from that country--a small but growing specialty business until the crisis struck.

These companies say bookings have dwindled from the two key sources of Russian travel--the country’s small economic elite and business travelers who come to the U.S. to study capitalism up close.

“Right now it’s zippo--everything is canceled,” said John Lu of Glendale-based Best of USA Marketing, which specializes in booking tours for Russian groups traveling to Southern California.

For example, a group of Russian public works officials has backed out of a planned weeklong visit next month to the Los Angeles Department of Water and Power and other utilities, Lu said.

He also faced a dilemma over hotel reservations later this month for 15 Russians from the casino industry. The group had planned a mixed business and pleasure trip, with a week at the beach in Dana Point and a week at a World Gaming Congress meeting in Las Vegas.

Lu didn’t hear directly from the group about a change of plans, but members failed to answer his queries last week. So he figured they wouldn’t be arriving as planned from Russia, where the banking system and the ruble have collapsed and inflation rocketed 15% in August alone.

Unlike Americans, foreign travelers rarely are willing to pay in advance. Lu hadn’t seen a nickel of the $1,200 he was charging each of the Russians for the visit. And the local hotel where the Russians were booked--the Doubletree Guest Suites in Dana Point--was about to charge him a late cancellation fee if he waited any longer.

“So I had to go ahead and cancel them,” he said. “You never know--they may show up anyway. But I doubt it.”

While their numbers have increased dramatically in the post-Cold War era, Russian travelers still make up a tiny fraction of visitors to the U.S.

Travel officials don’t even break Russians out as a separate category, instead lumping them with visitors from the rest of Eastern Europe. That region accounts for just 1% of foreign visitors to California, said John Poimiroo, the state’s director of tourism.

Still, the Russian malaise was a major problem for specialty tour bookers across the nation.

“It’s a real mess,” said Nalli Cohen, a Russian-speaking account executive at Magic Tours and Travel, a New York company that draws more than 10% of its business from Russians.

The flow of Russian petroleum industry employees to energy seminars in the United States has evaporated, Cohen said. And bookings from wealthy Russian tourists, normally some of her company’s best customers, have dried up as well.

“They always wanted the best service, the best hotels,” she said. “They don’t have a middle class in Russia, so anyone who can afford to travel has a lot of money.”

Officials at Intourist, the big Russian travel company, had told Cohen that Russians were unable to get access to bank accounts holding the dollars and other foreign currencies generally used to pay for foreign travel. And airlines were accepting payment only from credit cards issued in the United States or Western Europe--not Russia, she said.

Russians tend to travel mainly to a few big cities in the United States, such as New York, Miami, Washington and Los Angeles, said Eugene Kalutsky, manager of Orlando, Fla.-based Sunnet Travel.

Catering almost exclusively to Russian-speaking tourists, Sunnet has doubled its business in the last two years. So far there have been few cancellations, but “you’re seeing people who made their plans awhile ago,” Kalutsky said. “If the situation does not improve, that could have some really negative effects on our business.”

At World Business Service in San Francisco, which specializes in hooking Russians up with seminars in banking, mining, energy and other businesses, the cancellation rate is high.

“All [financial] transactions have stopped just now in Russia,” World Business owner Elena Rozkin said. She was hoping to fill the gap by increasing outbound bookings of Russian emigres living in this country.

“This is the only way you can survive in this economic time,” Rozkin said.

The problems seem certain to undermine the already weak Russian tourism business in California, said Lana Dubovik, the Russian-born director of marketing for the Radisson Valley Center hotel in Sherman Oaks.

Her hotel has tried to cater to Russians, translating menus and sending her out to greet groups in their own language, she said.

But it has been a struggle, and not just because the expense of traveling from Russia to California is so high. Affluent Russians are accustomed to being courted aggressively by Western European luxury hotels, and they find the language barrier formidable and the level of service inadequate here, Dubovik said.

“There is a very sophisticated, well-traveled new breed of Russian travelers. They are very top end--they order the best wines, they are very big spenders,” Dubovik said. “But they are just not that much interested in coming here. And with the recent problems, [visits are] going to go down even more.”