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Vol. 39 (Number 48) Year 2018. Page 21

Public-private partnership as a means of activating russian tourism potential

Asociación público-privada como medio para activar el potencial turístico ruso

Elena E. KABANOVA 1; Elena V. FROLOVA 2; Natalia V. MEDVEDEVA 3; Tatyana M. RYABOVA 4; Olga V. ROGACH 5

Recibido: 17/06/2018 • Aprobado: 01/08/2018 • Publicado 29/11/2018


Contents

1. Introduction

2. Methodological coordinates

3. Results

4. Discussion

5. Conclusion

Acknowledgements

References


ABSTRACT:

The article presents the analysis of problems in modern tourism infrastructure in Russia. The results of the research show the limitations in attracting the tourist flow: underdeveloped tourism infrastructure, unsatisfactory condition of transport infrastructure, low quality of resort services, etc. The most effective mechanisms for modernizing objects of tourist attraction are sponsorship, patronage and public-private partnership. According to the representatives of local authorities, one of the prioritized ways of solving the problems is public-private partnership. Collaboration between local authorities and the entrepreneurship community will not only attract financial resources into the sector, but will also allow the realization of joint projects for developing tourism infrastructure and tourism potential. As a result, the tourism industry developed in the framework of public-private partnership will become the most important means of activating Russian tourism potential and guaranteeing preservation, restoration and development of monuments of cultural and historical heritage, natural and recreational resources.
Keywords: tourism, public-private partnership, tourism infrastructure, tourism potential, tourism product, tourism industry.

RESUMEN:

El artículo presenta el análisis de los problemas en la infraestructura turística moderna en Rusia. Los resultados de la investigación muestran las limitaciones para atraer el flujo turístico: infraestructura turística subdesarrollada, condición insatisfactoria de la infraestructura de transporte, servicios de resort de baja calidad, etc. Los mecanismos más efectivos para modernizar los objetos de atracción turística son patrocinio, mecenazgo y asociación público-privada. asociación. Según los representantes de las autoridades locales, una de las formas prioritarias de resolver los problemas es la asociación público-privada. La colaboración entre las autoridades locales y la comunidad empresarial no solo atraerá recursos financieros al sector, sino que también permitirá la realización de proyectos conjuntos para desarrollar la infraestructura turística y el potencial turístico. Como resultado, la industria turística desarrollada en el marco de una asociación público-privada se convertirá en el medio más importante para activar el potencial turístico ruso y garantizar la preservación, restauración y desarrollo de monumentos del patrimonio cultural e histórico, recursos naturales y recreativos.
Palabras clave: turismo, asociación público-privada, infraestructura turística, potencial turístico, producto turístico, industria turística.

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1. Introduction

Tourism is a central sector in the economic complex not only at the state, regional and municipal levels, but in the world economic system as well. According to the World Tourism Organization, the contribution of the tourism sector to the world economy equals to 11-12 % of world gross national product. The sphere of tourism involves 7% of aggregate capital investments, every 16th workplace in the world, 11% of world consumer expenditures and one third of world service trade, 5% of all tax revenues, around 7% of revenues from world export, which in absolute terms is exceeded only by revenues from export of oil, oil products, and automobiles (Kabanova et al., 2016).

Presently, the tourism industry is one of the most dynamic and promising branches of social and economic development. The development of domestic and inbound tourism in Russia is now at the stage of popularization and increasing massive involvement. Russia possesses a huge potential, including unique natural and recreational resources, rich cultural and historical heritage (26 objects of UNESCO World Heritage), which opens potential opportunities for tourism growth. However, under the conditions of the world financial crisis, the current economic ambiguity, which exists in the tourism services market as well, the issues of finding resources and new opportunities for developing the tourism sector become relevant.

Although significant resources are allocated to the tourism sector and to tourism infrastructure of the Russian Federation in particular, its current state does not meet the interests and expectations of consumers and does not allow reaching the goals of innovative development of the country. The situation is worsened by the deterioration of objects of tourism infrastructure, most of which were constructed decades ago. The government’s policy to reduce the state’s involvement in the economy and to reduce the tax burden makes it impossible to allocate finances from the budget sufficient to eliminate the growing "investment gap" in the infrastructural tourism sector (Osintsev, 2010).

Thus, the analysis of international comparison shows that there is a need to modernize transport infrastructure in Russia. The absolute figures of the length of highways indicate a very slow rate of road construction. Relative figures are even more concerning (road density, km of roads per 1000 km2), illustrating a high level of isolation of certain territories from transport system.

The most important element of tourism infrastructure is the hotel industry. Accommodation is of primary importance among other services provided to tourists during their travelling, and is an indispensable part of every tour. At the moment, it is urgent to create new and comfortable hotel room stock in Russia, equipped according to modern requirements. 80% of hotel market in municipal units is made up by accommodation constructions built in Soviet times. The Russian hotel industry is below international standards and experiences serious problems: a lack of hotels of the middle price category, moral and physical deterioration of objects of hotel service, low service quality, deficit of qualified personnel, accommodation in hotel complexes. These tendencies are reflected in experts’ answers. Overall, more than half of the interviewed experts (51.8%) point out the insufficient amount of accommodation objects (hotels, inns, hostels).

One of the most significant elements of tourism potential in the territory of Russia is its objects of cultural and historical heritage. The current state of such objects does not meet modern requirements set by consumers of tourism services. The need in restoration and repair, outdated and deteriorated facilities, insufficient financing, underdeveloped informational and communicational infrastructure, and poor technical equipment are the most significant limitations of the tourist flow to objects of tourist attraction.

In tourism infrastructure, it is important to solve the problem of sufficient quantity and increased quality of service through its large-scale modernization. To achieve this, it is necessary to create conditions for effective investment in tourism infrastructure in order to reduce expenditures and to increase the quality of work in providing the availability of tourism services to consumers and the minimum load on the budget system.

Thus, the analysis of problems of modern tourism infrastructure indicates the necessity to attract additional financial resources for its development. One of the solutions to this problem can be public-private partnership. International experience shows that public-private partnership is not only a means of reducing budget expenditures for construction of infrastructural objects, but it also decreases significantly economic and corruption risks, thus performing important socio-economic functions in society.

Economic efficiency is realized by the following factors:

1. applying commercial approaches in decision-making, which to a greater extent use the "costs – result" analysis, in particular, when optimizing expenditures for remuneration and materials;

2. increasing the quality of management that is associated with enhancing accountability and allows making less politically motivated decisions;

3. Increasing transparency and competence in order to reduce corruption and detect hidden costs (Delmon, 2010).

Public-private partnership (PPP) is an institutional and company alliance between the state and business in order to realize national and international, large-scale and local, but always socially important projects in a wide range of spheres: from developing strategically important industries and research and development to providing social services. As a rule, every alliance of that kind is temporary since it is created for a certain term and ends after its realization (Resolution of the Government of Moscow No. 781-PP, 2008).

2. Methodological coordinates

2.1. Analysis of literature on the problem

In the process of the research, we have studied works by Russian and international researchers who contributed to investigating the problem of effective development of tourism (Aleksandrova (2010), Vinogradov (2010), Evreinov (2012), Zabaeva (2011), Makatrova (2009), Shishkin, & Biktimirova (2013), Srihadi et al. (2016), Țîțu et al. (2016), Hanafiah et al. (2016), Bouchon, & Rawat (2016), Yusof et al. (2014), Chan et al. (2012), Secondi et al. (2011)).

Works analyzing the nature and peculiarities of PPP are of great interest (Zhidkov, & Koskina (2016), Egorova et al. (2016), Yuldashev, & Khabibullina (2017), Eseva, & Kalina (2015), Efremov (2013), Dabagyan (2015), Zholudev, & Yurosh (2016), Kirilyuk (2011), Bozharenko (2012), Novitskii (2012), Gorban (2016), Akintoye et al. (2008), Frolova et al. (2016a; 2016b), Bult-Spiering, & Dewulf (2006)).

It is particularly worth to mention the works describing the peculiarities of PPP in the sphere of tourism (Ziyadin, & Takhtaeva (2016), Bedenko et al. (2013), Moroz, & Shadrintseva (2015), Kharitonova (2013), Latypov, & Vorotnikov (2010), Luneva (2014), Kosheleva (2013), Yui (2014), Dorozhkov, & Kupchinskaya (2016), Glasova, & Safronova (2017), Yakovenko, & Feraru (2016), Dedusenko et al. (2016), Guseva, & Amelkina (2017), Akimova, & Volkov (2012), Terenteva, & Gavrilchak (2014), Fattakhova, & Khakimova (2015)).

2.2. Informational basis of the research

Includes the results of the sociological research "Development of municipal units in the Russian Federation". The research was carried out in February-May 2015 by the All-Russian Council of Local Self-Administration (with the author’s participation) by means of sending questionnaires via the Internet. N=514 respondents (representatives of local authorities) took part in it. Selection was multi-step, territorial, and random. The authors also used general scientific methods of research; research operations were realized basing on the methods of comparison, comparative and system analysis.

3. Results

As mentioned above, in current conditions, infrastructural problems become the main reason for a decrease in the level of territory competitiveness in the tourism market for most Russian territories (Frolova et al., 2016a; Frolova et al., 2016b), which is proved by the results of our research. Experts claim that one of the significant limitations of the tourism flow are problems associated with underdeveloped tourism infrastructure, in particular: insufficient amount of objects of the hotel industry (51.8%), low service level in hotel complexes (72.9%), unsatisfactory condition of transport infrastructure (73%), insufficient amount of catering facilities (30%), low quality of resort services (47.6%), poor conditions for leisure activities (25.2%).

Figure 1
Results survey among experts

Thus, the analysis of the problems of modern tourism infrastructure indicates the necessity to attract additional financial resources for its development. 92% of representatives of local authorities noted that it is important to attract private partners to solve the problems of tourism development, and in particular, for construction of tourism objects and providing services.

As the results of the survey among experts show, representatives of local authorities noted that municipal units are in urgent need of private investment and pointed out its deficit or absence. The present problem illustrates that in the modern conditions of market relations it is necessary to apply more flexible mechanisms to involve private partners in solving the problems of tourism development. The most effective mechanisms of modernizing objects of tourist attraction are sponsorship, patronage, PPP, in which attempts of local authorities and business can be consolidated. Various financing instruments should be used, and their choice to a great extent depends on the peculiarities of state cultural policy, the development level of patronage and charity, mechanisms of social partnership (Medvedeva, 2016, p. 258).

The results of interviewing representatives of local authorities show that their most effective form of activity is PPP (92.2%). Collaboration between local authorities and entrepreneurship community will not only attract financial resources into the sector, but will also allow the realization of joint projects for developing tourism infrastructure and tourism potential. Attracting investment will lead to positive results:

- economy of municipal units’ own financial resources at the expense of private financing;

- construction of new objects of tourism infrastructure and tourism potential of a municipal unit fully or partially at the expense of private investment, keeping them as municipal property if possible after their operational lifetime is expired;

- reconstruction and overhaul of objects of tourism infrastructure and objects of cultural and historical heritage;

- increasing the quality of tourism services provided during the exploitation of an object of tourist attraction by a private partner;

- increasing the level of satisfaction with the development of objects of tourist attraction among tourists by expanding the range and increasing the quality of services provided;

- increasing the amount of objects of tourist attraction in the municipal unit's territory.

The main forms of PPP in developing tourism potential are:

- Concession activity – implies an agreement between the concessionaire (entrepreneur) and the concedent (municipal unit) basing on which the entrepreneur is obliged to carry out repair and reconstruction works on the object of tourist attraction which is municipal property at the expense of the concessionaire’s resources. In turn, the municipal unit guarantees the rights of ownership and use of the object of tourism potential to the investor for a certain term set in the agreement;

- charity – investing financial resources in objects of tourism potential by sponsors and benefactors on a non-repayable basis.

Certain factors can stimulate the involvement of entrepreneurship communities in tourism development: subsiding interest rates on loans, providing tax benefits and preferences, entrepreneurs’ participation in various projects on favorable terms, reducing administrative barriers, simplified procedures of renting or acquiring property, providing reduced rental rates on exploiting municipal premises, using modern technologies in socio-economic development of the region (Makushkin et al., 2016). Effective use of municipal property is the most important factor of tourism development. Leasing non-residential premises to investors interested in tourism development will make it possible not only to restore, preserve and develop objects on lease, shape tourism infrastructure necessary for municipal unit, provide services demanded by tourists, but to fund local municipal budget as well.

4. Discussion

Today, Russian tourism is a highly discussed issue in state policy. Currently, the government pays a great deal of attention to this sphere. The tourism industry is associated with the opportunity to increase the living standard and life quality in Russia, economic growth, solution of social problems, territory development, rise of patriotism, and reinforcement of the county’s image. At the same time, both the government and business-community begin to realize that it is impossible to activate Russian tourism potential without mutual efforts. The sector’s vulnerability in the conditions of increasing competition among foreign providers of tourism services requires support and skillful administration of the government. But the government’s efforts will be inefficient without feedback and financial support from the private sector (Kudryavtseva, 2013).

The role of investors can be performed by individuals and legal entities, joint enterprises, agencies authorized to administrate state and municipal property or rights of ownership registered in the territory of the Russian Federation, foreign individuals, states and international companies.

The main stages in attracting investors are the following:

- At the first stage, tourism investment projects of private partners are analyzed; economic opportunities and positioning of potential investors in the market are examined.

- The second stage supposes creating a list of potential investors.

- At the third stage, an investment memorandum is presented to investors, which serves as a basis for a private partner's decision to invest in the tourism project.

- At the fourth stage, preliminary negotiations with potential investors are conducted in order to define whether a private partner is interested in the project.

- The fifth stage – basing on the results of preliminary negotiations, potential investors are selected who best meet the requirements of the project's initiator. During the process of selecting potential investors, project presentations provided by private partners are analyzed.

- The sixth stage supposes municipal competition in which projects provided by potential investors are assessed. As the result of the competition, the winner is chosen basing on criteria and rules set in the competition documentation.

- The seventh stage is signing the agreement on collaboration between the contract giver and the investor.

- To inform potential investors about tourism investment attractiveness of the territory, marketing tools available to municipal units can be used. Such tools primarily include:

Currently, St. Petersburg is the leader among Russian cities in which PPP projects in the sphere of tourism are successfully implemented. At the same time, the regional government pays a lot of attention to both infrastructure projects (airport modernization, construction of the Moscow – Saint-Petersburg highway, etc.), and exclusively tourism projects (city water tour bus, city tour bus "City Tour", etc.). As a result, mutually beneficial cooperation of local authorities and business contributes not only to developing innovative solutions, increasing the attractiveness of territories, attracting tourist flows, developing related industries, and economic growth, but also to creating and implementing a competitive and unique tourism product.

5. Conclusion

Today, the tourism industry is one of the most dynamic and promising areas of socio-economic development. Russia has a huge potential for the development of domestic and inbound tourism. However, despite the high tourism potential of Russian territories, the study of trends in the formation of the tourist attraction of municipal units in the Russian Federation made it possible to identify the most significant problem areas of its development. The deficit of local budgets, insufficient state support from regional and federal budgets, and infrastructural problems illustrate the need to search for resources and opportunities for developing the tourism industry.

According to the results from interviewing the experts, in modern conditions PPPs can become one of the most effective, key and promising directions for intensifying tourism development. For the state, such partnership can result in the flow of new sources of capital, the development of tourism infrastructure facilities, the opportunity to share risks, improved service, access to skills in planning, managing and providing tourism services, additional benefits from economic development. In turn, the business community can gain access to new markets, the opportunity to increase the professional level, expand the range of provided tourism services and products, improve loaning conditions, and the opportunity to receive a high level of profit (Kudryavtseva, 2012).

Within the framework of PPP, many issues can be effectively addressed, and the variety of forms of cooperation allows choosing the most suitable option under certain conditions. The tourism industry, developed within the PPP framework, will become an important means of activating the Russian tourism potential, as well as ensuring the preservation, restoration and development of monuments of cultural and historical heritage and natural and recreational resources.

Acknowledgements

The publication was financed by the grant of the President of the Russian Federation to provide state support to young Russian scientists MK-265.2017.6.

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1. Candidate of sociological sciences, Assistant professor at the Department of Management and Administration. Russian State Social University, The Russian Federation, Moscow

2. Doctor of sociological sciences, professor of the Department of Management and Administration. Russian State Social University, The Russian Federation, Moscow

3. Candidate of sociological sciences, Assistant professor at the Department of Management and Administration. Russian State Social University, The Russian Federation, Moscow.

4. Candidate of sociological sciences, Assistant professor at the Department of Management and Administration. Russian State Social University, The Russian Federation, Moscow

5. Candidate of sociological sciences, Assistant professor at the Department of Management and Administration. Russian State Social University, The Russian Federation, Moscow.


Revista ESPACIOS. ISSN 0798 1015
Vol. 39 (Nº 48) Year 2018

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