Global tourism industry feels the pinch of Ukraine war’s fallout

1 / 3
Russian tourists were stranded abroad after sanctions. (Getty Images)
2 / 3
A Ukrainian tourist poses for a picture near the Hagia Sophia Mosque at Sultanahmet in Istanbul, Turkey, on May 9, 2021. (AFP file photo)
3 / 3
A Ukranian tourist poses for a picture near the Hagia Sophia Mosque at Sultanahmet in Istanbul, Turkey, on May 9, 2021. (AFP file photo)
Short Url
Updated 20 April 2022
Follow

Global tourism industry feels the pinch of Ukraine war’s fallout

  • Sudden drop in Russians and Ukrainians traveling abroad since February 24 has harmed sector’s post-COVID recovery
  • Spike in fuel prices has affected the travel industry, which in turn has piled pressure on ailing tourist hotspots

DUBAI: From his office in downtown Moscow, Vladimir Inyakin, founder of the local travel agency All World, is helping people in search of a ticket to fly out of Russia.

Since the Ukraine invasion began on Feb. 24, prompting Western nations to bar Russian passenger jets from their airspace, the Russian travel industry’s business model has undergone a rapid makeover.

Where once Inyakin helped his clients to book luxury getaways around the globe, he now helps them to reach any destination that provides respite from the prevailing atmosphere of crisis, conflict and international isolation.

“Russians were initially scared, panicking, crying and ready to pay any money to leave the country,” Inyakin, who established his travel agency in 2008, told Arab News. But now, nearly two months into the Ukraine war, some Russians are thinking of traveling again and Inyakin is on hand to arrange their itineraries.

Of course, Western sanctions have greatly shrunk the list of places Russians can travel to without a lot of hassle. Bermuda, which has suspended certification for Russian-operated planes registered there, is one extreme. On the other extreme are countries that have long benefited from Russian tourism and remain open to visitors from Russia.

“Many places are afraid to lose Russian clients,” said Inyakin. “We can now only fly to 15 countries, mostly ex-USSR countries, as well as Iran, Israel, Turkey, Vietnam, Zanzibar, Qatar, the UAE and Thailand with some Russian airlines.”

“They are traveling anywhere they can with a one-way ticket and cash — Uzbekistan, Georgia, Armenia, the UAE, for example,” said Inyakin. “If you fly abroad, you must take cash with you. Those that can afford it are going to Dubai.”

When the value of the Russian ruble plummeted at the outset of the war, Russian savers rushed to convert their earnings into other more stable currencies or to place them into secure accounts and investments abroad.

But, in a surprising reversal of fortune, the ruble has steadily rebounded, its value now double of what it was on March 7. On April 8 the ruble rallied past 72 to the dollar although it has since shed some of its gains.

A Reuters report said the ruble’s weakening is driven by expectations that Russia may relax its temporary control measures further, easing requirements for mandatory foreign currency revenue sales by export-focused companies.

Jet fuel prices have risen dramatically since Western sanctions hit Russia’s hydrocarbon-based economy, pushing up airline-ticket prices across the board. Nonstop roundtrip tickets from Moscow to Dubai range from $609 on flydubai, $1,359 on Emirates and $810 on Turkish Airlines—several hundred dollars higher than pre-February 24 prices.

Before the war, says Inyakin, “you could fly round-trip from Moscow to Dubai with Aeroflot for $300-350.” Aeroflot has yet to resume operations.

“There’s inflation now and the exchange rate — dollar into Russian ruble — is extremely high,” one Russian citizen living in the Gulf told Arab News on condition of anonymity.

When SWIFT, the messaging service that connects more than 11,000 financial institutions around the world, suspended services for seven Russian banks at the end of February in response to the war, it crippled the country’s financial system and curtailed its ability to trade globally.

In practical terms, the suspension made it near impossible for Russians to use their credit cards and bank accounts abroad.

“The main challenge now for Russians wishing to travel is that if you are a Russian citizen living in Russia, you cannot easily book airline tickets or hotels since Visa and Mastercard are no longer supported in Russia,” the Gulf resident said. “Very few countries are accepting Mir, the Russian national payment system.”




Russians have been vital for the tourism industry’s recovery. (AFP)

The drop in the number of Russians traveling abroad is already having a damaging impact on at least five tourist hubs once popular with Russian and Ukrainian visitors: Thailand, Vietnam, Turkey, Egypt and Cyprus.

The leisure and hospitality industries in these countries can ill afford such disruption, especially in the wake of lockdowns and travel bans imposed during the COVID-19 pandemic that decimated global tourism in 2020 and 2021.

Sanctions and boycotts imposed in response to the war are also harming Russia’s own tourism industry. Russian tour operators banking on the post-pandemic recovery will be sorely disappointed.




Russians have been vital for the tourism industry’s recovery. (AFP)

Prior to the war, Ukrainians too were avid travelers. But now, with millions of them displaced by the fighting, their spending, like that of Russians, has vanished from the international tourism market.

“As Ukrainians we usually love to travel,” Mariia, a Ukrainian originally from Odessa now living in Dubai, told Arab News. “Tourism is not even on our minds right now.”

For millions of men still in Ukraine, travel is simply not an option. Those aged 18 to 60, like Mariia’s father and brother, are of conscription age. “They could be called into the service at any time,” she said.

With its historic cities, verdant countryside and picturesque coastline, Ukraine was a popular tourist destination in its own right. Now its airspace is closed to passenger jets while its towns and infrastructure lie in ruins.

“I never in my life thought I would hear the air raid sirens over a video call in my city,” Mariia said. “I didn’t even know we had one. It’s been so devastating.”

One nation that will feel the loss of Russian and Ukrainian visitors perhaps most of all is Turkey. The luxury hotels, marinas and shimmering beaches of Bodrum and Antalya have long been a playground of Eastern European tourists.

Before the pandemic, tourism made up 10 percent of Turkey’s gross domestic product. In 2021, after the lifting of COVID-19 travel restrictions, about 4.7 million Russians and 2.1 million Ukrainians visited the country — accounting for a quarter of its 24.7 million foreign visitors that year.

The Association of Turkish Travel Agencies had expected 7 million Russians and 2.5 million Ukrainians to visit this year, and the industry to post $35 billion in revenues.




A Ukrainian tourist poses for a picture near the Hagia Sophia Mosque at Sultanahmet in Istanbul, Turkey, on May 9, 2021. (AFP file photo)

Although Turkey has not sanctioned Russia nor closed its airspace to Russian airlines, the invasion of Ukraine has dashed hopes of a post-pandemic recovery.

Vietnam has likewise revised down its estimates for the coming year. The province of Khanh Hoa and the island of Phu Quoc had long been popular among Russian tourists, as had the city of Phan Thiet, affectionately known as “Little Moscow.”

According to one survey by Vietnam’s National Administration of Tourism in 2019, Russians spent an average of $1,600 per stay compared to the average foreign visitor who spent around $900.

Several Vietnamese travel agencies catering solely for Russian visitors have sprung up over the years. But, on March 23 this year, in response to the war, Vietnam Airlines announced it was suspending flights to and from Russia.

Similar scenes are playing out in Thailand. On March 25, the South China Morning Post reported that more than 7,000 Russian tourists were stranded in the country’s once popular holiday destinations.




A picture taken on September 29, 2021 shows Russian tourists in the Egyptian Red Sea resort of Sharm el-Sheikh. (AFP file)

Looking on the bright side, in recent weeks many stranded Russians have been successfully repatriated. The state-owned news agency TASS, citing the Russian Federal Agency for Tourism, said that more than 85,000 Russian tourists were repatriated in March. The report said that Egypt had the largest number of package tourists, around 4,000.

The repatriation process, however, has been complicated by new Western sanctions targeting the aircraft that are expected to be used for special flights from Egypt to Russia. Tour operators are having to use different routes to fly stranded Russian tourists through third countries such as the UAE, Turkey, the Maldives and Thailand.

“The war in Ukraine poses new challenges to the global economic environment and risks hampering the return of confidence in global travel,” the UN World Tourism Organization said in a statement on March 31.

“The shutdown of Ukrainian and Russian airspace, as well as the ban on Russian carriers by many European countries, is affecting intra-European travel. It is also causing detours in long-haul flights between Europe and East Asia, which translates into longer flights and higher costs.

“Russia and Ukraine accounted for a combined 3 percent of global spending on international tourism in 2020 and at least $14 billion in global tourism receipts could be lost if the conflict is prolonged.”

In Italy, where tourists are only just returning after two years of pandemic restrictions, the absence of Ukrainian and Russian tourists is palpable. The country has joined other EU members in imposing sanctions on Russia and has stopped dealings with Russian banks.

A report in the UK’s The Guardian says that while Russians hardly constituted the top 20 for numbers of visitors to Italy, in terms of time spent in the country they were ninth, and when measured by overall economic impact they were second, behind only Germany.

“Traditionally the average Russian visitor stayed in Italy for five or more days, compared to two or three from most other countries, and they spent around 65 percent more money per day than the average tourist,” Costabile said. “I assure you, the absence of Russian visitors in the sector will be felt.”

One place where Russians are still welcome is Dubai. Long a popular tourism destination for both Russians and Ukrainians, the UAE’s commercial capital continues to be warm and welcoming for those with the financial means.




Dubai has long been a popular destination for both Russians and Ukrainians. (Shutterstock)

“Due to these challenging times for Russia now under sanctions, more Russians are looking to move to Dubai than ever before,” Anastasia, a Russian art consultant who arrived in Dubai two months ago, told Arab News.

Others are wary about the future, unsure where to go, whether to stay, or how to sustain themselves in the short term.

“Everything is still so unclear,” a Russian expat who lives in the Gulf told Arab News on condition of anonymity. “No one knows how long this war will last and what more will be affected. You don’t know how to calculate the risks.”

The embassy of Ukraine in the UAE recently announced that Ukrainian tourists who arrived in the Gulf country before the war may apply for a one-year residency visa.

As for the more than 1,000 Ukrainians who found themselves stranded in Dubai when the invasion began in February, aid agencies stepped in to house them or arrange tickets to Poland, where millions of war-displaced Ukrainians have found refuge.

“Traveling is not something on their mind now,” one Ukrainian living in Dubai told Arab News on condition of anonymity, describing their own family’s circumstances.

“There are no flights to or from Ukraine. People who managed to escape early on are largely those who could afford it and then came to places like Dubai.”

With a peace deal still eluding Russian and Ukrainian negotiators and the battlefront now shifting to the disputed east of the country, there is little sign of a return to business as usual any time soon.


LVMH chief Bernard Arnault to testify in France spy trial

Updated 28 November 2024
Follow

LVMH chief Bernard Arnault to testify in France spy trial

  • Arnault is not accused of any wrongdoing in the trial after paying a 10 million euro settlement in 2021 to close a criminal probe into LVMH’s role in the case

PARIS: LVMH Chairman and CEO Bernard Arnault is set to testify at a Paris court on Thursday in the trial of France’s former spy chief Bernard Squarcini, a case that has cast light on the lengths to which the world’s biggest luxury group has allegedly gone to protect its image.
Squarcini, who headed France’s counter-intelligence services from 2008 to 2012, was later hired by LVMH as a security consultant, during which time he allegedly illegally collected information on private individuals and violated privacy laws while helping the company fight counterfeits and monitor left-wing activists planning to target the company with protests.
He is also charged with leaking classified information, interfering with justice and peddling influence.
Squarcini’s lawyers did not immediately respond to a request for comment.
Arnault is not accused of any wrongdoing in the trial after paying a 10 million euro settlement in 2021 to close a criminal probe into LVMH’s role in the case.
He has said that the recruitment of Squarcini was conducted by Pierre Gode, his longtime right-hand man at LVMH who died in 2018, and that he was unaware of information allegedly collected by Squarcini, according to court documents.
However the two-week trial has thrust the billionaire into the spotlight at a time when his sprawling luxury empire is already navigating a downturn in the industry and a reshuffling of top management.
LVMH paid Squarcini’s consulting firm Kyrnos 2.2 million euros for services including allegedly searching the background of individuals suspected of counterfeiting luxury goods.
He also allegedly monitored Francois Ruffin, a French activist who is currently a politician, and members of his left-wing publication Fakir as they planned to disrupt an LVMH shareholder meeting and prepared their satirical, documentary film “Merci Patron.”
The film, which won the French Cesar award for best documentary in 2017, follows a family that lost their jobs at a supplier to LVMH.
Bernard Arnault’s lawyer did not immediately respond to a request for comment.


Adani allegations shine spotlight on India’s clean energy conundrum

Updated 28 November 2024
Follow

Adani allegations shine spotlight on India’s clean energy conundrum

  • The problem is that India’s states are unprepared for the rapid rise in renewable generating capacity, lack adequate transmission infrastructure and storage

NEW DELHI: Bribery allegations against Adani Group founder Gautam Adani have highlighted the growing problem India’s renewable energy developers face in finding buyers for the power they generate.
While India’s central government wants to shift away from polluting coal-fired generation toward solar and wind, officials say state government-owned power distribution companies responsible for keeping the lights on have dragged their heels over striking renewable purchase deals. US authorities allege that Indian billionaire Adani conspired to devise a $265 million scheme to bribe Indian state government officials to secure solar power supply deals, after one of his companies was unable to secure buyers for a $6 billion project for several years.
The Adani Group has denied the charges.
The conglomerate is not alone in facing increasingly long delays in signing up buyers for the renewable electricity capacity which is now being developed in coal-dependent India — the world’s third-largest emitter of greenhouse gases.
Coal accounted for 75 percent of India’s power generation during the year to the end of March, with renewables such as solar and wind, but not including hydro-electricity, making up about 12 percent.
India is still more than 10 percent short of its much-publicized pledge to add 175 gigawatts (GW) of renewable power by 2022.
That has led the federal government to ramp up bidding for renewable projects to meet an ambitious 2030 target of increasing its non-fossil fuel capacity to 500 gigawatts (GW). In the five years to March 2028 it plans to tender for more than four-times the capacity of renewable energy projects it commissioned in the preceding five.
To push states to help meet India’s overall goal, New Delhi in 2022 introduced so-called renewable purchase obligations (RPOs), which mandate that states increase clean energy adoption so that the national share doubles to 43.3 percent in March 2030.
Honouring these RPOs would require 20 of the 30 provinces monitored to more than double the share of green power in their electricity mix, a February report by government think-tank NITI Aayog showed.
The problem is that India’s states are unprepared for the rapid rise in renewable generating capacity, lack adequate transmission infrastructure and storage and would rather rely on fossil fuel for supply than risk “intermittent” renewables.
The challenges were stark in the case of Adani Green, India’s largest renewable energy company, which took nearly 3-1/2 years to strike supply deals with buyers for the entire 8 gigawatts (GW) of solar power capacity it won in a tender widely publicized as the country’s biggest.

DEMAND POOL
Yet setting targets for tenders and issuing contracts is “meaningless” so long as interest from power distribution companies is so low, said R. Srikanth, energy industry adviser and dean at India’s National Institute of Advanced Studies.
And the allegations against Adani are likely to result in a further renewables slowdown, as low-cost finance from foreign investors may become more difficult to secure, Srikanth said.
A change in the way some tenders are run has exacerbated delays in the time it takes to complete renewables projects. The tender won by Adani Green was the first major contract issued by state-run Solar Energy Corp. of India (SECI) without a state-guaranteed Power Purchase Agreement (PPA).
When announced in June 2019, SECI said buyers were guaranteed, but it withdrew the provision from the deal signed a year later.
SECI’s chairman told Reuters last month that a three-fold increase in tendering of renewable projects has left 30 GW of projects for which bidding is complete, but without buyers.
“You can’t expect the states to respond and start signing three times the power supply agreements,” R P Gupta told Reuters in an interview, adding that a “demand pool has to be created” and states had to be “sensitised” to renewables.
Brokerage JM Financial said that it now takes 8 to 10 months to sign power supply deals after a contract is awarded.
By comparison, companies that were awarded contracts between July 2018 and December 2020 needed around three months to strike supply deals, SECI data showed.
“The sudden surge in bids, large pipeline of projects under construction, mismatch in power demand and bid-pipeline ... and constraints in timely execution of projects are leading to delays in signing,” JM Financial said.
Renewable energy projects have also seen cancelations, with about 4 percent-5 percent of all tendered projects annulled, and backlogs in transmission infrastructure development, Gupta said.
One solution, said Rakesh Nath, former chairman of India’s Central Electricity Authority, would be knowing how much power buyers want before projects are bid for.
“Taking buyers into confidence before inviting bids may minimize delays in signing power supply agreements,” he said.


‘Anti-woke’ Americans hail death of DEI as another domino topples

Updated 28 November 2024
Follow

‘Anti-woke’ Americans hail death of DEI as another domino topples

  • Conservative activists hailed 2023 as a landmark year in America’s never-ending culture wars

WASHINGTON: America’s largest private employer, Walmart, is the latest name to join a list of US businesses and institutions rethinking programs to bolster minority groups as support for progressive policies erodes.
Walmart said it will phase out the terms “diversity, equity and inclusion” (DEI) and “Latinx,” end supplier diversity programs, shutter a racial equity center and pull out of a prominent gay rights index.
The announcement comes in the wake of similar moves by a string of prestige brands — from Ford, John Deere and Lowe’s to Harley-Davidson and Jack Daniel’s — reflecting a backlash against so-called political correctness in American public life.
The rightward shift is credited in part for populist Donald Trump’s White House comeback and for laying the groundwork for a 2023 Supreme Court ruling ending affirmative action in college admissions.
DEI initiatives aim to right historical discrimination but conservatives have long criticized them as unfairly targeting white people, particularly men, as well as being performative “virtue-signaling.”
Anti-DEI activist Robby Starbuck, who lobbied Walmart before its announcement, celebrated the “biggest win yet for our movement to end wokeness in corporate America” and noted that the company’s stock had risen 2.1 percent.
“Our movement is a force in the market. Go woke, go broke actually has meaning now,” he posted on X.
Starbuck, 35, told AFP in an interview before Trump’s November 5 victory over Democrat Kamala Harris — who was criticized for previous “woke” policy positions — that ordinary Americans were sick of inclusivity and diversity policies at US companies.
“People are entitled to their views, and we need to have a system that creates equal footing for everybody and doesn’t force any one ideology down everybody’s throats,” he said.
Emboldened by Trump’s campaign pledges to end “wokeness,” conservative groups have been filing numerous lawsuits targeting corporate and federal programs aimed at elevating minorities and women.
Trump himself focused mostly on political correctness that he says is infecting the nation’s classrooms, promising executive orders to cut federal funding schools pushing critical race theory and “transgender insanity.”
The president-elect has surrounded himself with anti-woke allies of all stripes, including his incoming deputy policy chief Stephen Miller, whose America First Legal group has targeted corporate diversity.
The military has been the main target of anti-woke crusaders in the US Congress, who argue that racial justice education and an obsession with climate change have made the troops go soft and driven a recruitment slump.
Republican lawmakers who spent much of the last congressional session locked in a war with Pentagon leaders on political-correctness were rewarded with Trump’s pick to lead the defense department’s workforce of three million — anti-DEI Fox News host Pete Hegseth.
Conservative activists hailed 2023 as a landmark year in America’s never-ending culture wars, when the conservative-majority Supreme Court ended affirmative action in university admissions, reversing a major gain of the 1960s Civil Rights Movement.
Conservative groups pounced on the ruling to fight all manner of diversity programs in court.
And in March, the University of Florida ended DEI programs and related jobs as part of Republican Governor Ron DeSantis’s offensive against “woke ideology” — joining campuses in around a dozen other states.
Workers are divided on the merits of DEI, with a slowly-growing share saying their company pays too much attention to the issue — 19 percent in an October Pew Research Center poll compared with 14 percent in the same survey in February 2023.
But a new poll of 1,300 employees from business think tank The Conference Board, showed a robust 58 percent indicating that their organization devotes the appropriate level of effort on DEI.
“Leaders should focus on what really matters for their workforce amid the noise, as these initiatives are crucial for attracting and retaining current and future talent,” said Allan Schweyer, the group’s principal Researcher for human capital.


Global operation seizes 1,400 tons of drugs, unearths new Pacific trafficking route

Updated 28 November 2024
Follow

Global operation seizes 1,400 tons of drugs, unearths new Pacific trafficking route

  • More than 1,400 tons of drugs seized, over 400 criminals arrested in global operation in October and November
  • Operation “Orion” involved the US, Brazil, Spain, Netherlands and other nations, as well as multiple international organizations
  • The seizure deprived drug cartels of more than $8.4 billion dollars, according to the Colombian Navy

BOGOTA: Authorities from dozens of countries seized 225 metric tons of cocaine in a six-week mega-operation where they unearthed a new Pacific trafficking route from South America to Australia, the Colombian Navy said Wednesday.
The latest phase of global naval operation “Orion” resulted in the seizure of more than 1,400 tons of drugs, including 225 tons of cocaine and 128 tons of marijuana, navy official Orlando Enrique Grisales told reporters.
More than 400 people were arrested in the operation targeting oceans, coasts, rivers and ports around the globe in October and November.
The massive bust involved the security agencies of the United States, Brazil, Spain, the Netherlands and several other nations, as well as multiple international organizations.
The seizure deprived drug cartels of more than $8.4 billion dollars, according to a Navy statement.
Grisales said officials also seized a semisubmersible wood-and-fiber glass vessel on its way to Australia with five tons of Colombian cocaine.
This was the third such vessel discovered in this area, revealing a “new route” of trafficking with sophisticated boats that can cover the distance of some 10,000 miles without needing to refuel.
A kilogram of cocaine is sold for up to $240,000 in Australia, said Grisales — about six times more than the price in the United States.
“It is a route that is becoming increasingly profitable because prices are much higher in Australia,” a security source told AFP.
“Initially, these boats were used mainly to take the drugs out of the country and move them off the coast of Colombia and then transfer them to ships,” added the source.
“It has been found that these semisubmersibles, sometimes even submersibles, are now increasingly sophisticated, with very fine engineering.”
The operation also uncovered previously-unknown alliances between cartels from Mexico, Brazil, Colombia, Ecuador and Peru with groups from Europe and Oceania.
“It is not just a pyramid structure as the cartels once were. Today they are organized crime networks joined together,” said Grisales.
Colombia is the world’s biggest cocaine producer and exporter, mainly to the United States and Europe.
Last year, the South American country set a new record for cocaine production and cultivation of the coca leaf it is made from.


Under tariff threat, US wholesaler warns: ‘People will pay’

Updated 28 November 2024
Follow

Under tariff threat, US wholesaler warns: ‘People will pay’

  • No matter what happens in January, retailer Melquiades Flores says he has no option but to keep importing produce from Mexico
  • The tomato-growing season in California lasts four months. The rest of the year, he gets the produce from Mexico

LOS ANGELES: While most of Los Angeles sleeps, 58-year-old Melquiades Flores starts his day at 1 a.m., supervising the unloading of produce at M&M Tomatoes and Chile Company, the wholesaler he started in 2019.
But the business that Flores hopes to pass to his children one day is bracing for a disruption.
US President-elect Donald Trump has pledged to impose a 25 percent tariff on all imports from Mexico and Canada when he takes office on Jan. 20, plus an additional 10 percent tariff on Chinese goods.
“Produce of Mexico” is stamped on almost all the boxes of tomatoes and chilies that arrive at Flores’ downtown warehouse, destined for homes, hotels and restaurant kitchens across the city.
“People will have to pay a higher price. Whatever they charge us, we will pass on to the consumer,” Flores said from his section of the larger complex, the Los Angeles Wholesale Produce Market.
No matter what happens in January, Flores says he has no option but to keep importing produce from Mexico. The tomato-growing season in California lasts four months, from August to November, he says. The rest of the year, he gets the produce from the Mexican states of Sinaloa, Baja California and Sonora.
His team stacks boxes upon boxes of tomatoes in every size and shade of red, plus some shiny green ones for making zesty tomatillo sauce.
“Any tariff is an added tax that impacts all of us, including those who buy a pound, two pounds, or a thousand or 10,000 pounds,” said Flores, who has lived in Los Angeles for 40 years and is originally from the Mexican state of Morelos.
Trump has pronounced his love of tariffs, presumably for raising revenue and protecting US industries against imports, but he avoids speaking about the inflationary effect or the impact of potential retaliation from the United States’ top three trading partners.
Officials from Mexico, Canada and China and major industry groups have warned that the tariffs Trump proposes would harm the economies of all involved, cause inflation to spike and damage job markets.
“The president should have first seen how much this will impact everyone before speaking,” Flores said.