RECREATION FOR LITTLE MONEY

Azerbaijan has managed to form a developed tourism industry in a relatively short period of time. The country is a clear leader in the South Caucasus region in terms of the number of five-star hotels of famous brands, high quality recreation areas and restaurants, as well as the number of modern airports. However, despite its effective infrastructure, local travel business significantly loses to competitors pricewise. The problem has acquired such a dimension that President Ilham Aliyev sharply criticized the existing situation and instructed to immediately prepare proposals for a solution.

Expensive for the rich

The international expert community has long noted the high rate of development of tourism in Azerbaijan. In certain areas, such as the growth in the number of foreign tourists or build-up of hotel capacity, the country has considerably exceeded average world indicators and established itself as a leader in the post-Soviet space. Over the past decade, about 535 hotels and boarding houses capable of simultaneously accommodating more than 35,000 tourists have been put into operation and reconstructed, mainly in the regions of the country. More than 50 new hotels of different levels are currently under construction. After the commissioning of these facilities, hotel capacity will increase by 10,000-12,000 beds.

Practical experience of the last decade shows, however, that the level of competition in the tourism sector is still insufficient and does not provide for an adequate level of prices acceptable to the majority of the country's citizens. Reasons for inflexible pricing policies of local hotels have deep roots: until recently, the cost of a package tour (without travel expenses) in local recreation areas was higher than a holiday at world-class resorts in Turkey, Egypt and even neighbouring Georgia. As regards value for money, the above countries outstrip Azerbaijan on many fronts. By way of comparison: the daily cost of staying even in a relatively inexpensive hotel is not less than 60 manats per person in most of the regions of Azerbaijan. And this amount does not always include breakfast. If you add the prices for lunch and dinner, a three-day stay in a cheap local hotel will cost a minimum of 250-300 manats per person. Somewhere in Turkey or Georgia, one can stay for six or seven days for that amount, i.e. twice as long. Furthermore, almost all hotels in Azerbaijan, unlike in the neighbouring countries, are unable to combine low prices with the "all inclusive" principle. Besides, one has to pay separately for three meals a day, soft and alcoholic drinks. The exceptions are some very expensive five-star hotels, but their complete travel package starts from 120-150 manats per day. By the way, a comparison of prices at restaurants and cafes in Azerbaijan with those at catering facilities in Turkey and Georgia are not in our favour, either. In Baku and its suburbs, a modest dinner consisting of two courses, dessert and soft drinks will cost a traveller 20 dollars on average; in Turkey, this amount would be enough for two adults to have a diner in a low-priced restaurant of the resort zone, while in Tbilisi and Batumi, even for three adults.

Local hotels often charge a separate fee for entertainment and animation, access to a water park and amusements, renting a bike, using SPA services, etc. However, the above infrastructure is available in almost every middle-level hotel in resorts of Antalya, Bodrum and Kemer, and such services are usually included in the price of a package tour. Azerbaijani hoteliers rarely bother to provide for cultural entertainment of travellers outside of their facilities. Meanwhile, hotels in many neighbouring countries employ guides or sports and leisure tourism experts as staff members, who organize collective visits to museums, historical and natural reserves, arrange for horse riding, sea cruises or fishing.

Another problem of the local leisure industry is paid beaches. Now there are almost no places on the Abseron coast where a holiday-maker can go to the beach for free. Even municipal beaches that are few in number charge a fee from one to three manats for car parking, whereas the cost of resting on beaches leased by private companies and enclosed by tall fences reaches 10-15 manats per person (for example, Sixov and Novxani beaches). It is impossible to decline such services because people are obliged to take a table, chairs and a couch regardless of their wish. In the recreation areas of Turkey, all items of the beach furniture are free for holiday-makers with vouchers. If a voucherless tourist wanders into the coast, they will not be chased away or forced to accept expensive service. Another example: the long sea beaches of Batumi and Kobuleti are open for free to all comers and prices for those renting couches and other items are much cheaper than the rates usually charged in Azerbaijan.

The vast majority of Azerbaijani holiday camps and health resorts do not give a discount during the summer and are extremely reluctant to reduce prices off-season. This situation is due to the fact that the holiday camps in the Saki-Zaqatala zone, the Quba-Qusar region, the Nabran and Abseron seashores and resorts in the south of the country, which are most visited by tourists, mainly operate during three summer months plus one month in the off-peak season if the weather is fine. In a relatively short period of time, the owners of the facilities try to recoup the costs of infrastructure and personnel maintenance and get at least some profit. Therefore, one should not expect any favours in terms of prices.

In Turkey and Georgia, travel companies use a flexible system of discounts at the beginning and end of the holiday season, as well as in winter, and the price gap often reaches 40-50 per cent. Azerbaijani hoteliers are usually not in a hurry to introduce a similar system of flexible discounts, as it simply does not pay to keep sizeable staff in order to attract a limited number of tourists in the fall, winter and spring. All of the above lead to a marked increase in the cost of recreation in Azerbaijan, while those wishing to travel on a reasonable budget are deprived of basic amenities and services that have long been familiar and accessible to tourists in the neighbouring countries.

Things are moving

The problem of very high prices for hotel services was brought up by President Ilham Aliyev at an enlarged government meeting dedicated to the socioeconomic development of the country in the first half of this year. "Hotels of internationally renowned brands are now operating in Baku, pursuing pricing policies appropriate to their levels, and it is quite normal. However, it is not clear why services of the remaining hotels that do not belong to the five-star category are so expensive," Azerbaijani President Ilham Aliyev wondered. "Prices asked in the tourist areas of the country are often so high that ordinary citizens and foreign travellers lose all desire to visit these places". The president said that Azerbaijan has all the conditions for the rapid development of domestic tourism - beautiful mountains, forests, rivers and beaches, historical sites and ski resorts. However, due to lack of quality three- and two-star hotels with affordable prices, families with limited financial resources are simply deprived of the possibility to have a rest in their home country. 

Ilham Aliyev underscored that in considering this issue, it would be wrong to rely entirely on market self-regulation - the equilibrium between supply and demand. Recent experience has shown that the huge demand for affordable vacation has failed to create adequate large supply. According to the president, in order to develop tourism in the country, three issues should be addressed: simplifying the procedure and terms of issuing visas as much as possible, significantly reducing the cost of air tickets and prices in hotels. The most important way of solving the pricing problem is to build more three- and two-star hotels, and here the state should play its stimulating role. "Let the Ministry of Culture and Tourism submit proposals on how to solve these issues. At the same time, it is necessary to attract the attention of businessmen to this area," said the head of state.

"Many foreign tourists admit that they have to begin making arrangements for a trip to Azerbaijan one or two months in advance. Meanwhile, people have got used to moving fast in the modern world: they make a hotel reservation in two or three days, buy tickets, get a visa and go. We must achieve similar results in our country too," said President Ilham Aliyev.

A response to the comments of the head of state was not slow to arrive from the relevant state agencies. Thus, according to the head of the department of information and public relations of the Ministry of Culture and Tourism, Vuqar Sihammadov, the tourism authority together with the Ministry of Economy and Industry are now preparing a joint package of proposals to regulate the pricing policy of the country's hotels. At the same time, we continue to work together with businessmen, tourist organizations and hotel managers on the issues of optimizing price parameters and bringing them into correspondence with the level and quality of services offered. The Ministry of Tourism has also developed proposals for the construction of two- and three-star hotels and stimulation of businessmen's interest in investing in such projects.

The tourism authority in cooperation with the Foreign Ministry and other state bodies have undertaken to promptly implement the joint action plan aimed at reducing the period for receiving e-visas. It is noteworthy that not so long ago, the country approved rules of accreditation of travel agencies authorized to issue electronic tourist visas.

Representatives of professional associations and unions are ready to join in on finding solutions for urgent problems of the tourism sector. In particular, the Azerbaijan Tourism Association (AzTA) and the Ministry of Tourism are developing a plan of activities including, among others, measures for monitoring the rates at local hotels. According to AzTA head Nahid Bagirov, such monitoring will not affect the branded hotels whose pricing policy is largely determined by the corporate rules of international hotel chains. As for the local hotels both in Baku and in the regions of the country, they will be monitored and the question will be raised as to economic substantiation of the rates established and their affordability to the general public. In turn, AzTA has come forward with a proposal to reduce the period of issuance of electronic visas to foreign travellers from 14 to seven days.

In the opinion of Board Chairman of the Hotels and Restaurants Association Samir Dubandi, it is quite clear that, given the current prices in hotels, the development of mass tourism is impossible in Azerbaijan. "For the mass construction of budget hotels in Azerbaijan, a number of benefits must be provided to potential investors," Dubandi believes. "Entrepreneurs can be motivated to build low-cost recreational facilities by the provision of tax incentives during the period of construction as well as at the initial stage - for a year or two - after the opening of the hotel".

The high cost of the hotel sector and protracted periods of obtaining visas are by far not the only problems of the domestic tourism sector. Very high cost of air fares from the national air carrier Azerbaijan Airlines (AZAL) CJSC is no less of a problem for promoting vacations in Azerbaijan. "It is quite good that AZAL provides high-quality services. However, we do not buy fuel abroad, we produce it domestically; moreover, AZAL receives considerable state subsidies, in particular, airplanes are bought for the company by the state and the construction of airports is carried out at the expense of the budget funds. In this regard, a reasonable question arises, why are the prices for AZAL services significantly higher than in the neighbouring countries?" President Ilham Aliyev asked. The head of state instructed the government as well as the ministries of finance, economy and industry to address this issue by performing a comparative analysis of prices and ensuring the implementation of a transparent mechanism for regulation of tariffs for air services, which would exclude their artificial overrating.

It is noteworthy that a meeting was held in AZAL premises on 15 July to discuss the issue of optimization of prices for passenger flights on a number of destinations.

"AZAL really provides high-quality services, but at the same time air tickets of that carrier are sold at inflated prices. To solve this problem, it is necessary to make active use of regional airports including in Ganca, Qabala and other cities, concurrently involving foreign discount airlines in operations on the domestic market," AzTA chairman Nahid Bagirov proposed at the meeting.

According to him, the tourist community suggests that, as an option, AZAL should create a state low-cost airline in Azerbaijan itself, thereby providing passengers with affordable services in the airline industry. In this case, each tourist will be able to choose the level of quality of aviation services depending on one's means. This experience is common in the world: own low-cost airlines have been set up by many carriers including Lufthansa and Aeroflot.

In short, the ice was broken, and perhaps we will be lucky enough to observe some positive changes in the pricing policy taking place in the tourism sector already during this summer season. Anyway, let us hope that, at least by the start of next year, proposals from tourist attractions and related structures will be brought into conformity with the general character of the existing demand.

FIRSTHAND

"Many foreign tourists admit that they have to begin making arrangements for a trip to Azerbaijan one or two months in advance. Meanwhile, people have got used to moving fast in the modern world: they make a hotel reservation in two or three days, buy tickets, get a visa and go. We must achieve similar results in our country too"

Ilham Aliyev, President of Azerbaijan