Elite Russians adopt the staycation habit

Financial Times

Annette Loftus, owner of a high-end Moscow travel agency, gets plenty of odd holiday requests from plenty of exotic people. She has had to organise a golf tournament at the North Pole, a buggy race on Bolivia’s salt flats and a getaway with an ice bar in the middle of a frozen Siberian lake.

Then, there was the mysterious caller who asked for “a holiday in a non-Interpol country” on behalf of his boss, who he would not name. She turned the last one down – first of all, she said, non-Interpol countries are very few, “and I would not be willing to run a trip in any of them”. Second, there was “the moral issue . . .”.

Recently Ms Loftus has seen more requests like the last one – clients with, as she puts it, “jurisdictional issues”. For a small but growing number of elite Russians, travel opportunities are increasingly limited. The trend was epitomised by the US Magnitsky act, which late last year imposed a US visa blacklist and asset freezes on roughly 60 Russians suspected of human rights violations. Its open-ended wording leaves open the possibility that the list of names will lengthen. The E U looks set to eventually pass similar legislation.

Meanwhile, the uncertain fate of Cyprus, once the favourite playground of Russia’s wealthy for its unbeatable combination of sea, sand and flexible approach to financial services regulation, may yet strike another holiday destination off the list.

In Soviet times, only the elite could travel. Today, it is the reverse: almost anyone in Russia can afford a week or two in Turkey or Egypt, but in some cases the foreign holiday dreams of the rich and powerful have been clipped, leaving them with few options. While Russia has the largest land mass of any country in the world, not much of it is suitable for high-end holidays.

“We don’t really have anything like Courchevel or the Seychelles here,” concedes Ksenia Sokolova, editor of Snob magazine, aimed at Russia’s wealthy consumers. “The only alternative is Sochi and the Black Sea coast.”

Sochi, “Russia’s summer capital” and blessed with beaches, has been getting a facelift to the tune of about $40bn to prepare for the 2014 Winter Olympics. “I think the Russian government has developed Sochi partly because there are going to soon be a lot more people in this situation, who can’t go anywhere else,” said Ms Sokolova.

It was the site of Stalin’s summer residence and Russia President Vladimir Putin and Prime Minister Dmitry Medvedev are often photographed on holiday there. “It’s the patriotic choice for vacationing,” said Ms Sokolova. “Wherever Putin is, is trendy.”

One fan of Sochi’s charms is Alimzhan Tokhtakhunov, who goes by the underworld alias of “Taivanchik”, or Little Taiwanese. He bought an apartment in Krasnaya Polyana, the mountain resort next door to Sochi, after fleeing an arrest warrant in the US on charges of bribing Olympic ice skating judges in 2002.
Sochi was a close substitute for Europe, he recently told an interviewer from the Russian edition of GQ magazine. “It’s lovely at night, you go out, the birds are singing, the river is rushing, a lot of my friends have bought houses and flats there.”

However, he complains: “It’s impossible to get a good meal in Sochi.” He hopes that “maybe things will improve when the Olympics are closer”.

Andrei Lugovoi, a Russian parliamentarian wanted in the UK in connection with the poisoning of ex KGB spy Alexander Litvinenko in London in 2006, was also circumspect about where he goes on holiday, given that he must stay in Russia and other friendly jurisdictions such as Belarus to avoid arrest.
Mr Lugovoi is, according to his press secretary, “a big fan of active recreation. In summertime it’s rafting, horseback riding, fishing and relaxing on a yacht. In winter Andrei prefers to relax by going skiing.” He declined to say where these activities generally occur.

Russians subject to travel restrictions do not like to brag about it. Sochi’s luxurious Grand Hotel Polyana hotel provides lodging for many a wealthy individual who may not be legal enough for Marbella or Courchevel. But the rule there is simple – don’t ask, don’t tell. “We really do not ask our clients this information, whether they can or can’t travel abroad. And, in general, they wouldn’t say,” said Anastasia Kozhevnikova, head of public relations for the hotel.

Restrictions on travel imposed by legal issues in western countries are not the main source of the stay-at-home bug. Increasingly there are limits on travelling abroad and owning property imposed by the Kremlin itself. Military and technical personnel with access to state secrets are largely forbidden from travel. And since 2009, high ranking officials in the security services are now nyevyezdnie or “unexitable”, a term which means they must get specific permission to go abroad.
Special travel agencies such as Voentur cater for those who have internal travel restrictions because of their in national security fields.

Online travel forums exist to advise on these issues – such as a thread in website forumok.ru titled “My husband is forbidden to travel. Where to go on holiday?” The suggestions range from the verdant slopes of the southern Urals, to the Black Sea beaches of Abkhazia, which, since it was invaded by the Russian army in 2008, “you can enter with a domestic passport” according to one contributor to the travel site.
Recently, Mr Putin has made it clear that senior Russian civil servants – who have been overcompensating for lean Soviet years by partying abroad in increasing numbers – are to spend more time at home.

With Russia’s relations with the west at a low point after Mr Putin’s return to power, and in the wake of the adoption of the Magnitsky law, the Kremlin has injected a note of xenophobia into public politics. Russia’s MPs, known for being a bit too enthusiastic about proving their loyalty to the sovereign, have proposed bans on imported food, a quota on foreign movies shown in theatres, and a ban on US adoptions of Russian children, implemented in December.

In the same vein, Izvestia newspaper last week reported that some deputies from ruling United Russia party were preparing a law requiring parliamentarians to request specific permission from the speakers’ office if they wanted to travel abroad.

The dire consequences for members of the elite who ignore the mood music was rammed home in February when Vladimir Pekhtin, a deputy in the Duma and head of the ethics committee, was deprived of his parliamentary seat after he was revealed to have not declared his interest in Miami real estate on the obligatory declaration.

Today, large groups of Russians who want to go on vacation together will increasingly stay in the country, says Ms Loftus. Ms Loftus recently organised a snowmobile tour of Siberia for a group of wealthy clients, complete with an ice bar in the middle of a frozen Lake Baykal, in Russia’s Irkutsk province. Hiking in the volcanic mountains of Kamchatka, she says, is also a favourite.

Russians with jurisdictional issues still have a lot of enviable foreign destinations at their disposal, said Alexander Lebedev, the billionaire London newspaper publisher, who for six months has been under a Moscow court-ordered travel ban due to a TV brawl in 2011.

“They can go to Cuba, they can go to the beach in Crimea, they can go hunting in Belarus. And hey, there is even North Korea”.
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