Uzbekistan debut as 'must-visit' destination delayed, but not derailed
In 2019, Uzbekistan was one of the fastest growing tourism destinations in the world. The combination of improved flight connections, a visa-free regime for 86 nationalities, investment in hotels and transport infrastructure, and proactive marketing of Uzbekistan’s tourism products abroad catapulted the country to the top of multiple “where to go” lists, including Lonely Planet’s trend-setting Best in Travel. The industry was rightly buoyed with energy and optimism, with Uzbektourism expecting to attract 7.55 million tourists in 2020, rising to 11.81 million a year by 2025. It’s therefore all the more devastating that just as Uzbekistan’s tourism sector was starting to flex its wings and fly, the COVID-19 crisis has wreaked its carnage.
Globally, 2020 will surely go down as the darkest year in history for international travel. UNWTO recorded a 98 percent drop in international tourist numbers in May, and fears job losses in tourism may reach 120 million. Uzbekistan, like so many other destinations around the world, will record next to no foreign tourist arrivals this year.
The Government of Uzbekistan recognises that travel and tourism is one of the most adversely affected economic sectors, however, and has thus made unprecedented interventions. These include a bailout of UZS 20 billion (USD 1.95 million) from the Anti-Crisis Fund; exemption from property and land taxes, and a reduction in income and social taxes; suspension of tourism fees; financial incentives for hotel investments; grants for innovative business ideas; and targeted, interest-free loans. Whilst these measures cannot compensate for the total loss of revenues, they do give the tourism sector some breathing room, and a chance to plan what a more sustainable, post-COVID tourism future will look like.
UNWTO has identified “Innovation and sustainability” as priorities for tourism recovery. These are areas which Uzbekistan, in its rush to grow, has previously overlooked. The current hiatus in tourism offers the country the opportunity to rectify that oversight and put the sector on a foundation which is not only economically viable, but also environmentally sustainable and socially acceptable.
Previously, Uzbekistan has pursued a mass tourism model, prioritising growth in the volume of tourists, but without attention to the value that those tourists bring. In 2017, 6.7 million international tourists visited Uzbekistan, contributing USD 1.3 billion to the economy. This equates to just USD 194 per tourist, reflecting the fact that most visitors come on short trips from neighbouring countries and spend very little during their stay. Mass tourism is problematic because it frequently results in overtourism, damaging natural beauty spots and fragile historic sites, and putting an excessive pressure on local infrastructure. Cities such as Bukhara, Khiva, and Samarkand are already victims of overtourism, experiencing overcrowding in high season; ugly and inadequately controlled real estate development; increased demand for water and waste management; and traffic problems.
What Uzbekistan needs to do is to shift its focus away from mass tourism to niche and high profile tourism. Niche and high profile tourism typically include small-scale and low-impact activities, focusing on the promotion of local communities and the conservation of natural resources. Key features include the active engagement of local stakeholders; the effective regulation and monitoring of construction and tourism activities; ensuring climate resilience; eliminating or recycling waste; valuing biodiversity and cultural heritage; developing eco-friendly infrastructure; and protecting environmentally sensitive ecosystems. The objective of this shift is to increase tourism revenues without increasing the number of tourist arrivals, which is possible because the per capita spend of these tourists’ is much higher than that of mass market tourists. The COVID crisis reinforces this recommendation, as in an economic recession, it is budget tourism which is the worst hit; and those who can still afford to travel will be prepared to pay more for a higher quality product and the ability to social distance.
Redirecting Uzbekistan’s tourism sector requires a collaborative approach from both the public and private sectors. One pressing need is in the expansion of flight capacity—demand for plane tickets outstrips availability in high season, unnecessarily restricting the flow of high spending tourists from Europe, the Middle East, and Southeast Asia. The government has signed up to the Open Skies regime to enable third-country airlines to use some regional airports (Bukhara, Urgench, Nukus, Termez, Navoiy and Karshi) without any restrictions; while airlines from IATA member countries are also now permitted to use Andijan, Ferghana, Namangan, and Samarkand airports (on routs that not operated by the Uzbekistan Airways). A significant 49 percent of Uzbekistan Airways’ shares are expected to be privatised in the medium-term, allowing investors to buy into the state-owned airline, bringing much needed international expertise as well as capital. More needs to be done to enable foreign airlines to compete on a level playing field, however, so that they might expand the flight network and bring down the cost of flight tickets. State interventions may include offering financial incentives to encourage new airlines to enter the market, or operate charter flights on busy routes in summer; as well as co-funded marketing activities.
The transition to niche and high profile tourism demands new products and a general upgrading in quality, with numerous opportunities for investors. The early success of the Amirsoy Mountain Resort in Tashkent Region, which opened in winter 2019/20, demonstrates Uzbekistan’s ability to provide world class winter sports facilities. Investing in the neighbouring Beldersoy and Chimgan ski resorts (both of which were built in the Soviet period and require modernisation) would expand the ski area to a level whereby it can compete with major resorts in Europe. Greater availability of winter sports products will also extend the tourism season in Uzbekistan, making it a year-round destination.
Investment in winter sports infrastructure, including access roads and high quality accommodation, also opens up mountain regions for adventure tourism in summer. Adventure tourism is likely to be one of the biggest post-COVID tourism trends on account of its low risks of virus transmission: it takes places outdoors, in fresh air, and most activities are naturally socially distant. Uzbektourism and private sector businesses should collaborate to map, build, and promote long-distance hiking and mountain biking trails, as has been done successfully with the Via Dinarica in the Balkans, the Pacific Northwest Trail in the USA, and the Camino de Santigao in Spain. This will spread tourism to new areas of the country, reducing pressure on the UNESCO World Heritage Site cities and creating employment opportunities for guides, porters, guesthouse owners, cafe staff, etc. in rural communities.
Overlapping with this, Uzbekistan has huge potential for niche tourism activities such as birding and astro-tourism (star gazing). Both of these activities are high value, low impact tourism products, which work best in areas where human development is minimal. Developing birding requires small scale investment in training birding guides, protecting birding habitats, and constructing or upgrading small, environmentally friendly forms of accommodation, such as eco lodges, so tourists can stay close to the birding sites. Serious astro-tourists will want to stay deep within Uzbekistan’s national parks where there is no light pollution, either in astro-stays (homestays where the host has a telescope and has been trained as a dark sky guide), or in a purpose-built dark sky hotel with its own astronomical observatory and resident astronomer. Astro-tourism can also be offered as an additional activity for general adventure tourists, adding value to hiking, yurt stays, etc.
In addition to these specialist forms of accommodation, there are investment opportunities across the hospitality sector. There is a recognised shortage of quality accommodation in key locations, especially in high season (April-October); and what is available often falls short of international tourists’ expectations. Accommodation providers are compelled to improve their facilities to meet new COVID safety guidelines. They should go beyond the minimum, however, segmenting their target marketing and redesigning their product offering to meet the needs and tastes of specific groups. The government is offering financial subsidies to investors who build 4 star and 5 star rooms, but upgrades should not just be tick box exercises. Capturing the maximum value from the tourism supply chain requires hoteliers (and, indeed, all entrepreneurs in the tourism sector) to be more sensitive to the nuances of the market, to identify gaps, to innovate, and to deliver truly world class products and services.