‘Glamping with an asterisk": how control over tourist accommodation will be tightened

State Duma have proposed to tighten control over tourist accommodation

Deputies proposed to classify all means of tourist accommodation. For this purpose, a single register will be created, which will also include beaches and ski slopes. But business warns that not everyone will want to come out of the shadows

Last week, on Wednesday 17 July, a group of deputies and senators introduced a bill in the State Duma that would classify a wide range of tourism facilities - accommodation facilities, ski slopes and beaches - and include them in a new unified register.

Among the authors of the initiative are Sangadzhi Tarbayev, head of the Duma Committee on Tourism and Tourism Infrastructure Development, Natalia Kostenko, Tatyana Lobach and Sergei Krivonosov, deputy chairman of the Duma Committee on Tourism, Nadezhda Shkolkina, first deputy chairman of the Duma Committee on Economic Policy, and Senator Andrei Klishas.

The Russian Union of Travel Industry (RST) has already called the bill revolutionary. The initiative will significantly expand the number of facilities providing temporary accommodation services to tourists and strengthen the government's control over the industry. The changes will affect thousands of accommodation facilities, which are now subject not only to classification, but also to a ban on their activities if they are not included in the Unified Register of Classification Objects in the sphere of tourism activities.

The tourism market participants  mainly support the initiative, but they also warn of some risks. How the unified register will affect the tourist accommodation market, how the changes may affect the availability of accommodation facilities and prices for consumers - in RBC's article.

Why tourist accommodation needs stars

The issue of regulating the tourist accommodation market in Russia has long been discussed by the authorities. The bill will take out of the grey zone most of the market participants who avoid state control and supervision, which will increase the level of fair competition in the market of tourist services, says one of the co-authors of the initiative deputy Tarbaev.

Classification (i.e. assigning hotels a certain category, or stars, according to the level of quality, comfort and service) Russian hotels began to undergo even before the Winter Olympics in Sochi in 2014, and then - in cities where the 2018 World Cup was held. From 2019, the law introduced a phased mandatory classification of hotels: from 1 January 2019 it was passed by large hotels - from 50 rooms and above, and already from 1 January 2022 - all hotels without exception. However, these requirements did not affect a significant part of the market - guest houses, mini-hotels and other accommodation facilities located in the private sector.

The fact that only hotel services provided by hotels that have been classified (i.e. have a confirmed category corresponding to one or another star) are subject to regulation is a problem, according to the authors of the bill submitted to the State Duma. Hotel services are also provided by other accommodation facilities, such as modular hotels and glamping, which today in fact remain ‘out of sight of the state both from the point of view of the object of taxation and the quality of services provided,’ according to the explanatory note to the bill.

In addition, the current classification procedure, according to lawmakers, has shortcomings. Hotels in Russia have been obliged to confirm their compliance with a certain category for almost three years already, but not all of them meet the declared stars in terms of quality of services and room configuration. This is due, among other things, to the fact that the requirements to the organisations conducting the classification are in fact formal: the procedure is often carried out without specialists visiting the facility itself.

Who will be affected by classification

A bill submitted to the State Duma by deputies and senators proposes to extend the requirement for classification to all accommodation facilities which provide services for tourist accommodation. It will also include ski slopes and beaches. An exception will be made for children's camps and sanatoriums, accommodation facilities of centralised religious organisations and their structures, as well as rural tourism facilities in farms.

The fact that the object has been classified and has the right to provide hotel services will be confirmed by information about it in the Unified Register of objects of classification in the field of tourism activity. Facilities that are not in this register will not be allowed to provide services to tourists.

The draft law does not explicitly state whether guest houses in the private sector, flats and flats for daily rent in the housing stock will fall under the classification. Requirements for types and categories of accommodation facilities will be established by the government in by-laws, according to the explanatory note to the draft law. On guest houses in the private sector is now considering another bill, which does not exclude that they may be affected by the new initiative, noted Vice-President of the PCT Georgi Mokhov.

Flats for rent may not fall under the classification, Tarbayev clarified to RBC through a representative. These objects are provided for accommodation under a rental contract and are regulated by civil legislation, while the provision of hotel services in apartment buildings is limited by housing legislation, the deputy reminds. Thus, in 2019, Russia adopted the so-called Khovanskaya law (after the surname of State Duma deputy Galina Khovanskaya, who initiated its adoption), which actually introduced a ban on the placement of hotels in apartment buildings. However, the law did not restrict the practice of providing hotel services in residential premises, such as flats and flats for rent.

How stars will be assigned

The authors of the draft law propose to revise the classification procedure and conduct it in two stages. At the first stage, owners of tourist accommodation will themselves assess its compliance with the mandatory requirements established for specific types of facilities and include it in a single register. At the second stage, specialists from organisations authorised by Rosakkreditatsiya will assign stars to the facilities and enter the results into the register. The authors of the draft law propose to increase the requirements for accredited organisations and experts conducting classification and to strengthen control over their activities (a separate register will be created for them). The issuance of a paper certificate of classification will be cancelled.

The visible result for the consumer will be the appearance of a unique identification number for each tourist accommodation object. This number from the unified register will be required to be indicated, including aggregators and online services for the search of tourist accommodation. Owners of online platforms will have to check the reliability of information about the object (i.e. a link to the unified register). Subjects of Russia at the regional level will control the presence of accommodation facilities in the unified register. They will also check information about the facility in the register itself, in advertisements, and on the aggregator owner's website. Offending hotels may have their classification suspended, and aggregators will be obliged to stop distributing information about the services of the facility. Absence in the register threatens with liability in accordance with the Code of Administrative Offences, including negotiable fines provided for hotels by Article 14.39 of the Code of Administrative Offences.

The first stage of the procedure - inclusion of accommodation facilities by owners in the unified register on the basis of self-assessment using a check-list - will be mandatory, Natalia Savelyeva, Deputy Director of the Department of State Policy in the sphere of licensing, control and supervisory activities, accreditation and self-regulation of the Ministry of Economic Development, explained to RBC. Hotel owners will make their own decision on receiving categories, i.e. stars, which will be assigned by accredited organisations, Savelyeva points out. ‘For bona fide market players, a unified register may become a competitive advantage. And those who do not claim to receive star categories do not need additional involvement of specialists of organisations conducting classification, so for them this procedure will not entail any financial costs’, - adds Savelyeva.

How soon the new requirements may become effective

The current version of the draft law states that, if adopted, it will come into force from 1 October 2024. Accommodation facilities providing temporary accommodation services for tourists will be able to operate without inclusion in the unified classification register until 1 January 2025. The terms may be adjusted, Tarbayev said.

The change of legislation should be accompanied by the creation of an understandable mechanism for business, and it is absolutely necessary to take into account the transition period, insists Vice-President of the PCT Dmitry Gorin. The reform is ‘too large-scale and cardinal’, Mokhov points out. ‘It takes at least a year to carry out all the procedures and launch the new federal register,’ the expert believes.

The industry will need a transition period to fine-tune the work of the register processes and, most likely, a period for voluntary classification, Yandex Travel agrees. The proposed timeframe for the transition to mandatory classification by 1 January 2025 seems very tight, says Vadim Melnikov, General Director of MTS Travel. According to him, in order to carry out classification on such a scale, a stable technological platform is needed, which will be understandable to hoteliers. To set up the work, Melnikov proposes to first conduct a pilot project in one of the regions, ‘not the most popular in terms of tourist traffic’, and then scale it up to the whole country.

Will there be less tourist accommodation

The Association of Travel Aggregators (ATAG) supports the initiative of deputies and senators, but points out some risks. Creation of registers of all unclassified accommodation facilities - small hotels, camping, glamping, guest houses - requires a lot of work, and there is a high probability that by the date specified in the bill they will not be ready, and aggregators will not be able to work with facilities outside the registers, is concerned about the director of ATAG Yulia Skoromolova. In her opinion, this may contribute to the departure of many accommodation facilities in the grey zone - in social networks and other online platforms.

The introduction of a unified classification will increase the transparency of the market, but many small accommodation facilities will simply not be able to meet the conditions of the register and classification - this will push such facilities into the grey zone, fear in ‘Yandex Travel’. As a result, the consumer may suffer - the number of available for booking tourist accommodation, which at times of peak demand in popular destinations and so lacking, will decrease. Information about the objects from the grey zone will be less transparent and will not be checked, the service adds.

Classification of all accommodation facilities may further drive the market into the shadows, as the requirements for hotels are not suitable for residential houses, says Natalia Stambulnikova, chairwoman of the Association of Small Hotels of Crimea. ‘It is necessary to introduce the concept of a ‘guest house’ into the law and spell out the requirements for it, as it cannot comply with the same requirements for hotels,’ she insists.

Guest houses will not go into the shadows, because today the lack of legal status prevents them from developing their business, objects Roman Sabirzhanov, chairman of the board of the interregional public association ‘Union of Hoteliers’. Moreover, the adoption of this law will stimulate the opening of new facilities, and the market of tourist accommodation in the perspective of one and a half two years can double, the expert believes.

Will classification affect prices

The experience of classification in Sochi and the cities hosting the 2018 FIFA World Cup has shown that assigning stars to hotels has virtually no effect on the cost of accommodation, the Association of Tour Operators of Russia said. Prices are much more influenced by other factors - seasonality, peak demand, class of the property, its geographical location or marketing.

Vadim Prasov, vice-president of the Federation of Restaurateurs and Hoteliers, agrees that classification cannot lead to an increase in the cost of accommodation. The procedure itself is ‘not expensive’, and prices on the market, as a rule, depend on demand, he adds. Gorin of the PCT adds that only a general increase in tax and financial burden affects the cost - ‘and the consumer pays for that’.

Accommodation for tourists at more favourable prices is offered, as a rule, by the segment of flats and serviced flats - against the background of rising prices in hotels it allows to keep travel around the country affordable, says Denis Drozdovskiy, head of hotel direction of OneTwoTrip service. ‘If we overdo the sanctions and tighten the requirements excessively, there is a risk of losing this price advantage,’ he warns.