In 2010, following a string of terrorist attacks in the volatile North Caucasus, Russia’s government announced a $15bn programme to turn the region into a tourism mecca. Fifteen years later the programme seems to have delivered results, but not for the intended reasons. Following COVID, war and sanctions, many Russians have looked inward for tourism, spelling an economic boon to many once-neglected regions.

When I first reported from Russia’s North Caucasus fourteen years ago, a federal initiative to invest $15bn in funding to the volatile region (presented by then-President Dmitry Medvedev at the Davos World Economic Forum) with the hope of calming ethnic tensions and stimulating the local economy through tourism and ski resorts seemed like a castle in the air. The Second Chechen War had just ended and the previous year a bomb blast in adjacent North Ossetia had killed 19 people. The region was under a counter-terrorism regime and even state newspapers at the time moaned that neighbouring Dagestan was fast becoming the new Chechnya as the area descended into sectarian violence. The next Courchevel it was not meant to be. Or so it seemed at the time.

Last year over 6mn tourists flooded Russia’s North Caucasus Federal District, up from 1.2mn just 10 years earlier. The number of hotels in the region has tripled since 2010. Dagestan is now more famous in Russia for trips to its Sulak Canyon, which is deeper than the US’s Grand Canyon and its coastal Derbent winery along the Caspian Sea. Overall crime in the North Caucasus is now half the national average, although the occasional incident still grabs national headlines (during my trip in May three local policemen were murdered in the Dagestani capital of Makhachkala).

State-owned Kavkaz.RF development corporation, which was tasked with building the region’s ski resorts and other infrastructure back in 2010, boasts that it has constructed over 60 kilometres of ski slopes, attracted 1.4mn tourists in 2025 alone, created 4,600 local jobs and earned RUB15.6bn ($200mn) in revenue for the residents of its special economic zones. But even its head, Andrei Yurmashov, admitted the corporation is only responsible for 30% of the total amount of tourists in the region. This story runs deeper than glitzy PowerPoint presentations and tax incentives.

Russia’s Grand Canyon

I could think of no better personification of the changes Dagestan and other North Caucasus regions have gone through over the last 30 years than 48-year-old guide Shamil Sultanmuradov. A practising Muslim and native Avar (one of Dagestan’s two major ethnic groups), Sultanmuradov has lived his entire life in the region. A veteran of both Chechen wars, he retired from the police as a major in 2022 and has since found his calling by welcoming visitors to his beloved homeland.

Ruins in the ancient city of Goor overlook the Caucasus Mountains

“More and more people are showing up every year. Once you have the right contacts and a respectable presence on social media, you can make good money during the tourist season,” he explained as we marvelled at the 3,000-metre high mountain peaks above while meandering along a newly paved valley road in the Goor Valley toward an ancient stone village of the same name.

Dagestan’s Sulak Canyon is deeper than the USA’s Grand Canyon

Exact figures are difficult to pinpoint, but a national franchising portal estimated profits from launching one’s own tourism agency in the Dagestani capital of Makhachkala as starting at RUB400,000 monthly ($5,000), not bad for a region with an average official monthly salary of RUB44,000 ($550). Albeit, this varies heavily by month, with guests arriving overwhelmingly during the tourist season (May-September). Last year, the regional government estimated that tourists had brought in RUB22.3bn ($280mn) in revenue to the local government, with Governor Sergei Melikov aiming for the sector to account for no less than 15% of Dagestan’s budget.

“War has no winners, everybody loses,” Sultanmuradov remarked solemnly when recalling his time in combat. “This is the way forward. We’re known in the Caucasus for our hospitality: warm, welcoming people, great cuisine and unfathomable beauty. I want to share this with the world!” He added that recently it’s been mostly tourists visiting from other parts of Dagestan and across Russia. “COVID, war and sanctions took their toll. Now for tourism we in Russia are very much looking inward. We get folks from all across the country: Vladivostok to St. Petersburg.”

A tasting at the Derbent Winery on the Caspian coast

In Dagestan, unsurprisingly, there’s plenty of diversity of all kinds on offer for any guest: geographic, ethnic and linguistic. The interior is host to some of Europe’s highest mountains (Mt. Elbrus, the tallest peak on the continent, lies a few hundred kilometres west in another region); the Caspian coast reminds one of California. In the mountains, where Muslim traditions abound, I was discouraged from wearing shorts in the sweltering sun. In Derbent, a city that claims to be Russia’s oldest at 5,000 years, I toured an ancient citadel in the hills and a winery along the coast on the same day. Dagestan is home to 30 ethnic groups and 81 nationalities. “There are about 30 different spoken languages here as you travel [from] village to village and none of us understand each other,” Sultanmuradov laughed. “Russian is the common denominator.”

Shamil Sultanmuradov (left) taking visiting tourists on a boat ride at the bottom the Sulak Canyon

When I asked why anybody would bother to holiday in Turkey or Dubai when we’ve got all this at home, he smiled: “We get that a lot from our guests.”

Derbent's ancient citadel

Powder dreams and Alpine scenes

A few hundred kilometres west of Dagestan, in the region of Karachay-Cherkessiya, the now-bustling ski resort of Arkhyz welcomed its first guests for the 2014 winter season following the announcement of Medvedev’s plans. Last year the resort hosted a million guests. At the time, local Anzor Botashev was studying criminal law at Moscow State University.

“When the resort opened, a relative offered to sell my family a plot of land in the town of Arkhyz (adjacent to the ski resort of the same name) to open a hotel,” he recalled. “It was a spontaneous decision. Around 2018 we invested RUB15-20mn ($180,000-$250,000) to set up a small eight-room guest house. The project did so well that we reinvested the money to open a café and restaurant and add another building. We now have 30 rooms and a heated year-round pool. Next year we plan to open a full spa and children’s recreational zone. Maybe eventually we’ll add a third guest house. One hundred square metres of land only cost RUB100,000 ($1,200) when we bought it; now the land is worth 10-15 times that and it’s expected to grow at the same rate for the foreseeable future.” The hotel complex is called Gornaya Roza (“Mountain Rose”) today.

A hiking trail near Arkhyz in the Caucasus Mountains

In the summertime, local tour companies offer everything from hiking to ATV rentals and white-water rafting. “We had some guests from Europe and the Middle East before 2022, but since then it’s been all people from other parts of Russia: mostly Moscow, St. Petersburg and the South. In the beginning they used to tell us they only came to this ski resort because going to France or Austria was too complicated. We don’t hear that much anymore,” Botashev grinned. “Now the ski resort in Arkhyz is considered second in Russia only to Krasnaya Polyana in Sochi [home of the 2014 Olympics].”

“Arkhyz itself has changed like night and day since the resort opened,” added Botashev. “In the beginning it was just a couple of minor slopes. Now they have restaurants with gourmet dishes including steaks and sushi. New four- and five-star hotels are opening every year. I just couldn’t imagine all this in Karachay-Cherkessiya before!”

Anzor Botashev outside his Gornaya Roza (“Mountain Rose”) hotel complex in Arkhyz

“The logistics are definitely complicated. Despite all the development, we’re still up in the mountains and far away from any major cities. We used to have problems with power outages until we got our own generator. Sometimes we lose water. Getting a specialist to come up here and fix anything can be difficult,” explained Botashev.

He also cited a lack of qualified staff and local zoning regulations as major hurdles. “The restaurant is a lot more difficult to run than the hotel. We have immigrants from Turkmenistan working for us. I don’t know how we’d get by without them! I heard from colleagues operating hotels in Moscow that they’ve hired people from the Philippines,” said Botashev. He cited monthly wages of RUB90,000 ($1,100), more than double the local average.

COVID was a mixed blessing. “There were at least as many minuses as there were pluses for us. International borders closed – yes. But people were also afraid to fly and we had to close partially due to epidemiological restrictions.”

Overall, however, Botashev has no complaints about his unexpected career turn. “I actually had no plans to go into hospitality, but got pulled in. It’s been great!”

A front view of the Gornaya Roza (“Mountain Rose”) hotel complex in Arkhyz

Northern Lights

The tourism boom has not just been confined to the North Caucasus. Former President of the Sochi 2014 Olympic Organising Committee and now-Deputy Prime Minister Dmitry Chernyshenko estimated Russians took 92mn vacations domestically in 2024, a historical record and up from 78mn in 2023. Online booking service OneTwoTrip reported the most popular destinations as Moscow (25%), Sochi (13.5%), St. Petersburg (10%), Kaliningrad (8%), Mineralniye Vody in the Caucasus Mountains (3%), Yekaterinburg (3%), Makhachkala (3%) and Kazan (2.5%). Recent trends include a preference for resorts along the Black Sea coast, ancient cities, far-flung nature and personalised tours offering unique experiences, with tourists citing improved infrastructure. Russia’s state statistics agency estimated tourism accounted for 2.8%, or around $57bn, of the country’s GDP in 2023 and employed around 1.1mn people. International industry reports expect this figure to exceed $130bn by 2034.

However, lack of infrastructure and, specifically, hotels is cited as the biggest problem the sector faces today. The state has already invested RUB788bn ($10bn) into subsidising hotel construction for private investors as part of the government’s Tourism and Hospitality Industry national project; it has committed RUB1.2 trillion ($15bn) into new projects nationwide, sometimes in unlikely places. In addition to developing infrastructure, the program also offers free training courses in hospitality to anyone working in tourism.

Alexander Plekhanov of the town of Medvezhyegorsk in Russia’s northern region of Karelia (across the border from Finland) took advantage of the training and was eventually awarded Best Guide from his home town at an international ceremony in Moscow this year. For the last seven years, he’s been introducing guests to the many offerings Karelia has for tourists.

“I’ve always loved traveling and history. Back when the kids were young, we used to do road trips in our van to go camping in places as far away as Italy and Spain. The last one was in 2017; since then, many things have changed,” recalled Plekhanov.

After he lost his job in 2018, Plekhanov’s wife – who worked at a tourism agency – suggested he give local guiding a try. “The great thing is that my startup costs were very low: I got a RUB2mn ($25,000) additional van on credit and eventually bought three electric ATVs for RUB600,000 ($7,500) to transport guests. Otherwise, all I need is enthusiasm, curiosity and the ability to communicate with people,” he said.

Alexander Plekhanov shows off his guiding award in Moscow

Plekhanov offers tours to the legendary White Sea-Baltic Canal, quad biking in the woods to various historical sites (including bunkers from Finland’s occupation of the area during WWII) and hikes to scenic local vistas. On my trip, we got to pick mushrooms while driving through the woods on our ATVs at no extra cost. “The meetings in Moscow gave me confidence in what I do and allowed me to exchange experiences with other guides from across the country. It turned out losing my job was a blessing in disguise – I enjoy my new career much more!”

But Plekhanov is keenly aware of the infrastructure problems cited by Russian authorities. “We have one gas station in town and there are huge lines in the summer. There aren’t nearly enough roads and trails to meet demand; ditto for hotels and even restaurants. The municipal authorities don’t have the funds for any major projects,” he said.

View from a quarry outside Medvezhyegorsk on the Kumsa River

Plekhanov cites COVID, the difficulty in getting a visa and currency fluctuations as reasons why many Russians have chosen to vacation domestically in recent years. “It used to be just people from Moscow and St. Petersburg who came, and now it’s from all across the country. We’ve even had guests from Chukotka (a region across the Bering Sea from Alaska) and China. I see great potential for the future if we could get the infrastructure in place. There’s a town not far from here called Sortavala, where they have a famous steam retro-train. They’ve got national attention and the federal funding flows in. Hopefully we can benefit in the future, too,” mused Plekhanov. Seasonality is also a big factor in Medvezhyegorsk: in the winter, most of the sites Plekhanov showcases are covered in snow.

A tourist enjoys quad biking through the Karelian forest

Even further north, past the Arctic Circle, lies the town of Apatity in the Khibiny Mountains, where entrepreneur Denis Solozhennikov has invested heavily in his resort complex, called Ogni Imandry (“Lights of Imandra”), on the banks of Lake Imandra. Originally from Moscow, Solozhennikov moved north on business as an employee of PhosAgro, a major chemicals company. Ahead of an IPO on the London Stock Exchange in 2011, the company’s management moved to shed non-core assets and Solozhennikov saw the opportunity to buy and renovate a Soviet-era resort for mine workers.

“People said I was crazy at the time,” he beamed. “They told me that if I wanted to get involved in tourism I should invest in some beach properties down south.” Today his sprawling complex offers several cottages by the lake, a restaurant, petting zoo, ethnic village, camping, BBQ and kayak rentals. Solozhennikov personally leads jeep tours of the nearby historical mining town of Kirovsk and adjacent Khibiny Mountains. A glitzy museum run by PhosAgro that demonstrates the technology behind mining and some local history is free to the public in central Kirovsk.

“We get lots of foreigners today, especially from China, Thailand, India and the Middle East. Sometimes large busloads of people come from the airports in Murmansk and Apatity. We also get private groups, some of them Chinese students studying at Russian universities on holiday. I guess for many people from that part of the world it’s exotic to be so far north and try to spot the Northern Lights. It’s like when I holiday in Thailand to be on a warm beach,” Solozhennikov grinned.

Cottage at the Ogni Imandry (“Lights of Imandra”) complex on the banks of Lake Imandra above the Arctic Circle

 

Kirovsk has a ski resort that slopes directly into its centre. “I’ve seen Chinese tourists come up to ski on their own, without any guided tour,” added Solozhennikov. “I think COVID, geopolitical events and partially closed borders definitely gave domestic tourism a boost. Most of our visitors are Russian, of course. I’d say the biggest barriers to development today are connected to high interest rates and a lack of qualified people trained in hospitality. The state is trying to help with its big national project,” he explained.

In 2018, Solozhennikov was recognised for his contribution to local tourism by the Murmansk regional government. “Overall, I’m satisfied with my decision to invest here,” he smiled.

 

Cheesemakers and connoisseurs

It’s not just locals taking advantage of the booming tourist scene. California-native Jay Close moved to Russia in 1993 after a stint as a chef in Paris. “I was always interested in what I was told was bad. As a kid growing up, that was Russia, Communism, rockets, Cuba, etc.,” he recalled. “In Paris I got to know some visiting Russian celebrities like [musician] Sergei Voronin and [fashion designer] Valentin Yudashkin. I showed them around; they were great guys. So, they invited me back home and I ended up staying in Russia.” Close recently received his Russian passport.

While originally working on various cruise ships as a chef, Close has recently gotten more famous for making cheese. “It all started out when I moved to the countryside [outside Moscow] and my girlfriend said ‘let’s get a cow and a bull and we’ll have milk.’ The cow got pregnant and soon we were milking 30 litres a day; I don’t have that many kids. So an old lady in the village showed me how to make cheese. I started sharing the cheese with friends and neighbours. Then I brought it to work [at a famous restaurant in central Moscow]. Soon my colleagues were telling me not to come to work, just to make cheese. Then I got a deal with [farm-to-table food delivery service] Lavka Lavka. My big break came when Rolling Stone Russia editor Boris Akimov profiled my farm and I soon found myself talking to Al Jazeera and the BBC.”

Today Close welcomes guests to his farm for master classes on cheesemaking and has his eye on renovating a few guest bedrooms atop his restaurant/café for overnight stays. He’s spent around RUB4mn ($50,000) on the farm to date and sees great potential in the future. “When I came to Russia there almost was no tourism. Then the Germans, Austrians and Swiss came. Now with flights to the West blocked off, it’s people from all across the country, with a few foreigners sprinkled in.”

Jay Close (right) gives a master class in cheesemaking

 

John Maxwell Kopiski has taken agrotourism a step further: a British-born entrepreneur who has spent the past three decades in Russia, he is one of the most colourful and unconventional figures in Russian agriculture today. A former steel and coal trader, Kopiski is now best known for his pioneering work in dairy farming and rural tourism in the Vladimir region east of Moscow, where he owns the well-known Bogdarnya farm. Born in 1949 in London, Kopiski began his career in international trade, working for steel trading firm Coutinho Caro & Co and later managing operations in Bangladesh, Pakistan and South Africa.

His journey to Russia began in the early 1990s, initially through coal ventures. After the collapse of the Soviet Union, he acquired a mine in Michurinsk and founded Michurinskugol, eventually relocating permanently and taking Russian citizenship in 1993. It was shortly after this move that Kopiski, inspired by the Russian countryside and his deepening connection to his adopted homeland, shifted focus from mining to farming.

Investing heavily in agriculture, he established the Bogdarnya and Christmas dairy farms in the Petushinsky district, building one of the largest private dairy operations in the country. The Christmas complex alone saw tens of millions of dollars in investment ($8mn in soft loans) and became part of Russia’s national agricultural development programme. At its peak, it supplied milk to major food producers including Wimm-Bill-Dann (owned by Pepsi) and the baby food brand Agusha. The business was sold in 2015 for $100mn, allowing Kopiski to return full-time to Bogdarnya, his true passion.

Today, Bogdarnya is not just a working farm with around 400 head of cattle; it’s a thriving agro-tourism destination. Visitors can engage in horse riding, sports activities and even sailing. The complex features three hotels. Kopiski, now in his 70s, teaches riding himself and maintains a stable of native Russian breeds such as the Vladimir heavy draft horse and the Orlov trotter. He’s also reviving traditional Russian sleigh racing with three-horse teams, a practice nearly lost to time.

Deeply involved in community and spiritual life, Kopiski has also restored several Orthodox churches in the region, including the Church of the Holy Myrrh-bearing Women in Krutovo and a chapel dedicated to St. Blasius, the patron saint of animals. His life is a rare blend of business acumen, cultural integration and rural revival – an Englishman who has become a distinctly Russian success story.

Calm in the storm

As bne IntelliNews reported, perhaps paradoxically, the war in Ukraine has been a great equaliser for Russian society: most of Russia's military production facilities are located in poor towns deep in the interior, which have been transformed by a torrent of investment. Many of the country’s poorest regions have seen the most economic growth in a generation as state money has poured in to modernising old plants and infrastructure. The military recruitment drive has also boosted soaring bank deposits as volunteers sign up to receive salaries that are triple the national average. As a result, a recent poll showed the war has reduced inequality and made Russian society fairer.

Tourism, it seems, has also played its part. Of the regions I visited, two (Dagestan and Karachay-Cherkessiya) are among the country’s 10 poorest in terms of GDP per capita. The surging number of tourists have brought not only national attention, but valuable investment and consumer spending, breathing new economic life into previously forgotten and isolated parts of the country. A new middle class of savvy entrepreneurs of various ages and backgrounds has moved in to take advantage of the economic transformation.

“The Russian man harnesses slowly, but rides fast,” Otto von Bismarck supposedly remarked. In the end, just like with Russian wine and agriculture, the tourism story is one of resilience, perseverance and, ultimately, prosperity under immense external pressure.