Spreading The Wealth

A decade ago, hotels in princely palaces in Rajasthan, India, were the preserve of wealthy Western tourists. "The only locals you'd see were either in the fields or serving you drinks," says London lawyer Rory White, a veteran India traveler. No longer. These days, you're less likely to see Europeans than wealthy Indians at the Lake Palace in Udaipur and well-to-do Chinese at the Red Capital Ranch boutique hotel near Beijing, with its gorgeous views of the Great Wall.

Across Eurasia, local middle-class travelers are increasingly choosing to vacation in their own countries. They've created a boom in domestic travel that has rapidly raised the level of accommodations and services. Many have traveled on package tours abroad, and are demanding the same amenities they found overseas, from spa treatments to high-thread-count sheets. And their demand for upscale travel is reaching even the most remote corners of the earth, from Tibet to Siberia, where posh hotels are opening in areas once hospitable only to backpackers. Richer tourists want "something more sophisticated than beaches and unlimited buffets," says Svetlana Gracheva of Moscow's exclusive "VIP Tours" agency—and that means trips far off the beaten path, from the once forbidden old city of Lhasa to the mountains of Tuva, on the Russian-Chinese border.

No country embodies the trend toward upscale domestic travel more than China, where the purchasing power of the middle class has expanded at an astonishing pace over the last decade. Currently there are 320,000 millionaires in the country, worth a total of $1.6 trillion, whose free-spending ways have driven the country's luxury-goods market to grow by 28 percent a year. And these big spenders don't just want to buy pretty things; they want to see beautiful places increasingly in their own country. Shao Qiwen, director of China's National Tourism Administration, predicts that China's tourism business will be worth a staggering $128 billion this year, much of that coming from an estimated 1.5 billion domestic travelers. Many Chinese "can afford to spend an average of $20,000 per trip per couple," boasts Lily Liu, one of the organizers of last November's first-ever China Luxury Travel Fair in Shanghai, which brought high-end hoteliers and tony travel providers together with prospective clients.

Russians, who for decades vacationed in the Baltics, are rediscovering the joys of home as well. "Russians like everything Russian again," says Alexander Sarayev of Russia's Federal Tourism Agency. "They want to spend their money at home. Russians' interest for their own history and culture is reawakening," he says, thanks to a growing national pride—and the difficulty of getting European visas, now required for former Russian favorites like Cyprus, Romania and Bulgaria. Last year, domestic travel in Russia grew by 15 percent, while the number of Russians going abroad increased by just 1.9 percent. This year, 25 million Russians are expected to vacation in Moscow, St. Petersburg, the Black Sea coastal resorts of Sochi, Anapa and Gelendzhik, or in the woods of Lake Baikal and Karelia.

India, too, has really embraced local tourism, offering a huge range of new options for travelers. Millions of Indians flush with cash are flocking to palaces that have been turned into hotels and castles with modern world-class spas. Even many traditional Hindu pilgrimage spots like Varanasi on the Ganges and Rishikesh in the Himalayas now boast luxury accommodations. "Low-cost airlines and rising salaries have greatly contributed to the growth of domestic tourism," says Subhash Goyal, president of the Indian Association of Tour Operators, which hopes that 65 million moneyed people will travel within India by 2010.

Rakesh Mathur, president of Welcome Heritage, a joint venture of ITC Hotels and Maharaja Gaj Singh of Jodhpur, is leading a boom in Indian heritage property hotels. The company already has a portfolio of 50 resorts and retreats. "We offer a fort resort at the rim of a desert, a country resort in the lap of a green valley or a jungle lodge in a wildlife forest reserve," he says. "Our aim is to provide an experience where you get away from all that is ordinary and enjoy something exclusive." Half of his guests are wealthy Indians like Ravneet Kler, a senior manager in a New Delhi travel agency. Last December, Kler took his wife and 7-year-old son on vacation to Rajasthan. After two nights in a palace suite adorned with original antique furniture and paintings, the family set out to enjoy the rural charm of a farmhouse with modern amenities. Kler rounded off the holiday with two nights at the 14th-century Kesroli Hill Fort, and was converted to Indian travel for life. "We can now spend the rest our lives traveling within India, and in comfort and luxury," he says.

China's new elite are rediscovering an ancient local tradition: hot springs and spas. Outside Beijing's Sixth Ring Road, far from the turbulent urban sprawl of China's capital, I Spa provides an oasis of comfort and indulgence, centered on a series of roiling pools of mineral-rich water. Last year the spa opened a small boutique hotel called the Napa Club, featuring what the brochure calls "Californian nobleness and elegance." Though the hotel décor is distinctly American, the clientele is almost exclusively Chinese; they even have a Hunanese chef to cater to spice-loving guests from southern provinces. Napa's Escape the City package is a favorite with beleaguered businesswomen; it includes a detoxifying body scrub meant to remove the poisons that have accumulated from Beijing's polluted atmosphere.

Russian holidaymakers, understandably, look for warmth and sun. During the winter, they flock to traditional hot spots like Egypt, Turkey and Dubai. But during the summer months, more and more Russians are returning to their own Black Sea coast, lured by cheap flights and Russian-speaking service. Old Soviet-era sanatoriums and resorts around Sochi and Crimea in Ukraine are being refurbished, and new hotels are springing up in anticipation of Sochi's 2014 Winter Olympics bid. But even Sergey Gorsky, director the Moscow International Travel and Tourism Exhibition, admits that Russian destinations still have a way to go before they can truly compete. "Egypt is famous for its Red Sea, corals and pyramids, Greece for ruins, Italy for architecture," he says. "What does Russia have to offer to our middle class, spoiled by the luxury and beauty they have experienced abroad? Sochi is not much cheaper than Turkey and service is still much worse. "

Yet away from the overpriced beaches, Russia offers plenty of wonders that locals are starting to discover for themselves. "Russian middle-class tourists have had enough of 'all inclusive' Turkish service," says Guly Alexander, a writer for Vacation to Russia magazine. "Russia can offer so many exotic treasures: hot springs in Kamchatka, sulfur springs in Caucasus, the beautiful Pacific beaches of the Far East, the mountains of the Altai." More than 200,000 Russian tourists visited Siberia's crystal-clear Lake Baikal last year—four times more than the year before—drawn by a new tourist railway along the shore and a summer shaman festival. A similar number of Russians even visited Magadan, the remote far-eastern region famous only for its old gulags.

Other remote areas are beginning to develop their upscale tourist trades, too. Lhasa, Tibet, has three high-end hotels under construction, including the St. Regis and the Park Hyatt. The House of Shambhala Lhasa, a boutique hotel with 10 luxury rooms all done in traditional Tibetan style, opened last summer, catering to high-end Chinese travelers. It boasts a Himalayan menu combining traditional Tibetan favorites with a fusion of flavors from India, Kashmir, Nepal and western China, a teahouse, a spa and retail space for the produce of the Shambhala Foundation's culturally sustainable microenterprises. The Shambhala's founder, Laurence Brahm, takes pride in the fact that only local workers and materials (except for electrical wiring) were used in the construction of the hotel. Ninety percent of visitors to Lhasa are domestic travelers eager to see a part of their country that was inaccessible to most Chinese citizens for decades.

Indian luxury travelers have also opened up the former highland backwater of Assam. Welcome Heritage plans to develop three tea estates, complete with old colonial bungalows and golf courses, into golf and spa resorts by the end of the year. And at Ananda in the Himalayas, guests can choose from treatments based on yoga and ancient ayurvedic philosophy in a spa built on 100 acres of virgin forest surrounding a palace in the foothills of Himalayas.

Travel at home is set to grow faster than any other sector of the tourism industry, according to Tourism Futures International, which studies Asian tourism trends. And with so much to see in Eurasia, it's easy to understand why. "My friends and I have traveled all over Europe, but we haven't seen our own country," says Sergei Dubrovsky, a Moscow-based engineer who enjoyed a trekking vacation this year in the mountains of the Altai. "I could spend the rest of my life traveling around my homeland, and still not see it all." But he could spend the whole time staying in high style.