"We can't even make forecasts or plan new hotels because fears over crime have destroyed the market," said Andrei Nadirov, the head of the mayor's tourism committee.
He said 1 million travelers visited Russia's historic home to the Tsars in 1993 -- a 50 percent drop from a record 2 million in 1985.
"Nowadays, people are put off from making a trip here because they are so scared," said PhiIlip Saunders, area manager of British Airways.
Across 10 time zones, Russia's new gangster elite -- known as the Mafia -- are battling for control over everything from kiosks to hotels to banks.
Official police statistics say 1,115 foreigners in St. Petersburg fell victim to crimes in 1993.
Fears over crime prompted the U.S. consulate in St. Petersburg to issue a report last March detailing muggings, sexual assaults, armed robberies, beatings, extortion and the 1993 murder of an American businessman.
The report infuriated local officials, who want to transform the former imperial capital into a major European tourist and financial center.
While police say crime against foreigners fell by 26 percent for the first half of 1994, they admit the drop is because there are simply fewer tourists.
That upsets St. Petersburg Mayor Anatoly Sobchak, who wants the Goodwill Games from July 23 to August 7 to heighten the city's profile worldwide.
Looking to lure free-spending visitors, St. Petersburg has spent millions on restoring palaces in the historic center.
International hotel and tour operators, eager to market the city's architecture and museums, assert it is no more dangerous than London or New York.
"St Petersburg is currently the number two East European destination behind Prague," said Eddy Buehlmann, the Central and Eastern European division director at the London-based World Travel and Tourism Council. "It will become number one when sidewalk cafes, shopping and all the infrastructural things that make for a happy, upmarket visit are in place."
There is a darker side to the home of Russia's fabled White Nights. At Apraksin Dvor, Walther pistols and silencers lie for sale amidst Turkish sweaters and local newspapers report gangland shootings in the city outskirts almost weekly.
Nadirov estimated the fall-off in tourism kept half a billion dollars out of city coffers in 1993. Russian law enforcers have a new weapon in President Boris Yeltsin's June decree declaring war on criminals.
Major Yevgeny Lukin, press secretary of St Petersburg's Federal Counterintelligence Agency, played down the threat from criminals, arguing that bandits are after each other, not foreigners.
"For our bandits, tourism is useful. Foreign guests frequent hotels, shops and restaurants, some Mafia-run," he said. "No intelligent thug would turn away such a good source of business by mugging a tourist on the street."
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