TOURIST INVITATION. All the papers needed for getting a tourist visa can be made either by a place you'll stay in (hostel/hotel) or by Russian travel agencies or by your local travel agencies. Then these papers can be sent to you and to the embassy by fax or by post or both.
Some time ago, if you wanted to be flexible enough (like not reserving a place to stay), it was better to get all these papers through a travel agency. But now some hostels offer enough flexibility (you have to pay for one night only) and quite competitive prices. You'll not be obliged to stay at one place and will be able to move freely around Russia if you make an invitation either through a hostel or a travel agency.
HOSTELS. When hostels or hotels make all these three papers (invitation, voucher and confirmation) that is called "visa support". Hostels in Russia make visa support for around $25 -$40 US. They make a voucher, a registration confirmation and a letter. Most of the time you'll not be obliged to stay in the particular hostel, which issued your invitation. Only few hostels might oblige you to stay in it for the whole time of your visa, or will make an invitation only for the period of your stay there. Check this beforehand.
Here are the prices (in $ US) of Moscow and St. Petersburg hostels for the tourist visa invitations:
Moscow, Travelers' Guest House: a single entry invitation costs $25 if you pre-pay you stay at their hostel for the whole period of your visa, and $40 if you don't stay there (they'll not register the visa, though).
Moscow, Asia Hostel: "Asia" hostel can make a single entry invitation for $25, and you're not obliged to stay there (but you need to pay for one night, for them to be able to issue the reservation confirmation and to register your visa later, one night costs $16).
St. Petersburg, Hostel Holiday: the invitation costs $25 US, you are obliged to stay there (or in the partner hotels in the other cities) for the period of your visa.
St. Petersburg, St. Petersburg International Hostel: a single-entry invitation costs $35.
St. Petersburg, Puppet Theater Hostel: the invitations are made through St. Pete International Hostel, so the price ($35) and conditions are the same.
HOTELS. Only expensive hotels (like Mariott, Novotel in Moscow - price around $200-300 US per night) can provide you with the invitation which is enough to apply for a visa. That is because only expensive hotels have reference number in ministry of foreign affairs. If you want to make your visa through those hotels, you have to give them the number of your credit card and reserve a number only in this hotel for the whole period of your planned stay. After that the hotel will provide you with the invitation papers, but if you come to Russia and not stay in this hotel then they charge half of the price for one room (or more), that is around 100-150$. So, it's better not to make visa through those hotels if you will not stay in them.
YOUR LOCAL TRAVEL AGENCIES. You can try to get the documents needed for a visa at your local travel agency. The problem is those agencies usually sell complete tours or they reserve a hotel (not a hostel) for you and you have to pay for the period you stay there before you come to Russia.
Also, check if your local travel agency has an office in the Russian city you want to travel in. You'll need their office to register your visa when you arrive (they'll charge you 20 bucks for that), otherwise, you'll have to spend time looking for another agency that can register your visa.
Careful: some travel agencies might make false invitation papers, be careful about that, it happens!
RUSSIAN TRAVEL AGENCIES. You also have an option to make all the papers (an invitation: a voucher and a confirmation) through a Russian travel agency. The reservation confirmation will confirm that you have a place in a hotel reserved, but you won't be obliged to stay in this hotel at all and you don't have to pay for this reservation.
The problem with some agencies is that they speak only Russian and they have inconvenient payment options (like sending credit card forms in Russian, or not accepting credit cards at all).
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Tourism 