Market News

Sergey Shpilko, the Head of the Russian Travel Industry Union (a quasi non-governmental organization that represents the Russian travel industry), has given his opinion on the latest travel statistics, since the economic situation changed in Russia. He said that up to 10% of Russian travel agencies have closed or will close in the near future, mainly small companies without a brand name. He estimated that up to 15% of the people working in the travel industry could be made redundant in the coming months, as companies cut down staff to a minimum in order to better adapt to the economic slowdown. However, many experts see this as a positive outcome in the medium term, as it will help consolidate the industry and increase the professionalism and profitability of those surviving companies.

The Russian Travel industry Union estimate that the for "sun and sea" resort destinations the demand have dropped by as much as 30% during the winter holidays, with the most affected destinations being Egypt and Thailand, as they are the most affordable destinations for the Russian emerging middle class. This may have some implications for the summer traffic, especially for the mass tourism destinations where price is critical. This will also depend very much on the continuation of the devaluation of the Russian rouble, which has lost up to 25% of its value against the euro and the dollar over the past 4-5 months.

Anatoly Yarochkin, Head of Russian Federal Agency for Tourism (equivalent to the Ministry of Tourism), reported that in general the demand for outbound travel from Russian has declined by 20-30% since the beginning of the financial downturn. He believes that Egypt, Dubai, Thailand and the Czech Republic are the most affected destinations. As a result the number of charter programs for the New Year holidays dropped by 20%, but there was a larger drop from the Russian regions than from Moscow, which held up much better against the economic challenges. However, skiing holidays, especially to the Alps, including trips to Austria, Italy, France and Switzerland remained stable. As skiing abroad is substantially more expensive than a package to a warm winter destinations, the information indicates that the upper middle class and the luxury end of the travel segment are much less affected than the mass market middle class segment.

Regional Markets

Tour operators from Yekaterinburg, one of the largest regional Russian cities, reported a substantial decrease in demand for outbound travel since January 2009, down by up to 40%. The largest decline was to Egypt, as well as Goa, Thailand and China, which are all traditionally popular destinations for the mass market during the winter period. Rostov-on-Don, one of the largest cities in southern Russia, reported a similar reduction in demand as Yekaterinburg, whereas Novosibirsk, the capital of Eastern Siberia, reported a smaller drop in demand, but still around 30%. Many charter programmes to China, Vietnam, Bali and Thailand were reduced or in some cases cancelled for the winter season, and as well as a number of regular flights.

MICE and Corporate Travel

One of the leading Russian MICE companies, Zelenski Corporate Travel Solutions, say the demand for business travel from their corporate clients have dropped by 30% since the beginning of the economic downturn. The number of incentive trips and corporate meetings requests has gone down by over 50%, however the market remains optimistic for the 3rd Quarter, as the price of oil will be established by then and budgets will be set according to this, as a result companies and the government sector can start making plans how to spend their budget.

On the other hand, the MICE department of Megapolus said that they have sufficient requests and that their corporate clients continue to book. However they have noticed a new destination trend, that clients tend to choose European countries that have  cheaper flights, instead of previously popular exotic long-haul destinations like Latin America. Nicko Travel also reports that they continue to receive MICE requests from their corporate clients, including requests for incentive programmes. Another leading MICE agency, Demlink, said that their clients have reduced their budget and in some cases postponed travel, but they have obtained plenty of last-minute requests, and their business continues to do well at the moment.

According to the organizers of the Moscow International MICE Forum, which takes place on March 17th, 2009, the day before the leading leisure travel exhibition MITT (18th- 21st March) this year, the feedback from leading corporate buyers concerning MICE Trips for 2009is the following:

- 35% indicated that MICE budgets stay the same
- 47% expect MICE budgets to be reduced by 15%
- 18% expect MICE budgets will be reduced by 25%
- 57% indicated that the number of delegates travelling in 2009 will increase
- 43% said they expect it to decrease
- 45% indicated that the value of MICE travel in 2009 will remain the same
- 55% think it will be reduced

Turkey: Forecasts for Summer 2009

Concerning the predictions for Russia's leading leisure destination, Turkey, tour operators' opinions are contradictory, with some of the convinced that Russian travelers may start to book 3-4 star hotels instead of 5 star which has been the case over the last few year. The directors of VKO Travel and Intourist have noted that they have already experienced this tendency, and expect this situation to continue as consumers become more price conscious. They also believe that the demand will shift away from destinations such as Bodrum, Belek and Kemer to cheaper destinations such as Marmaris, Antalya, Alanya and Side. However other Market leaders for Turkey, such as Pegas Touristik, believe that the majority of Russians will not sacrifice their comforts during their main summer holiday and will still request hotels of a 5* category.