Market Size and Trends in the Russian Travel Industry

The Russian travel market holds a notable position in the global travel industry. As per the “Russian Tourism Market Report: Trends, Analysis and Statistics” research, Russia advanced from the 11th to the 8th position (+13%) in 2017, reclaiming its spot in the top 10.

In this discussion, we will focus on the outcomes of the Russian travel market in 2018.

Analyzing the dynamics of the Russian travel market in 2018

In 2018, the growth rate of Russians traveling to foreign countries dropped by almost five times compared to 2017. The tourist outflow increased by only 7.34% in the first three quarters of 2018, while in 2017, it was +35.9%. Similar growth rates of around 7-8% are expected for the entire year of 2018. As a result, it is forecasted that there will be nearly 31 million Russians traveling to foreign countries in 2018*, while the total outflow will increase to 44.7 million people.

*Consolidated data for the Russian travel market in 2018 has not been published by the Federal State Statistics Service yet. Once there is an update on the statistics, we will promptly inform you. Be sure to subscribe to our blog for the latest news.

The growth rate of Russian tourists traveling abroad in 2018 decreased due to several factors, including the natural deceleration after a rapid increase in 2017, a decrease in real disposable income, and the significant weakening of the ruble exchange rate since spring 2018. In addition, the World Cup in 2018 played a role, as many affluent people stayed in Russia during peak season to participate in or serve the event. This included a large number of service personnel in major cities, from rescue workers to doctors.

What Are Russians’ Preferred Travel Destinations?

Maya Lomidze, Executive Director of the Association of Tour Operators of Russia (ATOR), stated that in 2018, Russians preferred low-cost tours with short flights, minimal extra services and excursions, and an average price range of 50-60 thousand per person.

The Russian travel industry market in 2018 saw a significant growth in tourist flow to the United Arab Emirates, with a 42% increase within nine months, compared to the same period in 2017. Despite this, Turkey still maintained a large share of the Russian tourist flow market, with nearly 6 million Russians visiting Turkey in 2018 and a growth rate of +24%. Early booking offered by companies in 2018 proved beneficial for Turkey, with 40% to 50% of the total volume sold thanks to this option.

Additionally, Tunisia experienced a significant growth in Q1-Q3 of 2018 compared to the same period in 2017. In 2019, Tunisia intends to develop its success in the Russian market by participating in regional tourism exhibitions and supporting leading tour operators’ events. René Trabelsi, Tunisia’s new Minister of Tourism and Handicrafts, will attend the MITT exhibition in March to meet with tour operators. A seasonal advertising campaign, info tours, workshops, and retail seminars are also budgeted for 2019.

Hungary, Portugal, and Croatia showed significant growth in Russian tourist arrivals among European countries, with an increase of 55.5%, 48%, and 21% respectively (and 30% in the organized segment for Croatia).

Expensive premium Asian destinations such as the Maldives have experienced a growth rate of 20-25% per year, while Japan saw a record increase of over 20% in the number of Russian tourists.

However, the tourist flow to some markets has decreased in the past year, such as the USA (-11%) and Great Britain (-2%), while there has been a slight decline in arrivals to certain Western European countries such as Norway, Belgium, the Netherlands, Switzerland, and Sweden.

Analysis of the Russian Travel Agency Market

As per ATOR, factoring in all the companies that ceased operations in 2018, the collective losses suffered by tourists due to bankruptcies of tour operators amounted to over 2.5 billion rubles (equivalent to over $36 million).

As a result, more than 27,000 tourists were unable to undertake their planned trips.

The maximum losses were borne by tourists due to the departure of Natalie Tours from the market.

The overall loss in this instance was around 1.8 billion rubles (more than $26 million).

Despite the bankruptcies, the travel market remained stable, with only small companies and one medium-sized tour operator leaving. The losses incurred were significantly lower than those experienced in 2014, where more than 73,000 tourists were affected by the collapse of only two tour operators (Neva and Labyrinth), resulting in a loss of 3.2 billion rubles (approximately $57 million at the end of 2014 exchange rates).

Trends and tendencies in the Russian travel market for the year 2019

• Experts observed a significant trend in the Russian travel market in 2018, which indicates that the mid-segment is shifting towards the lower end while the luxury segment is maintaining stability. This trend is expected to persist throughout 2019.
• The year 2019 will witness significant structural changes in the Russian travel market, with several stakeholders in both the operator and agency segments facing severe cuts.
• According to ATOR experts, mergers and acquisitions in the tour operation industry will be encouraged. It is estimated that the number of legal entities operating in the tourism sector will decrease by at least 20%.
• The travel industry is poised for a technology breakthrough in 2019. Tour operators are expected to invest heavily in innovative technologies and solutions, with a particular focus on real-time dynamic packaging systems, new B2B booking services, and online platforms for direct sales of tour packages. Additionally, online services that allow tourists to customize their trips and access certain services on the internet will also be in high demand.
• In 2019, there will be a more distinct contrast among the favored countries that Russians select as their tourist destinations in various Russian regions.
• As per the ATOR experts, Egypt is expected to reopen for Russian tourists by spring 2019. This move is likely to attract a considerable share of the tourist flow, especially from Turkey and Egypt.