Russia – a new outbound, lates market

29 March 2012

As the low cost carriers have taught many Europeans to book our travel early, the Russians are still last minute bookers, often less than 30 days before departure, 75% of leisure trips are booked within 14 days. 

With the average per capita GDP of Russia now at over $US10,740 and a population of 142m it is one of the world’s ripest markets for travel growth. Its GDP grew by 4.8% over the last 12 months[1] and its unemployment rate of 6.5% is lower than many European markets. However, only 15% of its population have ever travelled abroad. “Many travellers reside in oil rich Siberia, Ekaterinberg, Moscow and St Petersburg” according to Ala Osmond, MD of Exeter International which sends UK tourists to Russia.

Russia saw a mini outbound travel boom in 2008 and outbound travel has grown from 2.6m people in 1995 to over 11.3m travelling abroad in 2011. In 2007 it became the 9th biggest outbound travel market in the world, according to UNWTO[2], with tourists spending on average $1,000 per head on their trips, generating $22.3bn in overseas spend with nearly £200million spent in the UK[3].

Russians have developed a taste for all inclusive holidays and like branded hotels and often choose 5* properties. However the market is segmented from the super rich to funky young professionals and those on cheap beach packages. The emerging middle class, whilst still a minority are open to being persuaded to visit new destinations. They can set trends and form public opinion and are already making their views known about their wish for change in the major cities.[4]

The Russians are also looking for fun and safe destinations for their children. They have more disposable income than most as their income tax is only 13% and many prefer to pay for their holidays in cash. They are keen to secure a bargain and will book online to get the best deals although Russians have been frustrated by their online booking experience as shown in a recent WTM blog[5].  Over 5 million have discovered Facebook which is wrestling with its local rival VKontakte[6] and Russia has a huge internet population of 61 million.[7]

Popular destinations have included Egypt, Dubai, Israel, Turkey, Brazil and Thailand which have all relaxed their visa requirements. Destinations that do not need visas or where visas can be issued on arrival are the most popular. According to Ala Osmond, “Many wealthy Russians are now travelling to Europe on long term Schengen visas”.

The Russian travel industry is still quite fragmented as 70% of companies are still small companies.  The dominant players are Intourist, Capital Tour, S7 Tour and Transaero Tours Centre,  Russkiy Express, Lanta Tour Voyage, Coral Travel, Uzniy Krest, KMP Group and Natali Tours[8]. 

Some companies have chosen celebrities to endorse their destination with the Russian market and trade shows are a good way to learn fast about this market and build partnerships.  Destinations such as Barbados launched their website in Russian last year and TUI has spent more than $US60 million launching its brand in Russia[9]. Thomas Cook also took a 50.1% stake in VAOIntourist for $US45 million in July 2011[10]. Earlier this year 50 UK travel businesses took a Visit Britain trade mission to Russia to improve the inbound market back to 2008, when 208,000 Russians visited the UK.[11]

The Russians take different holidays, the Russian Orthodox Easter is Apr 15th this year and May 5th in 2013.  They have a May 1 Workers Day holiday with May 9th as their Victory Day holiday.  Russians have long summer family holidays from 1 June to 1 September. They typically take 11 day holidays between late December and 9 January and holiday around 4 November – their national day of unity. 

For those wanting to know more about Russian travel trends don’t miss the WTM Vision Conference in Moscow on April 4th 2012

How are you finding the Russian market? Hard to reach or please?

[1] The Economist March 24th 2012 Economic and Financial Indicators page 100

[2] Special thanks to UNWTO  2009  “The Russian Outbound Travel Market”

[3] International Passenger Survey £194million spent by Russian visitors to the UK in 2010.

[4] The Economist, February 11th 2012  “Just making our feelings known” 

[5] “Frustrations when shopping for travel products online”

[6] The Economist February 4th 2012, “Floating Facebook, the value of friendship”

[7] Internet World Stats – Internet data as of 31 December 2011

[8] Special thanks to Eventica for their report “The Russian Outbound Travel Market”

[9] Travel Weekly March 3rd  2010

[10] Travel Weekly  July 13th  2011 “Thomas Cook completes Intourist deal”

[11] Travel Weekly January 25th 2012 “UK tourism businesses on  Russian trade mission”

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