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FORECAST REVISIT FOR THE GLOBAL TRAVEL AND TOURISM INDUSTRY RUSSIA March 2013
INTRODUCTION
GLOBAL OVERVIEW
TOURISM PERFORMANCE
CATEGORIES
CONSUMER TRENDS
REGIONAL FOCUS
© Euromonitor International
3
Disclaimer
Much of the information in this
briefing is of a statistical nature and,
while every attempt has been made
to ensure accuracy and reliability,
Euromonitor International cannot be
held responsible for omissions or
errors.
Figures in tables and analyses are
calculated from unrounded data and
may not sum. Analyses found in the
briefings may not totally reflect the
companies’ opinions, reader
discretion is advised.
The travel industry confirmed its
vitality in 2012, recording 4%
growth in terms of international
arrivals. Growth is expected to
continue in the next five years and
beyond, driven by the growing
desire to explore the world among
consumers across the globe, as
well as by the rise of the middle
and affluent classes in the
emerging economies. The fastest
growing categories include online
travel, low cost carriers, medical
tourism, shopping tourism, rail
transport and private
accommodation.
Scope
INTRODUCTION
Travel and Tourism
Tourism flows and spending
Travel accommodation
Transportation
Car rental
Travel retail
Tourist attractions
Health and wellness tourism
© Euromonitor International
4 KEY FINDINGS
Key findings
World tourism confirms its
vitality
World tourism flows achieved another positive performance in 2012, growing
by 4% and surpassing one billion tourist arrivals during the year. Emerging
markets once again generated the most growth, however, tourist arrivals
performed well also in advanced economies.
Steady growth to continue The tourism industry is forecast to maintain its vitality in the next five years
and beyond, benefiting from a growing desire to explore the world among
consumers across the globe as well as from the rise of middle and affluent
classes in the emerging economies.
A multi-channel model for
hotel distribution
The hotel sector benefited in 2012 from the growth in international arrivals, as
well as in domestic tourism in countries such as China, Brazil and India. A
growing trend in this sector is the emergence of a multi-channel model where
the mobile channel and meta-search engines play an important role.
Gulf airlines and LCCs drive
air transport growth
Air transport saw healthy 5% growth in 2012 in terms of passengers, with the
Middle East achieving the highest increase. The Big Three Gulf airlines drove
traffic growth in the region and achieved the best performance among world
airlines. Low cost carriers continued to be the most successful category.
Online channel to expand
globally
Online travel continued its rise in 2012, at the expense of traditional
distribution channels. Advanced economies still accounted for the vast
majority of online travel sales, but emerging markets are expected to play a
major role in this sector within five years.
Shopping and medical
tourism grow fast
Online travel and low cost carriers are the most significant success stories
among travel consumers, and will continue to achieve strong performances in
the next five years. Other rising consumer trends include medical tourism,
shopping tourism, mobile travel, rail transport and private accommodation.
INTRODUCTION
GLOBAL OVERVIEW
TOURISM PERFORMANCE
CATEGORIES
CONSUMER TRENDS
REGIONAL FOCUS
© Euromonitor International
6
-1
0
1
2
3
4
5
6
7
8
9
2012 2013 2014 2015 2016 2017
% y
-o-y
gro
wth
GDP % Growth in World Regions 2012-2017
World
China
India
MENA
Russia
US
Brazil
UK
Eurozone
Source: IMF World Economic Outlook
The world in 2013: A polarised performance
GLOBAL OVERVIEW
World GDP is expected to rise by 3.5% in 2013, up from 3.2% seen in 2012. This growth is the result of a
polarised performance which sees decline or stagnation in the Eurozone and in the UK while emerging
countries continue to record healthy growth rates.
The world continues looking to China and, to a lesser extent, India for strong economic growth in 2013.
The other BRIC nations, Brazil and Russia as well as the MENA (Middle East North Africa) region, will also
show economic progress in 2013.
Western Europe will remain mired in uncertainty, with investor and consumer confidence low. A healthier
economic performance is expected in 2014 for the UK (2%) and in 2015 for the Eurozone (1.5%).
The outlook for the US economy is brighter, following the bipartisan agreement to avoid the fiscal cliff and
thanks to the recovery of the real estate industry and to a rise in investment.
© Euromonitor International
7
What lies ahead?
GLOBAL OVERVIEW
Although the peak of the financial crisis appears to have passed, austerity measures are hampering GDP growth in
the Eurozone, resulting in social distress and in the risk of a prolonged stagnation.
The prospects for the US economy look much rosier in 2013; however, a large public debt and trade deficit represent
threats to future growth which need to be addressed.
Sustained growth is expected for China in the next five years, thanks to the development of the internal market and
to substantial foreign investment.
The emerging economies will need to shift their focus onto intra-regional and domestic markets in order to make up
for the weaker demand from traditional sources in Western Europe and the US.
The economic outlook is mixed for the Middle East, with healthy growth expected in the next five years for oil
exporters, while oil importers remain under strain.
Eurozone woes continuing
Fiscal threat for the US
Sustained growth in China
Mixed outlook for the Middle East
Emerging markets looking intra-
regionally
INTRODUCTION
GLOBAL OVERVIEW
TOURISM PERFORMANCE
CATEGORIES
CONSUMER TRENDS
REGIONAL FOCUS
© Euromonitor International
9
Arrivals and spending: Tourism shows vitality
TOURISM PERFORMANCE
The World Tourism organisation (UNTWO) celebrated the
world’s billionth international arrival in December 2012, a
world record highlighting the ongoing vitality in tourism.
Global tourism performance is being driven by emerging
markets, notably the BRICs. Developed countries are,
however, also seeing continued growth in arrivals,
benefiting from growing outbound flows from emerging
markets.
Global arrivals are predicted to continue their growth in the
next five years, matching GDP increases, as travel continues
to illustrate its popularity. Average spend will, however,
remain stagnant over the same time period, as a result of
continuing caution and hesitancy amongst European
travellers.
Asia Pacific is home to some of the key countries expected to
record significant growth in arrivals over the next five years,
including Vietnam, Myanmar, Uzbekistan and the
Philippines.
-3
-2
-1
0
1
2
3
4
5
2012 2013 2014 2015 2016 2017% y
-o-y
gr
ow
th
Global Economic and Tourism Performance – % Growth
2012-2017
Global GDP
International arrivals
Average spend per arrival
© Euromonitor International
10
Arrivals to Western Europe continue to record growth below the world average, although the performance in
terms of both inbound tourism flows and expenditure was still positive in 2012.
Eastern Europe achieved strong growth of 8% in terms of arrivals in 2012, driven by intra-regional flows.
Growth is expected to be less robust but still healthy from 2013 onwards.
Asia Pacific is showing good growth, although a slight tapering off is expected over the forecast period.
The Middle East and Africa recorded the worst performance among the world regions in 2012, due to
political instability. Its performance is expected to improve in the next five years, as stability returns.
North America is predicted to maintain growth at around 4%, with the US simplifying visa processes to entice
visitors from the fast growing BRICs. Other regions showing healthy growth include Latin America and
Australasia, both of which are benefiting from growing flows from emerging markets.
-2
0
2
4
6
8
10
2012 2013 2014 2015 2016 2017
% y
-o-y
gro
wth
Arrivals by Region % Growth 2012-2017
Asia Pacific
Australasia
Eastern Europe
Latin America
Middle East and Africa
North America
Western Europe
Regional arrivals: Asia Pacific to lead
TOURISM PERFORMANCE
© Euromonitor International
11
The BRIC nations, with their rapidly growing middle and affluent
classes, are expected to be key drivers of growth for many tourism
destinations in the next five years.
China and India are leading the charge, with CAGRs of above 10%
predicted for the next five years in terms of both outbound trips
and expenditure. Outbound tourism flows from both countries are
mainly to other Asian destinations. The US is the leading non-Asian
destination for Chinese travellers, followed by Australia and
France. For Indian travellers, the UAE is the favourite non-Asian
destination, followed by the US.
Neighbouring Ukraine and Finland are the main destinations for
Russian travellers. However, Turkey is by far the favourite
destination for package holidays, accounting for 28% of organised
trips. In the last two years, Turkey and Greece were aided by the
decline of packaged holidays to Egypt, due to political instability in
the country, with Greece replacing Egypt in second place.
Whilst Brazil is showing the least dramatic growth in spending of
the BRICs, average spend for the Brazilian tourist is high, with
shopping abroad a popular pastime, due to high import taxes at
home, and a major driver of departures to the US, France and Italy.
0 5 10 15
Brazil
Russia
India
China
%CAGR 2012-2017
Outbound Tourism Trips and Expenditure in BRIC Countries –
% CAGR 2012-2017
OutboundExpenditure
Outboundtrips
Outbound tourism flows: Everyone is chasing the BRICs
TOURISM PERFORMANCE
1. US
2. Argentina
3. Uruguay
Brazil
1. Hong Kong
2. Macau
3. South Korea
China
1. Singapore
2. Thailand
3. UAE
India
1. Ukraine
2. Finland
3. Kazakhstan
Russia
BRIC’s Top Three Outbound
Destinations 2012
© Euromonitor International
12
Once again, China, Russia and India are expected to lead
among those countries recording absolute increases in
outbound tourist trips of over one million in the next five
years. Rising disposable incomes in these emerging
economies, combined with the relaxation of visa
requirements, have opened up travel to more consumers.
China, in particular, is forecast to see an increase of
almost 47 million outbound trips over the next five years.
The expected stronger performance of the US economy is
forecast to drive 8 million American outbound tourists
over the 2012-2017 period.
Turkey is slowly creeping up the rankings to fifth place
thanks to a stable economy and expanding flight options
encouraging travel, with trips to Greece a growing trend.
Newcomer Kazakhstan enters the list, with an increase of
over 3 million travellers predicted over the next five years.
A strong economy, boosted by oil revenues and natural
resources, is aiding the development of the country and
enabling its citizens to travel.
0 10 20 30 40 50
UK
UAE
Australia
Kazakhstan
France
Canada
Switzerland
Japan
Germany
Malaysia
Taiwan
Turkey
US
India
Russia
China
Million departures
Top Countries for Outbound Departures Forecast Absolute
Increase 2012-2017
The million+ departure club
TOURISM PERFORMANCE
© Euromonitor International
13
Business travel has recorded a healthy rise since the
downturn across the globe in 2009 , to reach 212
million arrivals in 2012. Western Europe is the world
leader for international business arrivals, with a 37%
volume share, followed by Asia Pacific, with a 29%
share.
2013 is predicted to see a 5.9% rise in global
business travel spend, according to the Global
Business Travel Association (GBTA).
Business travel has changed, with many companies
shifting to video-conferencing for the troubled
established markets in Europe, and spending instead
on travel to emerging markets, where growth is more
certain.
In 2012, there were 1.9 billion domestic business
trips worldwide, up by 7% on 2011. Asia Pacific is the
world leader in domestic business travel, with a 64%
share, followed by North America, with an 18%
share.
Business Arrivals in 2012 by World Region
Western Europe
Asia Pacific
Middle East and Africa
Eastern Europe
North America
Latin America
Australasia
-6
-4
-2
0
2
4
6
8
2009 2010 2011 2012 2013 2014 2015 2016 2017
Global Business Arrivals % Growth 2009-2017
% y-o-y growth
Business travel: Back on the road
TOURISM PERFORMANCE
INTRODUCTION
GLOBAL OVERVIEW
TOURISM PERFORMANCE
CATEGORIES
CONSUMER TRENDS
REGIONAL FOCUS
© Euromonitor International
15
The hotel sector is expected to achieve healthy growth globally in the next five years, driven by increased
demand in emerging countries and a positive performance in the US. Western Europe is expected to record
more moderate growth in terms of value sales, due to intra-regional travellers increasingly turning to budget
options. International hotel chains continue to look to corporate guests for revenue growth. Domestic
business travel in China, India and the US is thriving, and assisting hotels to increase revenues.
A rush of new websites and mobile apps are leading to the clear emergence of a multi-channel model for
hotel bookings. Last minute hotel bookings are now much easier, thanks to apps such as those of Hotel
Tonight , Orbitz, Booking.com and Expedia, which cater to a traveller’s specific city location, and often
provide discounted rates for a same day booking. Mobile apps are expected to account for two-digit shares of
sales for the main online travel agencies in 2013.
Hotels: Embracing technology and innovation
CATEGORIES
0
1
2
3
4
5
6
Asia Pacific Middle EastAfrica
Latin America Eastern Europe North America Australasia Western Europe
%C
AG
R
Hotel Value Sales % CAGR by World Region 2012-2107
© Euromonitor International
16
Total Number of Rooms in the Pipeline for Leading Hotel Chains 2012
Hotel Number of rooms in the pipeline Pipeline focus
IHG 167,485 Americas (45%)
Hilton 161,177 Americas (approximately 63%)
Wyndham 113,900 International markets (53%)
Starwood 95,000 Asia Pacific (64%)
Marriott 90,000-105,000 North America (55%)
Accor N/A Europe (46%)
Hyatt 38,000 International markets (70%)
Hotels: Strong pipeline for leading brands
CATEGORIES
Global pipeline development for hotels is at full force, with leading hotel chains expected to add over
700,000 rooms in the next five years. The focus for some leading groups, such as InterContinental
Hotels Group (IHG), Hilton, Marriott and Accor, remains their domestic markets in the US and
Europe.
However, other hotel chains are firmly focused on the developing countries. With 113,900 rooms in
the pipeline, Wyndham has a strong focus on international markets like China, India and Brazil. In
Asia Pacific, Wyndham plans to open five new Ramada hotels in China by 2013, and build 35 new
Howard Johnson hotels in India by 2017. Although from a small base, four Chinese hotel chains
recorded the fastest absolute value growth globally in the last five years: 7 Days Group Holdings Ltd,
China Lodging Group Ltd, Homeinns Hotel & Management Co Ltd and Shanghai Motel Chain Co Ltd.
© Euromonitor International
17
2012 saw a 5% rise in the number of air passengers worldwide. The Middle East was the best performing
region in the air sector in terms of traffic in 2012, followed by Latin America, Africa and Asia Pacific.
China and Brazil recorded the highest growth in terms of domestic air traffic, of 9.5% and 8.6%,
respectively.
The Big Three Gulf airlines (Emirates, Etihad and Qatar Airways) were the players faring best – together
with low cost carriers – in 2012. They have recently been building networks with other airlines to enlarge
their reach. American Airlines has sealed a code-sharing deal with Qatar Airways, whilst the latter is also
exploring a share in Czech Airlines. Etihad now has a stake in Air Berlin, opening up access to the
German airline’s large European network. The Big Three Gulf airlines may be involved in further
expansion and acquisitions in other world regions over the next five years.
Air transport: Middle East leads growth
CATEGORIES
0
1
2
3
4
5
6
7
8
Asia Pacific Eastern Europe Latin America Middle East andAfrica
Australasia North America Western Europe
%C
AG
R
Air Value Sales % CAGR by World Region 2012-2017
© Euromonitor International
18
Low cost carriers were once again the air category to achieve the best performance in 2012, growing
globally by 8% in terms of constant value sales.
In order to face competition from low cost airlines on medium and short haul routes, a number of
schedule airlines are currently embracing a business model which is more similar to the low cost one,
either by launching a low cost brand or by offering cheaper fares. Moves in this direction include Air
France’s Mini fare and low cost brand HOP!, Lufthansa’s no-frills Germanwings brand, Iberia’s Iberia
Express low cost brand, Air Canada’s Rouge low cost brand and Alitalia’s new cheaper fares policy.
Air transport: Low cost carriers’ success story continues
CATEGORIES
0 10 20 30 40 50 60 70 80
Malaysia
Turkey
USA
India
Indonesia
Italy
China
Philippines
Absolute growth in passenger numbers (million)
Low Cost Carriers Forecast Absolute Increase in Passengers 2012-2017
© Euromonitor International
19
The US and Western Europe remained the largest online
travel markets in 2012, amounting to US$185 billon and
US$170 billion, respectively, or 38% and 35% of global online
travel sales. They are also the markets expected to grow least
over 2012-2017, as they approach maturity.
The emerging economies have yet to embrace online travel
fully, but they have significant potential for growth over the
next five years. China, India, Russia and Brazil are all
expected to become major online travel markets, with healthy
online travel value CAGRs of between 10% and 20% over
2012-2017.
Online travel: Emerging markets catching up
CATEGORIES
Online Travel Value Sales by World Region 2012
North America
Western Europe
Asia Pacific
Australasia
Latin America
Eastern Europe
Middle East and Africa
0
5
10
15
20
25
India China United ArabEmirates
Russia South Africa Brazil WesternEurope
USA
%C
AG
R
Online Travel Value Sales % CAGR in Key Markets 2012-2017
Note: the charts refer to online value sales of transportation, travel accommodation, car rental and tourist attractions through intermediaries and
direct suppliers.
© Euromonitor International
20
2012 saw several significant developments in online travel, which had a
significant impact for the whole travel industry.
The success of mobile travel resulted in smartphones and tablets becoming
an increasingly important sales channel, as well as customer service tools.
The inroads made by technology companies in the travel market was a
second important development in 2012. In particular, Google’s position in
online travel distribution is becoming increasingly strong, with the launch
of the Google Flight Search and Hotel Finder meta-search engines, and it is
starting to be perceived as a threat by travel retail companies.
Meta-search engines, such as Kayak and Booking Buddy, are growing in
importance, due to consumers increasingly searching the web for travel
deals.
Moves by technology companies were addressed by the largest online travel
agencies looking for new traffic sources. Priceline bought Kayak and
Expedia acquired a majority stake in Trivago, two meta-search engines.
Traditional travel operators are increasingly focusing on online sales,
including companies such as American Express, TUI and Thomas Cook.
Another important development is travel retailers looking to differentiate
their products in an environment where all players have a very similar offer.
Online travel: A fast changing environment
CATEGORIES
INTRODUCTION
GLOBAL OVERVIEW
TOURISM PERFORMANCE
CATEGORIES
CONSUMER TRENDS
REGIONAL FOCUS
© Euromonitor International
22
Medical tourism remains a success story among travel categories, with continued strong growth expected
over the next five years. Consumers are keen to obtain savings on medical treatments, and have increased
confidence in travelling to medical tourism destinations such as India, Thailand and Brazil.
Rail travel continues to grow in value globally, with high speed trains often competing successfully with
short haul flights. China upped the stakes in December 2012 with the opening of a high speed line between
Beijing and Guangzhou, shortening the 2,298 km journey time to eight hours.
National parks and areas of natural beauty are growing in popularity, with consumers seeking a “back to
nature” or green tourism experience.
Private accommodation is also expected to gain ground in the next five years, driven by travel websites for
peer-to-peer sales such as Airbnb , Homelidays and HomeAway.
Low cost carriers, online travel and shopping tourism are other major drivers of growth for the tourism
industry.
Growth categories to watch
CONSUMER TRENDS
0
2
4
6
8
10
Medical Tourism Low Cost Carriers Online Travel Rail Travel Areas of NaturalBeauty
Tourist Receiptson Shopping
PrivateAccommodation
Global Fastest Growing Travel Categories – Value Sales % CAGR 2012-2017
% C
AG
R
© Euromonitor International
23
Shopping is becoming increasingly important for the
travel industry and is today a major reason for
travelling for large numbers of tourists.
BRIC nationals are avid shoppers, and the shopping
tourism trend is being driven by their strong
preference for status symbol products and brands, as
well as high import taxes for foreign luxury products.
Brazilians, for example, are the biggest tourist
spenders in New York City, where goods are often half
the price they are at home.
The US remains the top location for incoming
shopping tourism receipts, with China in second place
and Hong Kong third. France, in fifth place, is a
favourite destination for luxury shopping, especially
for BRIC travellers.
China is leading growth in outbound shopping
spending, with a 15% CAGR forecast over 2012-2017.
Asia Pacific countries are predicted to dominate
shopping tourism growth, with India, Vietnam and
Taiwan all showing significant increases.
0 5 10 15
Taiwan
Vietnam
Kenya
India
China
%CAGR 2012-2017
Leading Countries for % CAGR in Outbound Tourism Expenditure on
Shopping 2012-2017
0 5 10 15
France
Spain
Hong Kong
China
US
US$ billion
Leading Countries for Incoming Tourism Receipts on Shopping 2012
Shopping tourism: Driven by the BRICs
CONSUMER TRENDS
© Euromonitor International
24
The introduction of smartphones represents one of the most significant technological developments of recent
years, and it is having a major impact on the travel industry, due to the mobile nature of travellers.
In the mobile travel era, travellers expect real time answers wherever they are and at any time, before, during
and after the trip. These include booking capabilities when on the go.
Moreover , as a result of the intersection between the mobile and social dimensions, and of the creation of
geo-social media – aware of users’ geographical location – travellers expect a higher level of customisation of
services based on their stored preferences and current location.
Travel companies need to embrace the SoLoMo (social local mobile) trend fully, integrating it in their
strategies and business models in order to benefit from the increasing share of business generated by the new
mobile and social consumers.
The SoLoMo trend: Reshaping consumers in the travel industry
CONSUMER TRENDS
Travel company
Reputation management
Apps
Mobile website
Geo-social media
Mobile bookings
Mobile alerts and services
© Euromonitor International
25
Luxury travel: From status symbol to experiential travel
CONSUMER TRENDS
High level of comfort
Top notch service
Status symbol
Privacy guaranteed
Exclusive locations
Classic model of luxury travel New model of luxury travel
Experiential travel
Authentic experiences
Ecotourism
Multi-generational
Voluntourism
Sustainability
Luxury travel recorded a significant recovery after the decline experienced in 2009, with luxury hotels and
premium air travel growing by between 5 % and 10% per year over the 2010-2012 period.
Advanced economies still represent the main source of luxury travel worldwide. Luxury travel in these
countries is expected to grow at a 4% constant value CAGR over the 2012-2017 period.
Emerging markets are still much less important for luxury travel; however, they are expected to record the
fastest growth in this category, at a 10% constant value CAGR over the 2012-2017 period.
Luxury travel is evolving, with experiential travel and sustainability becoming increasingly important,
especially in the traditional luxury travel markets, while the classic model of luxury travel is still valid in
emerging markets. However, in some emerging markets, such as Brazil and, to a lesser extent, China, the
new model of luxury travel is also gaining ground.
© Euromonitor International
26
Sustainable tourism is gaining
momentum, becoming increasingly
important for most businesses,
governments and consumers.
Europe leads the way in
sustainability. Scandinavian
countries feature strongly in the
World Economic Forum (WEF)
sustainable ranking, with Sweden
leading the world.
Price, quality, brand and
convenience will continue to drive
consumers’ choices, but
sustainability will become a more
influential factor in consumers’
decision making when they choose
a product.
LOHAS (“lifestyles of health and
sustainability”) is increasingly
being recognised as a major new
consumer segment. According to
the World Travel Monitor Forum,
those interested in LOHAS could
be the tourism industry's new
premium customers.
Switzerland is wooing the LOHAS
target group with eco-hotels, car-
free alpine villages and a growing
number of “biosphere
reservations”. Many of the top
sustainability countries are also in
Europe, with Scandinavia leading
the way, albeit with a reputation
for expensive stays.
Sustainable tourism: The rise in social responsibility
CONSUMER TRENDS
The importance of sustainable
tourism development for
African national parks and local
communities was highlighted in
the Arusha Declaration on
Sustainable Tourism in African
National Parks, signed in
October 2012 at the first Pan-
African Conference on
Sustainable Tourism in African
National Parks, organised by the
UN World Tourism
Organization (UNWTO).
INTRODUCTION
GLOBAL OVERVIEW
TOURISM PERFORMANCE
CATEGORIES
CONSUMER TRENDS
REGIONAL FOCUS
© Euromonitor International
28
Russian inbound tourists showed solid growth in 2012, up by 13% from 2011 to reach 26 million trips.
However, for a country with vast cultural attractions and tourism potential, the number of inbound visitors
remains disproportionally low, once neighbouring countries are discounted.
Cultural and economic connections with neighbouring countries and former Soviet republics represent the
main driver of growth, while tourism from important outbound markets such as Western Europe and the
US still needs to take off.
Major sports events planned in the country in the next few years may represent important opportunities to
showcase Russia and its tourist attractions to a global audience. These events include the World Athletic
Championships in Moscow 2013, Winter Olympic Games in Sochi 2014, and the FIFA World Cup in 2018.
Russia: Inbound tourism still to develop its potential
REGIONAL FOCUS
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
’00
0 tri
ps
Number of Arrivals to Russia from Top Source Countries 2012-2017
2012
2017
© Euromonitor International
29
Russia: Issues hampering inbound tourism growth
REGIONAL FOCUS
The main goal of a federal programme launched in 2011, called Domestic and Inbound Tourism
Development 2011-2018, is to increase the number of inbound arrivals in Russia six-fold by 2018, with a
150% increase in the number of domestic trips also targeted under the programme.
In order to achieve these ambitious goals, the Russian government is set to invest RUB96 billion from
state funds, with a further RUB25 billion invested by regional and municipal governments and RUB211
billion expected to be attracted from private funding sources. The majority of these funds will be invested
in developing Russia’s travel and tourism infrastructure, as well as undertaking promotions abroad.
Bureaucracy in obtaining visa
Undeveloped infrastructure
Quality of tourist services
Safety concerns
Image overseas
© Euromonitor International
30
With rising disposable incomes and a relatively stable
economy, Russian outbound travellers are growing year-on-
year, up by 9% in 2012 compared to 2011.
The traditional destinations of Ukraine, Finland and
Kazakhstan remain the most popular, due to proximity and
shopping trips, as well as friends and family visits.
However, the top package holidays destinations are
significantly different and are growing in diversity. Turkey
remains the most popular by far, accounting for 28% of the
total. It has benefited in the last two years from the decline of
trips to Egypt due to political instability in the country.
Package holidays to Greece recorded healthy 25% growth in
2012, placing Greece as the second favourite destination for
organised trips from Russia. Strong growth was also recorded
in 2012 by organised trips to Spain, Bulgaria, Italy, Cyprus,
Croatia and Thailand.
Many countries are trying to attract tourists from Russia by
reducing visa and administrative barriers. Croatia introduced
visa-free travel for Russians from April to October 2012, while
Mexico implemented an online visa procedure for Russians.
Russia: Outbound travellers exploring new destinations
REGIONAL FOCUS
Country Breakdown of Russian Package Holidays Value Sales 2012
Turkey
Greece
Egypt
Spain
Bulgaria
Italy
Thailand
Cyprus
Croatia
Other
Source: Association of Tour Operators of Russia (ATOR)
© Euromonitor International
31
Russian consumers are actively switching from traditional travel retail outlets to the online channel to book
flights, hotels, car rental services and holiday packages. The increasing number of internet users in Russia
and the growing trust in online purchases are important drivers of online travel’s positive performance.
This has created favourable conditions for the development of online travel retailers and is, moreover,
boosting individual travel over group trips.
Russians actively use a wide variety of local and international social media websites, such as VKontakte,
Odnoklassniki, YouTube, Facebook and Twitter. Social media is becoming an increasingly important tool
for travel and tourism companies to communicate with their customers and organise promotional activities.
Air transportation is the most popular online travel category in terms of actual sales. It recorded 20% value
sales growth in 2012, to reach RUB87 billion.
Russia: Robust performance for online travel
REGIONAL FOCUS
0
5
10
15
20
25
2012 2013 2014 2015 2016 2017
% y
-o-y
gro
wth
Online Travel Categories % Growth in Russia 2012-2017
Air
Hotel
Car Rental
Travel Retail
© Euromonitor International
32
0
5
10
15
20
25
30
35
40
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
% o
f R
ussia
n H
ou
se
ho
lds
% of Russian Households with Annual Disposable Income over US$25,000 – 2007-2017
Russia: The rise of the middle class
REGIONAL FOCUS
The Russian rich continue to increase in number, although the growth rate is slowing. By 2017, over 1.7
million households in Russia will have an annual disposable income of over US$100,000.
However, middle class consumers in Russia will become increasingly important over the forecast period,
given their sheer size and the rate at which their real incomes are rising. By 2017, nearly 40% of all Russian
households will have an annual disposable income of over US$25,000.
For the Russian elite, travel is no longer a luxury, but a fundamental part of their lifestyle. For new middle
class consumers, travel abroad is a relatively new concept, and for many a first trip abroad will be to a
relatively familiar neighbouring destination.
Average Price for Package Holidays in Russia in 2012
Below US$600
US$601-1,500
US$1,501-4,000
Above US$4,001
Source: Association of Tour Operators of Russia (ATOR)
© Euromonitor International
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Russia: Changing population demographics
REGIONAL FOCUS
Russian Population Age Segmentation 2010-2020 – '000 people
2010 2015 2020 2010-2020 % growth
Babies/Infants (0-2 years) 5,056 5,168 4,873 -3.6
Kids (3-8 years) 8,557 9,973 10,371 21.2
Teenagers (9-12 years) 5,136 5,856 6,874 33.8
Teens (13-19 years) 11,260 9,263 10,066 -10.6
People in their 20s (20-29) 24,514 20,818 15,385 -37.2
People in their 30s (30 – 39) 20,864 22,809 24,169 15.8
Middle-aged Adults (40-64 years) 48,244 48,400 47,463 -1.6
Older Population (65+ years) 18,155 18,220 19,969 10.0
Rising incomes in recent years have also driven the birth of more children. However, the fertility rate 0f 1.7 per
1,000 population remained below the replacement rate of 2.1 in 2012.
Increasing awareness of the influences of bad habits on health, a growing interest in healthy food and better
accessibility to health services have all been recognised as having an effect on the lifestyles of the older
population, which is predicted to grow substantially by 2020.
Russia's population will rise from 143 million in 2009 to 145 million in 2020, and, with a total annual
disposable income of US$3.4 trillion in 2020, there is enormous potential for expanding consumer spending.
© Euromonitor International
34
2011 figures are provisional and based on part-year
estimates. The forecast period under review covers the
period 2011 to 2016, inclusive.
All US dollar data cited in this report, historical and
forecast, at national, regional and global level are
shown at fixed 2011 exchange rates. As such, any
impact from currency and/or exchange rate volatility
are discounted.
Arrivals refers to international tourists visiting
another country for at least 24 hours not exceeding 12
months, and staying in collective or private
accommodation for leisure, business, visiting
friends/family and other (religious, medical,
education etc). Measured in trips.
Incoming tourist receipts are classified as payments
by international inbound tourists, including fares paid
to national carriers for international transport and any
other prepayments made for goods or services
received in the country of destination.
Departures refers to the number of residents that travel
abroad from their country of residence to another
destination country for leisure or business purposes.
Residents include students residing abroad for a period of
over 12 months. Destination reflects the main departure
destination recorded at the country of residence.
Measured in trips.
Outgoing tourism expenditure is spending on travel and
tourism products and services by outbound tourists
abroad, including their payments to foreign carriers for
international transport.
Definitions for industry-specific and other
terminology/abbreviations used in this report:
CAGR – compound annual growth rate
MENA – Middle East North Africa
ADR – average daily room rate
RevPAR – revenue per available room
LCC – low cost carrier
OTA – online travel agent
Data parameters and report definitions
REPORT DEFINITIONS
© Euromonitor International
35
Hotel outlets that provide lodging include
independent and chained operators as well as all
company owned, leased, managed and franchised
outlets. Aparthotels are included.
Luxury: includes luxury, upper upscale and
upscale chained and independent outlets and
their corresponding sales. Includes 4 to 5 stars.
Mid-priced: includes mid-priced chained and
independent outlets and their corresponding sales
that may or may not serve food and beverages.
Includes 3 stars.
Budget: includes budget chained and
independent outlets and their corresponding
sales. Includes 0-2 stars.
Tourism expenditure on shopping includes
spending by international and domestic tourists
on food and non-food purchases. Duty-free is
included.
Air transport includes schedule, charter and low
cost carriers. Excludes all transit.
Rail covers travel by passenger train, excluding
freight and car transport. Includes cablecars. Covers
what is spent on rail in that country by both
international and domestic tourists.
Online travel retail sales include traditional travel
retailers including travel agents, tour operators and
exchange service providers that have a web platform
for sales. Also includes online travel agents, brokers
and intermediaries.
Cruise includes sales of cruises through tour
operators and travel agents. Includes flights and
other pre-paid products/services such as spas, food,
drinks, entertainment, excursions etc.
Package holidays include traditional package
holidays which are fixed by tour operators and travel
agents and include transportation, accommodation
along with a choice of food options. Includes
dynamically packaged holidays.
Spas include destination spas, hotel/resort spas, and
others.
Category definitions
REPORT DEFINITIONS
© Euromonitor International
36
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