Online travel agencies, hotel booking sites and metasearch players in Russia will survive the turmoil in Ukraine and Crimea, but the ruble crisis will take its toll.
With Russia annexing Crimea, and despite months of unrest in Ukraine, the CEOs of some of the top online travel companies in Russia seem to believe that the falling value of the ruble is having more of an impact on their businesses than the political unrest in Ukraine and Crimea.
“We do not see any impact,” says Marina Kolesnik, the CEO of Travel.ru (Oktogo Group), referring to the turmoil in Ukraine. “We are more conerned by the fact that the Russian ruble devalued against the euro and U.S. dollar by more than 10 percent since the beginning of the year. That makes travel to European destinations more expensive.”
The average spending on a trip to Europe for Travel.ru has been stable, though, as travelers are booking further in advance, staying at budget hotels, or taking advantage of special offers, Kolesnik says.
Kolesnik points out that travel from Russia to Ukrainian destinations such as Kiev, Odessa and Lviv has declined in 2014, compared with last year, but “Russian travelers who wanted to go there for a weekend or short trip turned to other weekend destinations, either in Russia (Kazan and Nizhny Novgorod etc.) or in the Baltic countries (Tallinn, Riga, and Vilnius).”
Travel.ru doesn’t have an office in Crimea, although it does offer hotels there. “It’s always been a popular destination for Russians,” Kolesnik says. “It’s visa-free and very inexpensive with its Black Sea resorts.”
“The substantial depreciation of the Russian ruble will make international travel more expensive and less attractive in the short term, with some impact on the industry,” Burge says. “However, we still see the Russian market as a very exciting one, with rapid online adoption and a growing market.”
The Momondo Group “continues to have plans for further substantial investment” in Russia, where Momondo is a “leading metasearch player,” and has notched “tremendous growth,” Burge says.
This isn’t exactly an opportune moment to travel to Crimea, though, with all but direct flights between Crimea and Russia facing cancellations, according to The New York Times.
“I think our advice would be to stay clear for now as the situation is fluid and volatile, but I’ll leave travel advisories to the Foreign Office,” Burge says.
Irina Ryabovol, a member of the Momondo team in Russia, predicts that Russia will invest in Crimea as a vacation destination, particularly for civil servants.
A counter-argument might be, though, that the Crimean economy is a mess, and Russia will already be hard-pressed to bail it out.
“Crimea always was a summer travel mecca for Russian tourists, especially those who can’t speak English or prefer to visit Russian resorts or believe that it’s cheaper,” Ryabovol says. “Using the Soviet Union experience they would like to promote budget trips for civil servants that are half prepaid by labor unions to make flight subsidies or even make airlines cut their prices etc.”
Assuming things in Crimea settle down, Ryabovol believes that promoting more Russian travel to Crimea can begin as soon as this Summer.
“All this can happen by this season already so probably we will soon see a splash of interest to Crimea again,” Ryabovol says. “And, of course, many Russians have relatives in Ukraine and in Crimea whom they would love to visit.”
Serge Faguet, CEO of hotel-booking site Ostrovok.ru, says he “anticipates that there will be increased travel into Crimea now that it is a part of Russia.”
Faguet says Ostrovok.ru “has the leading database of direct hotel relationships in Crimea,” but apart from an envisioned uptick in travel to the disputed area, he doesn’t think the conflict will bring meaningful changes to the travel patterns of Russian consumers over the long term.
“It is tough to say how travel to Ukraine will be impacted at this point, but generally because Russia and Ukraine have very close social, economic and political ties, there is unlikely to be any long-term decline,” Faguet predicts.
However, with the annexation of Crimea a done deal, European and U.S. sanctions against Russia being posed, and tensions very high, it is hard to see the situation approaching any semblance of normalcy any time soon.
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Photo credit: Pro-Russian people celebrate in the central square in Sevastopol, Ukraine, late Sunday, March 16, 2014. Russian flags fluttered above jubilant crowds Sunday after residents in Crimea voted overwhelmingly in a disputed ballot process to secede from Ukraine and join Russia. Andrew Lubimov / Associated Press