EyeforTravel - Travel Distribution Russia Report

Part of EyeforTravel’sEmerging Online Travel Markets Series

TRAVEL DISTRIBUTION

R E P O R TRUSSIA

including an overview of the CEE regionEdition 1

© EyeforTravel Research. All rights reserved.2


Travel Distribution Russia & CEE Report Edition 1

EyeforTravel Research 7-9 Fashion Street LondonE1 6PXUK

For queries contact:[email protected] www.eyefortravel.com

EyeforTravel Ltd, February 2008




Table of Contents Section 1: Russia 9

Executive Summary & key trends 9

1. Country overview 11 Introduction 111.1 Macroeconomic setting 121.2 Key demographics 191.3 Government policy 26

2. Tourism overview 31

2.1 Traveller segmentation analysis 362.2 Airline capacity 412.3 The current investment scene in the travel and tourism industry in Russia 422.4 Scale of the budget for development 43

3. Travel distribution trends in Russia 45

3.1 The size of the Russian travel market: online vs. offline 453.2 Airline sector analysis 463.3 Hotel sector analysis 503.4 Car rental sector analysis 563.5 Package tour sector analysis 563.6 Online intermediaries 593.7 Traditional intermediaries 633.8 Costs and Key Performance Indicators 663.9 Technological advances in Russia 66

4. The Russian traveller – search and buying behaviour 65

4.1 Internet users 674.2 Mobile phones in use 674.3 Technology in the future 674.4 Payment solutions 684.5 The use of online facilities 68

5. Marketing, PR and Sales 73

Marketing to the Russian traveller 73

6. A ‘how to’ guide for international businesses in the Russian travel industry 75

Useful Contacts in Russia 78

Tabl

e of

Con

tent

s

3



Travel Distribution Russia & CEE Report Edition 1List of Figures

Section 2: CEE Overview 79

Executive Summary 79

1. CEE countries overview 81

1.1 Macroeconomic Overview 811.2 Overview of Internet usage in CEE EU members 81

2. Macroeconomic setting, key demographics, Internet use and e-commerce trends - by country 83

2.1 Bulgaria 832.2 Czech Republic 852.3 Estonia 872.4 Hungary 882.5 Latvia 902.6 Lithuania 912.7 Poland 922.8 Romania 952.9 Slovakia 962.10 Slovenia 972.11 Ukraine 99

3. Travel and Tourism overview 101

3.1 Key Trends 1013.2 Bulgaria 1073.3 Czech Republic 1113.4 Estonia 1133.5 Hungary 1153.6 Latvia 117

4

This section of the report is intended to provide summary information on the ten countries in Central and Eastern Europe who have joined the EU since 2004: Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia and Slovenia. Ukraine has also been included in this resume for reasons explained below.

In recent years all these countries have experienced considerable change in consumer spending patterns during the transition to free market economies, and

with an overall population of around 148 million, the market is of a similar size to Russia, although over a much smaller area.

We present overviews of each of the countries in the region in terms of basic macroeconomic information, and data on Internet access and usage and e-commerce developments. This is followed by information and statistics on travel and tourism activity, both domestic and outbound, including some regional information.




3.7 Lithuania 1203.8 Poland 1213.9 Romania 1233.10 Slovakia 1243.11 Slovenia 1263.12 Ukraine 127

Conclusion 128

Methodology 129

5

Tabl

e of

Con

tent

s



Travel Distribution Russia & CEE Report Edition 1List of Figures

List of Figures

Section 1: Russia

Figure 1 Resident population: urban vs. rural, 2002-2007 Figure 2 Breakdown of the Russian population by age & gender (2001; 2005; 2006)Figure 3 Nominal GDP, 2002-2008 Figure 4 Gender breakdown of the economically active population of the Russian Federation, 1992-2006 Figure 5 Forecast of the number of employed men and women in the economy of the Russian Federation, 1995-2016Figure 6 Rouble exchange rate dynamics, 2002-2007Figure 7 Forecast 2007-2012 exchange rate against the dollaFigure 8 Volume of foreign investments in the economy of the Russian Federation in 2006, by countryFigure 9 Volume of foreign investment by types Figure 10 Distribution of population by per capita average income (percentage of the total)Figure 11 Average monthly nominal accrued wages of employees by kinds of economic activities, 2002-2006Figure 12 Dynamics in the development of Internet users amongst the population over 18 years from, 2002-2006 Figure 13 Internet access location, 2001-2007 Figure 14 Forecasts of increase in debit and credit card usage to 2009Figure 15 Domestic travel volume and value, 2003-2007Figure 16 Number of journeys abroad made by Russian citizens including purpose of travel, overview, 2002-2007Figure 17 Number of journeys abroad made by Russian citizens including purpose of travel, details, 2002-2007Figure 18 Outbound value of the Russian tourist market, 2003-2007F Figure 19 Top outbound destinations of Russian citizens, 2006 (number of trips)Figure 20 Outbound destinations, volume and reason of travel of Russian citizens, 2006 Figure 21 Number of trips abroad undertaken by Russian citizens for tourism purposes, 2002-2007 Figure 22 Prices for one week tours from Russia to the most popular destinations, June 2005Figure 23 Airline capacity: domestic and international, 2005-2007Figure 24 Domestic travel market volume and value, 2003-2012FFigure 25 Outbound travel market volume and value, 2003-2012FFigure 26 Russian travel distribution - offline vs. online bookings, 2005-2012FFigure 27 Value and volume of the Russian airline sector, 2002-2012FFigure 28 Russian airline sector – online vs. offline bookings, 2005-2012FFigure 29 Airline sector: Growth in indirect sales, 2002-2012FFigure 30 Airline sector - Direct vs. indirect sales, 2002-2012FFigure 31 Value of the hotel sector, 2002-2012FFigure 32 Airline sector - Online vs. offline sales, 2005-2012F

6

13

1314

15

161617

1718

20

21

23232632

33

333434

35

37

3941454546474748485252




Figure 33 Hotel sector - Growth in direct sales, 2007-2012FFigure 34 Hotel sector - Direct vs. indirect sales, 2005-2012FFigure 35 Value of the Russian car rental market & car rental fleet size, 2006-2008FFigure 36 Value of the domestic package tour sector, 2002-2012FFigure 37 Domestic tour package sector - Online vs. offline sales, 2005-2012FFigure 38 Value of the outbound package tour sector, 2002-2012F Figure 39 Outbound tour package sector - Online vs. offline sales, 2005-2012FFigure 40 Package tours - direct vs. indirect sales, 2002-2012FFigure 41 Breakdown of online visits to Russian OTAs, July 2007 Figure 42 Online visits to Russian OTAs by country, August 2007Figure 43 OTA sector leaders in terms of site visitors, July 2007 Figure 44 Value of the OTA market in Russia, 2002-2012FFigure 45 Breakdown of OTA sales by sectorFigure 46 Breakdown of Yandex and Aport OTA sales by sector, 2007Figure 47 Value of sales by traditional intermediaries, 2005-2012FFigure 48 The 65 key players in the Russian tourist industry, 2006Figure 49 Russian Internet penetration, 2004-2007Figure 50 Regional analysis of Internet users by frequency of use, January – June 2007Figure 51 Volume of Internet users by city, 2006Figure 52 Internet access location of Russian consumers Figure 53 Influential sources of information for Russian travel consumers, 2005

Section 2: CEE Overview

Figure 54 Internet Usage in CEE European Union MembersFigure 55 Bulgaria - Internet users by age, 2006Figure 56 Bulgaria - Internet connections, 2006Figure 57 Czech Republic - Internet users by type of activity, 2006Figure 58 Czech Republic - Internet purchases by product, 2005Figure 59 Estonia - Internet penetration, 2000-2007Figure 60 Poland - Breakdown of Internet users by frequency of use for travel purposes, 2006Figure 61 Poland - Consumers preferred method for obtaining travel information, 2005 Figure 62 Slovakia - Breakdown of Internet users by frequency of use for travel purposes, 2006Figure 63 Gender differences in Internet use in Ukraine, 2006Figure 64 Air passengers travelling between Estonia, Latvia, Lithuania and the UK, 2000-2004Figure 65 Value of total travel market, 2002-2010FFigure 66 Forecasted travel market growth rate: CEE vs. other European regions, 2006-2010FFigure 67 New EU-12 travel market distribution - online vs. offline, 2002-2010FFigure 68 New EU 12 - Size of the total travel market & breakdown by sector, 2006 Figure 69 Total travel market split by sector: 12 new EU vs. total Europe, 2006Figure 70 Airline sector - gross market value in Eatern EU, 2002-2010F

List

of F

igur

es

5353

56575757585860606161626263646869

69707070

828484868688

94

94

97100

101102

102

103104104



Travel Distribution Russia & CEE • Section 1 Russia

Figure 71 Low cost airlines – gross market value, 2002-2008FFigure 72 Eastern European LCC sector - online vs. offline sales, 2002-2010FFigure 73 Volume of air passengers – geographical split by CEE country, 2002-2005Figure 74 Volume and value of package tour market, 2002-2006Figure 75 Trips of Bulgarian residents abroad by purpose of visit and by destination, 2002-2007Figure 76 Czech Republic - Numbers of guests at accommodation establishments, residents vs. non-residents, 2004-2007Figure 77 Domestic and outbound tourism of Czech residents: by type of trip and average expenditure, 2003-2006Figure 78 Outgoing visitors served by Estonian travel agencies and tour operators by destination, 2006-2007Q2Figure 79 Hungary - Domestic guest nights by type of accommodation, 2005-2006Figure 80 Hungary - Domestic guest nights by tourist region, 2005-2006Figure 81 Hungary - Top 10 most popular destinations for main leisure trips abroad (%), 2005 Figure 82 Mode of transport used for domestic trips around Latvia, by purpose of trip (%), Q2 2007Figure 83 Latvia - Percentage of the population taking trips inland and abroad, by purpose of trip, Q2 2007Figure 84 Volume of Latvian travellers crossing the state border for outbound travel, 2005-2006 Figure 85 Lithuania - Outbound tourist trips by country of destination, Q1 2007Figure 86 Lithuania - Expenditure of outbound tourists – breakdown by type of product spend, Q1 2007 Figure 87 Poland - Domestic holidays (at least 5 days) by purpose of trip (%), 2003-2006Figure 88 Poland - Outbound tourist trips by country, 2002-2006Figure 89 Average expenditures of Polish tourists travelling abroad pre-trip and during the trip, 2002-2006Figure 90 Trips made by Polish residents - Forecasts of short breaks, long trips and outbound tourism, 2001-2013F Figure 91 Slovakia outbound and domestic tourism data: volume of tourists; average length of stay; volume of tourism establishments, 2005-2006Figure 92 Ukraine - Volume of domestic, inbound and outbound tourists, 2000-2006

List of Figures

105105

106106

107

111

112

114

115115

117

118

118

119

120

121

122122

123

123

125

127



Travel Distribution Russia & CEE • Section 1 Russia

Exec

utiv

e Su

mm

ary

Section 1: Russia

Executive Summary & Key Trends

This report examines the travel distribution trends in Russia. It aims to fill a gap in travel industry knowledge, as information on this region in terms of travel distribution is fairly limited. The report identifies and analyses individual markets in terms of their stages of development regarding travel distribution and the population’s propensity to travel.

The report is intended for various travel industry sectors such as airlines, hotels, travel agents, online intermediaries and tourism boards. It provides information necessary to back up distribution and marketing strategies and ultimately reach the consumer in a more informed way. It will be of interest to both foreign companies looking to invest in the market and capitalise on the travel spend of the residents (domestic and international travel) as well as local companies looking to understand the market in which they operate.

The report examines the role of the Internet in terms of travel distribution in Russia, combined with a study into traditional channels of distribution, which at this stage still play a dominant role in Russia.

The report covers the following key areas:

•

•

•

•

•

•

•

The report focuses exclusively on the market for domestic and outbound travel and tourism. It does not count the inbound contribution to the Russian tourist economy, so as to avoid any global double counting.

Country overview - macroeconomics, demographics, government policy, internet penetration, broadband penetration, credit card / e-payment card penetration

Domestic and outbound tourism information and statistics – volume and value

Outbound tourism trends e.g. destinations, volumes and trends

Travel distribution trends: total market values, transportation, accommodation, intermediaries, online and offline / direct vs.. indirect bookings. This includes an in-depth look at the airline, hotel and package tour market

Russian consumer travel research and buying habits

Marketing activity, including how travel companies are successfully marketing to the Russian consumer

Going about doing business in the Russian Federation



Travel Distribution Russia & CEE • Section 1 RussiaExecutive Summary

Key Trends/Highlights

•

•

•

•

•

•

•

All the current predictions for the Russian economy are positive, based on a healthy macroeconomic environment and expectations of large scale government investments in the economy. Russia is seeing a steady growth in infrastructure investment and earnings are rising steadily.

All the trends in domestic and outbound travel predict significant increases in all sectors, with airline travel benefitting particularly from the growth.

Russian government investment into the tourism infrastructure is developing, with the designation of a number of Special Economic Zones dedicated to tourism. These zones offer highly favourable tax conditions and are attracting interest from Russian and international players in the travel market. The programme reflects the commitment to exploiting the huge potential resources for tourism in the largest country in the world.

The decision to hold the 2014 Winter Olympics at Sochi has stimulated further investment pledges from both the government and private sector. Sochi is at the heart of the Krasnodar region, where around 50% of Russian tourists go every year.

The hotel market is ripe for expansion and investment; one of the key factors holding back domestic tourism in Russia is the lack of mid-range hotels in both the major cities and tourist destinations in the regions. In 2004, the US Department of Commerce highlighted this sector as particularly favourable for international investors.

In 2006, the World Travel and Tourism Council presented a report for the Russian Government and the Federal Tourism Agency forecasting Russia to regain the role of a leading tourist attraction before 2015. The Russian tourism industry will be developing twice as fast as in the European Union, according to the Council’s prognosis. According to Russian travel industry experts, this level of growth will be hard to achieve, but the forecast is a powerful indicator of Russia’s potential as a tourist destination.

Russia is currently seeing unprecedented growth in ICT development, particularly mobile technology. Internet access and broadband facilities are being steadily expanded, with significant government and private investment. Online bookings in all sectors of the travel industry are now beginning to take off, with forecasts of growth up to 15% by 2012.

Documents

EyeforTravel - Travel Distribution Russia Report