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The event initiated by the Center for Strategic Research “North-West” and Northwest Regional Branch of the Russian Union of Travel Industry (RUTI) was conducted on January 27, 2009 in St. Petersburg.
Among the participants of the meeting were representatives of federal and regional authorities in charge of tourism development, tourism industry representatives and experts.
The seminar was moderated by Vladimir Knyaginin, Director of the CSR “North-West”, Sergei Korneyev, Vice-President of the RUTI and Yuliya Rybakova, Executive Director of the Northwest Regional Branch of the RUTI.
The discussion was conducted within the framework of three sessions:
1. Factors responsible for the tourism industry development in mid-term perspective
2. Possible strategies and behavioral models for travel industry participants
3. Policies to be pursued by authorities under the new conditions.
In his opening speech Sergei Korneyev, Vice-President of the RUTI, said that he believed the crisis gave travel industry participants a chance to enter new markets. He noted that in developing the strategy of behavior in the current situation it would be important to consider
tendencies that had emerged during past crisis, including global economic downturns.
1. In crisis period tourism markets tend to localize in the nearby areas, citizens are increasingly travelling within their own country and to the nearby regions. So, attractiveness of St. Petersburg and Leningrad Oblast for Baltic countries’ residents increases. Andrei Chernykh, Chairman of St. Petersburg Legislative Assembly’s Commission on Travel Industry, agreed with the opinion expressed by Sergei Korneyev and added that St. Petersburg should pay more attention to provision of services to domestic tourists.
2. The crisis hits consumer markets of different countries non-uniformly, therefore the most promising strategy is to look for the least affected markets, like China. Recently the number of Chinese tourists coming to Russia has been actively growing, in addition to border areas they also visit Moscow and St. Petersburg. Thus, it is necessary to step-up efforts to attract Chinese tourists.
3. St. Petersburg possesses unique attractions: the city has been closely connected with Russia’s history over the last 300 years, tourism demand is stable, only its segments change.
For example, luxury travel segment so far has not experienced any serious turmoil due to reduction of prices for services. At the present time there is a seasonal decline as well as decline of demand due to the general situation of uncertainty. Reduction of prices for hotel services would allow hotels to attract new groups of customers. Western airlines are also cutting their prices.
4. Exchange rates difference is advantageous for a foreign tourist as it makes Russian packet of travel services more affordable for him. At the same time, it would be rather difficult for St. Petersburg to turn the weakening ruble into an additional attractiveness factor, because prices in the city are strongly linked to foreign currency.
CSR “North-West” project manager Viktoriya Zheltova pointed out several key factors affecting development of the sector at the present time. One of the most noticeable is the reduction of population consumption due to falling incomes and weakening hopes for a secure future. Consequently, attempts to reduces travel costs may boost domestic tourism and travelling to neighboring countries like Finland or Ukraine. Stagnation of bank lending would result in reduction of development opportunities of the sector and in “freezing” of tourism and development projects. Speaking about opportunities for raising attractiveness of Russia as an inbound tourism destination Viktoriya Zheltova stressed that the factor would work only if prices for travel services packet would remain stable.
Summing up results of the first session Vladimir Knyaginin specified the main processes which in his opinion would determine development of the tourism sector in the nearest future:
1. Contraction of tourism service market would continue.
2. The time of emergence and scenarios for development of the “bad debts” situation would be the major factor determining banking sector operation.
3. Currency rate – the degree of ruble weakening and strengthening of euro and dollar as well as the degree of weakening of other emerging markets’ currencies (rupee, yuan) and their competition with the ruble - would be the framework condition for development of the sector. Vladimir Knyaginin also quoted opinion of analysts regarding the expected second wave of bank crisis.
4. The impact of the crisis on operation of related sectors, primarily of transport sector. Expected growth in transportation tariffs creates uncertainty for travel operators: from one side they have to secure “deep” travel booking, from the other side – to avoid the risk of exceeding the planned transportation expenses.
Report on the second and the third session would appear on this page in the nearest future.
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