Travel and Tourism in Russia 2012

December 23, 2011

Tourism Overview

The majority recent national data for H111 show solid increase of 14% year-on-time(y-o-y) in the number of foreign visitor arrivals to Russia, after similar increase in Q111. This was a strong rebound on weak increase in arrivals in H110 of just 2% y-o-y. Of the top source markets (outside the former Soviet Union), Finland, China and Poland amount recorded favourable increase in arrivals, equivalent to 36%, 14% and 71% yo- y respectively. The other major source market, Germany, recorded only slight increase of 1% compared to H110. Of the Baltic states, Estonia provided positive increase of 9% y-o-y, while Lithuania and Latvia both recorded negative increase of -15% and -12% respectively.

Estimate Scenario

Globserver has again raised its outlook for foreign visitors to Russia in 2011, to annual increase of 9.4%, mainly due to recent strength in arrivals. We continue to expect increase to slow in 2012, however. The forecasts are strongly influenced by real GDP increase in the eurozone - an significant source market for tourists - which we have revised down this quarter to 1.7% and 1.2% in 2011 and 2012 respectively, though increase should accelerate in 2013.

Alongside other emerging markets’ currencies, the Russian rouble came under sustained pressure against the US dollar in Q311 on the back of heightened world risk aversion. However, we see possible short-term support for the resurgence in the rouble. Broadly speaking, through to the end of 2012, Globserver  believes stable oil prices will help support the rouble against the US dollar and the euro.

Aircraft Safety

In September 2011, a Yak-Service aircraft, a Yakovlev Yak-42, carrying Russian ice hockey team Lokomotiv Yaroslavl crashed shortly after takeoff from an airport in Yaroslavl, north-east of Moscow, killing 43 of 45 people on board. In another case, crash investigators have confirmed that a Tupolev TU- 134A, flown by local carrier RusAir, which crash landed at Petrozavodsk Airport in June 2011 (47 people on board died), had no technical problems and the crash was the result of errors by the pilot and other members of the crew. The navigator of the plane had as well been drinking alcohol, investigators said. Moscow Domodedovo Airport

Figures for January-September 2011 show passenger numbers up solidly at Moscow Domodedovo Airport by just under 17% y-o-y (to 19.8mn). International traffic grew by 17.6% y-o-y to over 12.1mn, with the majority buoyant increase (+60%) recorded for the following destinations: Antalya, Barcelona, Munich, Frankfurt and Paphos. Over the same period, domestic traffic was up by about 16% y-o-y, with the strongest increase on routes to Krasnodar, St Petersburg, Yekaterinburg, Rostov-on-Don and Novy Urengoy. The number of passengers on these routes increased by over 37% y-o-y. Aeroflot And Transaero Airlines

During the first eight months of 2011, the Russian national carrier Aeroflot recorded a strong 23% y-o-y increase in passenger numbers to almost 9.2mn, with both international and domestic traffic increasing by around 23% y-o-y. In H111, Aeroflot reported a 29% y-o-y rise in operating profit to US$204.7mn. In October 2011, Airbus announced a provisional transaction to sell A380s to Russian carrier Transaero Airlines - the first sale of Europe’s superjumbo to a Russian airline. In November, Transaero signed an agreement with Boeing for Boeing 747-8 aircraft. Data for January-September 2011 show Transaero carried nearly 6.6mn passengers, a robust increase of just under 30% y-o-y.

Accommodation Developments

In October 2011, Hilton Worldwide announced new hotel developments in Russia, amount of which are due to open over the next years or so. Hilton has as well boosted its focus on Russia following a multiproperty agreement with Osnova Development. The agreement is for at least 11 hotels, which will add about 1,500 rooms to Hilton’s portfolio in the country, involving of its brands: Hampton and Hilton Garden Inn. In Q311, InterContinental Hotels Group (IHG) announced major expansion plans for Russia and the Commonwealth of Independent States (CIS) over the decade. In particular, IHG, which has 11 hotels in Russia, aims to develop its Crowne Plaza and Holiday Inn brands.

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