WTM Vision Master Report

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

http://www.euromonitor.com/


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


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.



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


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



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



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



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



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


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


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



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.



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



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



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


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.



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


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



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



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



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.



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


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



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



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)



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



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)



33

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.



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



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



36

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