Russia Outbound - Travel and Tourism No

Russia Outbound - Travel and Tourism No. 19, November 2011

Published by IMPORTANT WARNING

Mintel Group Ltd 1. Mintel Group Limited ("Mintel") is the legal owner of the copyright 11 Pilgrim Street subsisting in this report. Any use and/or copying of such documents London EC4V 6RN and materials which is not in accordance with Mintel's standard Terms tel: 020 7606 4533 and Conditions (available at www.mintel.com/terms) or these fax: 020 7606 5932 Conditions of Use is unauthorised. Any unauthorised use may give rise to Mintel bringing proceedings for copyright infringement against you Sales hotline: +44 (0)20 7606 6000 claiming an injunction, damages and costs. No purchase order issued by the original subscriber (“Licensee”) will modify or amend these standard Terms and Conditions, even where the purchase order is email: [email protected] signed by Mintel.

© Mintel Group Limited. All rights reserved. 2. The purchase, use or reading of any Mintel report that contains Statistics in this report are the latest available at the time of SymphonyIRI Group (IRI) InfoScan data by (or disclosure to) a Non- research Participating Retailer or its employees (or agents/professional advisors working on its account) is prohibited. A Non-Participating Retailer is a retailer and its subsidiaries each as defined by IRI, where it, or one of NOTE: This publication is issued as a series of reports. Each its associated companies, has declined to participate in IRI’s InfoScan report is a complete work in itself, which is available information service by not providing its data to IRI. A current written separately or as part of a subscription list of Non-Participating Retailers and subsidiaries (as notified to Mintel by IRI) is available from Mintel at any time, or as linked through the latest set of terms and conditions as displayed continuously on www.mintel.com Mintel’s website at http://www.mintel.com/terms. The Non- Participating Retailers as at May 24, 2010 are Walmart, Sam’s Club, Costco, Lidl, and Aldi.

3. Unless otherwise agreed in writing in advance by Mintel, this document may not be sold, passed on, communicated or disseminated in any form (including within its original covers), nor access granted, to any third party or to any subsidiary, associated or holding company (whether direct or indirect) of the Licensee.

4. The Licensee acknowledges that all information and materials contained in this report are the copyright property and confidential information of Mintel, and are protected, inter alia, by the Copyright, Designs and Patents Act 1988 and other intellectual property rights and by these Terms and Conditions, and that no rights in any of the materials are transferred to the Licensee. The Licensee undertakes that it will not copy, reproduce, print or store in any manner (electronic or otherwise), extract or transmit in any form or otherwise deal with in any way the whole or part of the data, materials or information contained in this report.

5. The Licensee (or any subsequent user, whether licensed or unlicensed who reads this report) agrees it will not place financial reliance upon any figure, statement or inference contained within this or any other Mintel report, or invite investment from others, without first obtaining the written consent of Mintel's Company Secretary so to do. In the event that the Licensee (or any subsequent user, whether licensed or unlicensed) does not follow this procedure, it (or any subsequent user) agrees fully and effectually to indemnify Mintel against any claims, howsoever arising, and to draw specific attention to the fact that this consent has not been obtained.

Table of contents Russia Outbound Travel and Tourism No.19, November 2011

INTRODUCTION ...... 1

DATA SOURCES ...... 3

MARKET DRIVERS ...... 5 POPULATION ...... 5 Figure 1: Mid-year population estimates for Russia, 1950-2050 ...... 6 Figure 2: Mid-year population estimates for Russia, by age and gender, 2011 and 2050 ...... 7 ECONOMY ...... 8 Figure 3: Russia’s real GDP growth and unemployment, 2003-10 ...... 8 EXCHANGE RATES ...... 9 Figure 4: Selected exchange rates against the Russian Rouble, 2004-10 ...... 10 TOURISM BALANCE...... 10 Figure 5: Russia’s tourism balance, 2004-10 ...... 10 OUTBOUND TOURISM ...... 13 ARRIVALS ...... 13 Figure 6: Outbound tourism from Russia, 2004-10 ...... 13 DESTINATIONS ...... 14 CIS countries...... 14 Figure 7: Outbound tourism from Russia to CIS destinations, 2004-10 ...... 14 Non-CIS Europe ...... 15 Figure 8: Outbound tourism from Russia to selected non-CIS European destinations, 2005-10 ...... 16 Africa and the Middle East ...... 18 Figure 9: Number of trips taken by Russians to selected Middle East destinations, 2005-10 ...... 19 Asia Pacific...... 19 Figure 10: Number of trips taken by Russians to select Asia-Pacific destinations, 2005-10...... 20 Americas ...... 21 Figure 11: Number of trips taken by Russians to selected destinations in the Americas, 2005-10 ...... 22 MARKET CHARACTERISTICS ...... 23 PRE-BOOKING BEHAVIOUR AND BOOKING METHODS ...... 23 DEMOGRAPHICS ...... 24 The ultra wealthy ...... 24 Young professionals ...... 24 Emerging middle-class families ...... 25 PURPOSE OF VISIT ...... 25 Figure 12: Number of trips taken by Russians to selected Asia-Pacific destinations, by purpose of visit, 2004-09 ...... 26 EXPENDITURE ...... 26 LENGTH OF STAY ...... 27 SEASONALITY ...... 27 TRANSPORT ...... 29 AIR ...... 29 Figure 13: Number of international passengers carried between CIS and non-CIS destinations, Jan-Jun 2010 and 2011 ...... 29 Airports ...... 30 Airlines ...... 30 Figure 14: Market share of major Russian airlines, by international passenger traffic, 2009 and 2010 ...... 31 ROAD ...... 31 RAIL ...... 31 SEA ...... 32 Cruising ...... 32 ACCOMMODATION ...... 33

TOUR OPERATORS AND TRAVEL AGENCIES ...... 35

Figure 15: Turnover of major travel companies in Russia, 2008 and 2009 ...... 36 WHAT NEXT? ...... 37

INDEX TO TRAVEL & TOURISM ANALYST ...... 39 Index grouped by geographic area ...... 39 INDEX TO TTI DESTINATION REPORTS ...... 47 Country reports ...... 47 City reports ...... 48 SPECIAL REPORTS INDEX ...... 49 2003 ...... 49 2004 ...... 49 2005 ...... 49 2006 ...... 49 2007 ...... 49 2008 ...... 49 2009 ...... 49 2010 ...... 50 2011 ...... 50

Introduction Russia is undergoing rapid changes – structurally, socially, economically and politically. Having diverged from its socialist roots, it has readily embraced capitalism, and living standards for the majority of its citizens have improved significantly in the last 20 years. Gross domestic product (GDP) per capita now stands at US$9,148 versus US$2,980 in 2003 – an increase of 207%. GDP per capita for Russia is about 6.3% higher than the global average of US$8,600 cited by the World Bank. However, its economy is still wholly reliant on commodities such as oil, and any downward shift in commodity values could therefore have a devastating effect on Russia’s economic prospects.

Crucially, Russia is home to a growing number of affluent middle-class individuals as well as millionaires and billionaires, who form the bulk of Russian travellers heading overseas, whether on business or for leisure. Indeed, about half of Europe’s millionaires are Russian and Russia is now home to 101 billionaires. It still lags behind its Cold War rival the US, who has 413 billionaires, as estimated by Forbes Rich List. Russia is home to 140 million consumers and is the most prosperous of the BRIC countries (Brazil, Russia, India and China). It is apparent that Russia has a lot of potential, and the outbound market will certainly grow in the immediate future.

However, the pace of growth could be capped, due to the anticipated decline in the number of individuals aged 25-54 years – who are the most inclined to journey abroad – over the next 40 years. Year-on-year growth in the Russian outbound market has been relatively robust, hovering around 10.2% between 2004-10. Between 2010-11, according to the Russian Federal Statistics Service (Rosstat), the number of Russians heading overseas jumped by 32%, signalling a recovery in the market after the steep decline in 2009 due to the recessionary effect of the global financial crisis.

Affluent Russians travel far and wide, preferring sunny climes. Border travel to destinations such as China and Finland are still common among Russians, although these are more for grocery shopping or trade purposes. There has been a clear demand for more exotic destinations in recent years, as more Russians experience travel, whether independently or on a package tour.

Turkey is the top non-Commonwealth of Independent States (CIS) destination for Russian tourists, followed by Egypt and Spain. Generally, Russians gravitate towards destinations where they are granted visa-free travel or where there are provisions to ease the visa application process. Hong Kong, Thailand, Israel, the Dominican Republic and Turkey have seen the number of Russian tourists soar since they implemented visa-free regimes.

The Internet is still used predominantly by Russians for research, but compared to Western European nations, the level of travel bookings made online is low, relative to the general rate of growth of Russia’s Internet users. Russians are still wary about using the Internet to purchase products due to security fears but confidence is growing gradually as more Russians veer towards independent travel. Russians are also notoriously late bookers. Moscow is the main source market of Russian outbound tourists, followed by St Petersburg. Christmas and New Year are the peak periods for Russian outbound travel.

Most outbound flights from Russia land in the European Union (EU), although their share has diminished in the last ten years as more Russians travel out of Europe. Total capacity at Russian airports is rising, as its government attempts to modernise the country’s transport infrastructure. The country’s travel trade remains fragmented, with small and medium-sized players dominating. Russia has just over 12,000 travel agencies.

Data Sources Wherever possible, the most recent statistics have been cited, with estimated totals where they are not yet complete. Much information in this report is gleaned from figures provided by the Russian Federal Statistics Service, or Rosstat.

The World Travel and Tourism Council (WTTC), in association with Accenture and Oxford Economics whose research has been drawn upon here, uses the Tourism Satellite Account (TSA) system, an international standard of accounting devised by the WTO (prior to its becoming UNWTO), the Organisation for Economic Co-operation and Development (OECD) and Eurostat and approved by the United Nations Statistical Commission in 2000. TSA research gives a more accurate picture of tourist movements and expenditures than some government sources because it quantifies both the supply and demand sides of the tourism industry.

Data sources also include a variety of economic bodies, banks, travel industry organisations, government departments and publications: US Census Bureau’s International Data Base (IDB); Russian Ministry of Health and Social Development; World Health Organisation (WHO); World Bank; Pacific Exchange Rate Service; Merrill Lynch; Forbes Rich List; Russian Central Bank; United Nations World Tourism Organization (UNWTO); Rostourism; Association of Tour Operators in Russia (ATOR); Hot Line Tourism Magazine; Croatian National Tourist Board (CNTB); VisitFinland; German National Tourist Board (GNTB); Cuban Ministry of Tourism; Greek Tourism Organisation; Bulgarian Ministry of Economy, Energy and Tourism; Cyprus Statistics Office; France Tourism Development Agency (Atout France); Austrian Agency of Tourism; Swiss National Tourist Office; British Tourism Authority (BTA); Turkish Culture and Tourism Office; Israeli Tourism Ministry; China National Tourism Administration (CNTA); Hong Kong Tourist Board (HKTB); Tourism Authority of Thailand (TAT); Tourism Department of Goa; Japan Tourism Marketing; Russian Ministry of Tourism; Sanya Tourism Development Board; Office of Travel and Tourism Industries (OTTI); US Ministry of Trade; Central Bank of the Dominican Republic; Jones Lang LaSalle; prian.ru; Global Blue; Travelport’s The Well Connected Traveller, 2010; Credit Suisse’s Emerging Consumer Survey 2011; Visa’s Tourism Outlook: Russia, July 2011; Russian Association of Tourist Agencies (RATA); Internet World Stats; eMarketer; Rambler’s Rumetrica; Eventica Communications; comScore; Skyscanner; European Travel Commission (ETC); IPK International’s Russian Travel Monitor 2006; Citibank; Russian Ministry of Transport; OAG; Boston Consulting Group’s Global Wealth report, 2011; Airports Council International (ACI) Europe’s November 2010 Traffic Report; Costa Cruises; and SITA/Air Transport World Passenger Self-Service survey, conducted in 2010.

Disclaimer: due to the differing way in which data are gathered/collated/calculated, there may be a discrepancy between figures sourced from the UNWTO and certain tourist boards within this report.

Market Drivers Population Despite Russia’s expansive geographic size, it occupies only ninth place in the world in terms of population, significantly lagging behind the three leaders – China (1.3 billion), India (1.2 billion) and the US (310 million). The country’s population is mainly concentrated in the sprawling conurbations of Moscow and St Petersburg, the most socially and economically developed cities in Russia, which together account for some 11% of the total population.

The Russian Federation has a diverse population, encompassing Estonians, Belarussians, Lithuanians, Latvians, Ukrainians, as well as those from Kyrgyzstan, Uzbekistan, Turkmenistan, Tajikistan, Georgia and Azerbaijan living alongside various indigenous nationalities. As a result, there is a significant level of outbound VFR tourism (visiting friends and family) from Russia to CIS (Commonwealth of Independent States) countries.

Since the demise of communism and the break-up of the Soviet Union in 1991, Russia’s population has shrunk year on year. Between 2002-10, the population declined by 5.8 million people, while the gap between the number of men and women has widened. This decline would have been even steeper if not for an influx of immigrants in the early 1990s, which included ethnic Russian immigrants and refugees from other CIS countries.

The rapid rate of decline in Russia’s population, relative to other European nations, can be traced to a handful of fundamental causes – the number of deaths far exceeding that of births, the lowest life expectancy in Europe and an ageing society.

In Russia, fertility rates (the average number of children that would be born to a woman over her lifetime) have hovered around the 1.3-mark since the mid-2000s, which is far below the rate required for a population to replace itself. As of 2011, according to estimates drawn by the US Census Bureau, there were 16 deaths in Russia for every ten births. In contrast, globally, there are 19 births for every eight deaths. The low birth rate can also be attributed to the fact that more middle-class Russian women are foregoing motherhood in favour of a career.

A high rate of abortions is another key factor behind Russia’s lower number of births. In 2009, the total number of abortions recorded by the Russian Ministry of Health and Social Development reached nearly 1.3 million – a similar number to the US, which has a population size three times that of Russia. One of the reasons behind the high abortion rate is the fact that the birth of a first child often pushes many families into poverty.

Life expectancy for an average Russian now stands at 65.5 years, far below the 78.8 years projected for individuals living within the EU. Widespread alcoholism and poor health care have been cited as the root causes behind Russia’s high mortality rates and dwindling life expectancy figures. According to the World Health Organisation (WHO), one in five men die from alcohol-related causes in the Russian Federation and neighbouring countries, compared to one in ten worldwide.

FIGURE 1: MID-YEAR POPULATION ESTIMATES FOR RUSSIA, 1950-2050

Year Population (000) Year Population (000)

1950 101,937 2006 142,069 1960 119,632 2007 141,378 1970 130,245 2008 140,702 1980 139,039 2009 140,041 1990 147,973 2010 139,390 2000 146,710 2011 138,740 2001 145,990 2020 132,242 2002 145,163 2030 124,094 2003 144,308 2040 116,553 2004 143,507 2050 109,187 2005 142,776

Period % change Annual % change

1950-60 6.8 +0.7 1960-70 6.4 +0.6 1970-80 -0.9 -0.1 1980-90 -0.5 0 1990-2000 -0.6 -0.1 2000-10 -5.0 -0.5 2011-20 -4.7 -0.5 2020-30 -6.2 -0.6 2030-40 -6.1 -0.6 2040-50 -6.3 -0.6

SOURCE: US CENSUS BUREAU, IDB As with other industrialised countries, Russia’s population is ageing rapidly, putting additional strain on the country’s coffers. Its labour force is projected by its government to decline by 8 million between 2008-15. Moreover, increasing numbers of Russians are drawing pensions even before they reach pensionable age, mainly due to high levels of unemployment, particularly outside cities. According to government figures, close to half of Russia’s households depend heavily on pensions. They are the only source of livelihood for 18% of Russian families and one of the primary income sources for a further 30%.

FIGURE 2: MID-YEAR POPULATION ESTIMATES FOR RUSSIA, BY AGE AND GENDER, 2011 AND 2050

2011 2050 % change 2011-50 Total Male Female Total Male Female Total Male Female 000 000 000 000 000 000

0-4 7,639 3,924 3,715 5,115 2,630 2,486 -33.0 -33.0 -33.1 5-9 7,198 3,695 3,503 5,391 2,770 2,621 -29.4 -29.4 -29.5 10-14 6,237 3,198 3,039 5,484 2,817 2,667 -23.8 -23.8 -23.9 15-19 7,301 3,739 3,562 5,374 2,758 2,616 -13.8 -13.8 -13.9 20-24 11,325 5,756 5,569 5,315 2,724 2,591 -27.2 -27.1 -27.3 25-29 11,774 5,887 5,888 5,654 2,895 2,758 -50.1 -49.7 -50.5 30-34 10,607 5,216 5,391 6,388 3,274 3,114 -45.7 -44.4 -47.1 35-39 9,920 4,839 5,081 7,068 3,622 3,446 -33.4 -30.6 -36.1 40-44 9,069 4,437 4,632 7,133 3,643 3,490 -28.1 -24.7 -31.3 45-49 10,447 4,938 5,509 6,333 3,208 3,126 -30.2 -27.7 -32.5 50-54 11,417 5,203 6,214 5,497 2,738 2,759 -47.4 -44.6 -49.9 55-59 9,974 4,316 5,658 6,510 3,155 3,356 -43.0 -39.4 -46.0 60-64 7,760 3,151 4,610 9,109 4,201 4,908 -8.7 -2.7 -13.3 65+ 18,071 5,457 12,614 28,815 9,914 18,901 +271.3 +214.7 +310.0

Total 138,740 63,756 74,984 109,187 50,349 58,838 -21.3 -21.0 -21.5

SOURCE: US CENSUS BUREAU, IDB Within the confines of this report, according to various studies carried out by national tourism organisations (NTOs), Russians aged between 25-54 years are the most inclined to travel abroad. However, as previously mentioned, this segment is set to diminish significantly over the next 40 years. Between 2011-50, the number of individuals within this age range is expected to drop to 38 million from 63 million today, representing a decline of some 40%. Currently, those aged 54 years and above are the least likely to venture overseas, probably owing to budget as well as health constraints. Outbound travel for Russia is therefore projected to fall in line with the anticipated decline in population over the long term, and is expected to remain the exclusive domain for the fairly wealthy or the most prudent of savers in the long term, unless the pension system undergoes radical transformation.

Russia’s political outlook for the near term is expected to remain stable. Nonetheless, there are fears that the recent uprisings in the Middle East and North Africa might spill over into Russia. Speculation is also growing to whether President Medvedev or Prime Minister Putin will contest the March 2012 presidential elections. An announcement is likely before the end of year but foreign investors are unlikely to see any significant impact to the business climate as a result of these elections. Regardless of who wins, Putin is predicted to retain a highly influential role in policy-making, which will leave many of Russia’s regulations and practices unchanged.

Economy The Russian economy suffered great strain during the 1990s, as it switched from a centrally planned economy to a market-driven one. Lower prices for oil and minerals, two of Russia’s chief exports, as well as the Asian currency crisis in 1997, exacerbated Russia’s economic problems. Consequently, the Rouble, the country’s official currency, saw its value plummet and foreign investment drop. The country ended 1998 with a decrease in real output of 4.9% for the year instead of the small growth that was expected.

Nonetheless, Russia’s economy began to pick up not long after the devaluation of the Rouble, as key economic reforms kicked in and commodity prices recovered. Russia’s economy flourished between 2000-08, as business-friendly policies initiated by the Putin administration attracted inward investment and household consumption grew. In 2007, the World Bank announced that the Russian economy had achieved “unprecedented macroeconomic stability”.

Russia’s economy was tested during the global financial crisis of 2008-09. In late 2008, during the onset of the crisis, markets in Russia plunged and over US$1 trillion was wiped off the value of Russian shares. The country only managed to emerge from recession in the third quarter of 2009, aided by a rise in commodity prices. By 2010, its economy was making modest inroads, bolstered by its government’s anti-crisis policies. Its leaders put renewed emphasis on promoting innovation to bolster economic development as well the need to diversify its economy in order to lessen its dependence on oil and gas.

FIGURE 3: RUSSIA’S REAL GDP GROWTH AND UNEMPLOYMENT, 2003-10

2003 2004 2005 2006 2007 2008 2009 2010* % change 2003-10

Current GDP (US$bn) 430 591 764 990 1,300 1,667 1,232 1,275 +196.5 % change +24.6 +37.4 +29.3 +29.6 +31.3 +28.2 -26.1 +3.5 -21.1 Real GDP growth (%) +7.3 +7.2 +6.4 +8.2 +8.5 +5.2 -7.8 +4.0 -3.3 Unemployment rate (%) 8.2 7.7 7.1 7.1 6.1 6.3 8.2 7.5 -0.7

Note: GDP = gross domestic product; *estimate

SOURCE: WORLD BANK Historically, household consumption in Russia has played an even bigger role than investment in propping up the country’s economy, growing at an impressive compound annual growth rate (CAGR) of 27% between 2000-08, driven by high oil prices. This was stimulated further by the expansion of consumer lending, which even extended to personal tourism trips. Holidaymakers are relying increasingly on credit to fund their trips.

According to Visa, the number of credit cards issued in Russia grew by a phenomenal 7,600% between 2000-10. Last year, Russians spent a total of US$5.8 billion on their Visa cards during their trips overseas – a 36% increase on 2009. The country’s federal statistical office, Rosstat, revealed that Russians spent US$4.2 billion on goods and services outside the country using debit and credit cards in the first quarter of 2011.

According to Rosstat, the richest tenth of Russia’s population earns around 15 times as much as the poorest tenth. Half of Europe’s millionaires are Russian, according to the financial group Merrill Lynch. Some 101 billionaires live in Russia, according to the Forbes Rich List, with their cumulative wealth making up just over a third of the country’s GDP in 2010.

Between 2000-08, per-capita income grew by around 21% annually. This impressive growth in the population’s disposable incomes created not only Russia’s elite of billionaires and oligarchs, but also an emerging upper-middle class desiring the finer things in life. Moscow and St Petersburg have been dubbed as the ‘luxury capitals of Russia’ with its residents being the most inclined to buy luxury items and travel abroad.

In 2009, prior to the full-blown effects of the worldwide recession, Merrill Lynch estimated that Russia comprised 7% of the global luxury market, and that it would grow by 15% per annum until 2014. The luxury market collapsed over the second half of 2009, and in 2010, Russia was knocked off its pre-crisis ranking as the world’s fourth-largest luxury market by China, Japan and South Korea. Russia is now estimated to account for 3% of luxury spending worldwide. Penetration of the luxury market, including travel by Russians, is forecast to grow at a pace of 1-2% per year over the next five years, boding well for the global luxury travel market.

Despite the growth in GDP, unemployment in Russia is still stubbornly high, although it is now marginally lower (6.1%) than that of the EU (9.9%). According to Russia’s Ministry of Health and Social Development, more than 1.7 million people have been retrenched or fired since the beginning of the economic crisis in 2008 and less than a third of them, as of June 2011, found new jobs. Nonetheless, according to other government figures, Russian unemployment fell to the lowest level in almost three years in June 2011, hitting 6.1%. The acceleration in job growth is facilitating household spending, which is in turn boosting economic growth.

Russia’s GDP in the first quarter of 2011 increased by 4.1% compared with the same period last year – a strong performance compared to most European economies. A fairly robust outlook for Russia’s economy is on the cards for 2011-12. Observers are predicting that the country’s GDP will grow by about 4-4.5% next year, buoyed by domestic demand and rising commodity prices. On the other hand, Russia’s relatively weak banking sector and poor management in Russian companies could well destabilise this anticipated growth. From a tourism standpoint, the number of Russian tourists heading abroad should continue to rise in line with the country’s improving economic prospects, although the majority is anticipated to derive mainly from the upper-income tiers.

Exchange rates On 17 August 1998, the Russian government and the Central Bank devalued the Rouble, and declared a moratorium on foreign creditors, as the economy reeled from the impact of the Asian financial crisis. The Rouble plunged by 70% in value against the US Dollar in just six months. A decline in commodity prices, of which Russia is a major exporter, was a key factor behind the rapid devaluation of the currency.

Inflation in the country hit a painful 84% in 1998 and welfare costs grew considerably. Many banks, including Inkombank, Oneximbank and Tokobank, closed down as a result of the Russian financial crisis, and hundreds lost their life savings. Social unrest ensued, as Russians lost their trust and confidence in the country’s financial system.

Fortunately, Russia bounced back quickly, and in subsequent years, oil and gas prices soared so high, the country began reporting trade surpluses. Since 1998, the Putin government has put several safeguards and structural reforms in place to prevent another similar crisis, securing stability and putting Russia’s economy on the right path to prosperity.

FIGURE 4: SELECTED EXCHANGE RATES AGAINST THE RUSSIAN ROUBLE, 2004-10

One unit = X Russian Rouble 2004 2005 2006 2007 2008 2009 2010 % change 2004-10

US Dollar 28.81 28.30 27.18 25.57 24.87 31.76 30.37 +5.4 European Euro 35.82 35.19 34.12 35.02 36.41 44.13 40.30 +12.5 Chinese Renminbi 3.48 3.46 3.41 3.36 3.58 4.65 4.49 +29.0 Egyptian Pound 4.64 4.89 4.73 4.53 4.57 5.72 5.39 +16.3 New Turkish Lira 20.20 21.00 19.02 19.63 19.16 20.41 20.18 -0.1

SOURCE: PACIFIC EXCHANGE RATE SERVICE The Russia Rouble declined significantly against the world’s major currencies between 2004-10, despite an upswing in its economic performance. At the end of 2006, the Russian government lifted controls on the Rouble, establishing it as an important international currency. It began to strengthen significantly against the US Dollar not long after, surging to a record high in 2008. However, it began to devalue once more during the global financial crisis, and plunged to record lows in 2009. Due to economic troubles in the Eurozone and the US, the tide has turned, the exchange Rouble has strengthened significantly against the Euro and US Dollar, and values are now back to 2006-07 levels.

Exchange-rate fluctuations have a profound impact on the Russian outbound segment. For example, when the Rouble hit a low against major global currencies in 2009 owing to the financial crisis, the number of Russians heading abroad declined by 17%. Nonetheless, as the global and Russian economy recovered, and exchange rates became slightly more favourable, the number of Russians venturing abroad rose by 44% in 2010. A decade earlier, exchange rate fluctuations had less of a negating effect on the Russian outbound sector. The proliferation of middle-class consumers taking holidays abroad probably accounts for this marked change in the Russian sensitivity to exchange-rate fluctuations.

Tourism balance According to the United Nations World Tourism Organization (UNWTO), Russia ranked in ninth place in terms of international tourism expenditure worldwide in 2010 – a position it has held since 2004. However, its earnings from inbound tourism are comparatively woeful, owing to the relatively smaller volume of foreign arrivals. In 2010, Russia languished in 22nd place in terms of tourism revenue, compared to 20th place in 2006. Russia remains an unattractive tourism destination due to the high prices for accommodation, uneven quality of services and the threat of terrorism constantly looming over the country.

FIGURE 5: RUSSIA’S TOURISM BALANCE, 2004-10

2004 2005 2006 2007 2008 2009 2010* % change 2004-10

Tourism receipts (US$m) 7,262 7,806 9,720 12,427 15,774 12,300 16,316 +124.7 Tourism expenditure (US$m) 16,082 18,305 19,478 23,248 27,010 23,529 29,647 +84.3 Balance (US$m) -8,820 -10,499 -9,758 -10,821 -11,236 -11,229 -13,331 +51.1 Expenditure per head (US$) 728.88 824.51 866.23 1,014.80 1,140.82 1,197.34 1,047.67 +43.7

Note: *estimate

SOURCE: ROSSTAT

Tourism expenditure outstripped that of earnings by almost twice in 2010, as fewer visitors ventured to Russia. In 2010, expenditure per head in the country stood at US$1,048, just marginally below the global average of US$978. Growth in Russian tourism expenditure averaged 11.5% between 2005-10 even though the number of Russians heading abroad increased by only 5.7% on average over the same period. Russia’s tourism balance has been in deficit since 2001, and by the end of 2010, it had accumulated losses totalling US$99 billion.

Outbound Tourism Please note that the outbound data drawn from Rosstat should be interpreted with caution as it often differs substantially from other sources. The figures include same-day trips – mainly cross-border trips for shopping and shuttle-trading (practice in which traders shuttle backwards and forwards outside the country buying goods from cheap sources outside Russia to resell them within the country) – as well as trips by those not classified by the UNWTO as ‘tourists’, such as coach drivers and the crews of ships, airlines and rail companies.

Arrivals Two decades ago, Russians were banned from travelling outside the Soviet Union, and consequently, most went on holiday within the Eastern Bloc. The Baltics, the Crimean coast and the sanatoriums of Poland and Czechoslovakia were the most popular destinations for Russians during the Soviet era. The Soviet government often offered its citizens state-subsidised holidays to other communist countries. However, many were keen to head to the democracies of the US, France, Italy and the UK, as well as faraway tropical isles.

After the fall of communism in 1991, Turkey became the first recipient of Russian tourists, the vast majority of whom were keener on purchasing goods not normally found in Russia, thereby showing little real interest in taking a break. As Russia’s economy began to flourish, the number heading abroad for leisure multiplied, particularly to the reasonably priced beach resorts of Sharm El Sheikh in Egypt and the Antalya region in Turkey. Both destinations remain popular with Russian tourists. The Russian financial crisis of 1998 led to a 6.7% drop in the number of Russian outbound travellers. However, the market recovered quickly, and by the end of 2000, the number of Russians travelling overseas had surpassed 18 million.

Year-on-year growth in the Russian outbound market has been relatively strong, averaging 10.2% between 2004-10, a similar pace to that of the buoyant Chinese outbound segment. The volume of outbound tourists from Russia declined by 6.1% in 2009, as the global economy weakened. Nonetheless, as in 1998, the Russian market proved to be quite resilient, and by 2010, Russians were venturing abroad in droves once again. The resurgence in the Russian appetite for travel was fuelled partly by a significant rise in the number of Russian citizens taking out loans or using credit to finance trips.

FIGURE 6: OUTBOUND TOURISM FROM RUSSIA, 2004-10

2004 2005 2006 2007 2008 2009 2010* % change 2004-10

Outbound tourists (000) 24,410 28,476 28,920 34,219 36,487 34,276 43,188 +76.9 % change +8.4 +16.7 +1.6 +18.3 +6.6 -6.1 +26.0 +17.6 Propensity to travel (%) 0.2 13.9 0.2 0.2 0.3 0.2 0.3 +0.1

Note: *Mintel estimate

SOURCE: ROSSTAT/MINTEL Recent outbound statistics indicate that in addition to traditional sunny, beach destinations, more Russians are choosing countries where they may supplement time on the beach with other activities, such as cultural and sporting events, shopping and recreation. Moreover, Russians who have travelled to Asia and Europe in the past are now more willing to explore destinations other than those they have already visited.

In March 2011, Rosstat published statistics pertaining to the outflow of Russian citizens in 2010. However, these figures are much lower than the ones provided by the governments of leading travel destinations, due to the fact that they only capture traffic on direct flights. However, they show a record 32% growth in Russian outbound leisure tourism compared to 2009, which indicates the full recovery of the travel market after the 2008-09 financial crisis.

The Association of Tour Operators in Russia (ATOR) reveals that in the first quarter of 2011 the number of the Russian tourists increased by 7.4% in comparison to the same period in 2010. The growth amounted to 20.6% when compared with 2008. According to Rosstat, fewer than 0.5% of the Russian population have been abroad since 2001. Comparatively, some 13.8% of people in the world travelled overseas in 2010. This discrepancy reflects the fact that the vast majority of Russian travellers come from the relatively small but expanding class of middle-income consumers as well as the ultra-rich. Anecdotal evidence suggests that less well-off Russians do venture abroad, but those who do visit friends and relatives, as well as travelling for trading purposes, particularly along the Chinese border.

Destinations Russia’s geographic status as the world’s largest country means that inter-regional travel for its outbound market is exceedingly diverse, consisting of trips to Asia, Africa, Europe and the Middle East. A survey carried out by ATOR in 2010 uncovered that Turkey is the most popular foreign destination for Russian nationals, followed by Egypt and Spain. Greece, Thailand and Cyprus took fourth, fifth and sixth place respectively. Seventh place was shared between Bulgaria and Tunisia. Montenegro and Croatia were eighth on the list. The Dominican Republic ranked in ninth place and the Czech Republic tenth. Russians tend to choose all-inclusive packages in the €600-800 range to established budget destinations such as Turkey, Egypt and Tunisia. Generally, highly affluent and experienced Russian travellers are becoming increasingly willing to try new, often exotic, destinations. The following sections are listed in order of number of arrivals, beginning with the highest.

CIS countries A substantial number of Russians cross into neighbouring CIS countries each year. In 2010, according to Rosstat, approximately four out of ten departures from Russia were made to CIS nations. Presently, the latter consists of Armenia, Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Moldova, Tajikistan, Ukraine, Uzbekistan, Georgia and Turkmenistan, all of which are home to swathes of ethnic Russian communities. Many of their nationals live in Russia. Destinations that border Russia, such as China, Finland and Turkey, are also popular destinations for both Russian leisure and business tourists.

FIGURE 7: OUTBOUND TOURISM FROM RUSSIA TO CIS DESTINATIONS, 2004-10

No of Russian outbound tourists % change 000

2004 11,263 -3.3 2005 13,638 +21.1 2006 13,263 -2.7 2007 15,527 +17.1 2008 16,023 +3.2 2009 12,605 -21.3 2010* 15,441 +22.5

Note: CIS = Commonwealth of Independent States; *Mintel estimate

SOURCE: ROSSTAT/MINTEL

Data drawn from Rosstat highlight that Ukraine receives the highest number of Russian tourists out of all CIS countries, welcoming around 6-7 million Russians each year since 2004. However, this dipped to around 5.6 million in 2009 due to the global recession. Trips to Ukraine are usually for business and VFR, rather than for leisure.

Kazakhstan is the next most popular CIS destination for Russian travellers, attracting around 3 million per annum. Meanwhile, the number of Russians entering the Republic of Moldova rose by 344.7% between 2006-09, from 199,000 to 885,000 visitors.

Non-CIS Europe The bulk of trips to non-CIS Europe is undertaken by air, chiefly by scheduled flights, although to certain destinations such as Greece, Cyprus and Turkey, chartered flights – as part of a tour package – are more commonplace. Well-heeled Russians tend to head to the Alps to ski during the New Year and the Christian Orthodox Christmas, which normally falls in the first week of January.

According to interviews with over 400 travel agencies carried out by Hot Line Tourism Magazine in the last quarter of 2010, the top three ski destinations for Russians are Austria, Italy and Andorra. France, Bulgaria, Switzerland, Finland and Turkey are other popular ski destinations for Russians.

Non-CIS Europe has become less expensive of late, especially within the Eurozone (Austria, Belgium, Cyprus, Estonia, Finland, Germany, Greece, Ireland, Italy, Luxembourg, Malta, Netherlands, Portugal, Slovakia, Slovenia and Spain). The Euro has devalued significantly against the Rouble in recent months, owing to the economic woes battering a handful of member countries, making trips to the Eurozone more affordable than it was two years ago.

The EU and Russia are closer to signing an agreement to implement a visa-free regime for its citizens; they have been negotiating the mutual abolition of visas for travellers since 2007. While the issue of full abolition for Russian tourists to the EU has not been resolved, several European countries, such as France and Italy, have agreed to ease the visa regime for Russian citizens. According to preliminary agreements drawn between both parties, the visa-free regime will encompass only short-term trips totalling no more than 180 days annually. It will be in force only in those 25 EU countries that are part of the Schengen agreement. The Schengen Area encompasses most EU states except for Bulgaria, Cyprus, Ireland, Romania and the UK. However, Bulgaria and Romania are currently in the process of joining the Schengen Area.

Finland is currently the most popular destination for Russians in non-CIS Europe. In 2010, 67% of Russian arrivals to Finland were same-day visitors. This relatively high proportion of day trippers reflects the fact that Finland is often used by a significant proportion of Russian residents as a gateway to other destinations in Europe. In addition, Russians tend to cross into Finland to purchase goods including alcohol, clothes and groceries.

Russian tourism to Finland is predicted to grow by 15% in 2011 in terms of the number of visits, according to official Finnish government data. Economic growth and the relaxation by Russian customs of regulations governing duty-free and other customs issues, are enabling Russians living close to the Finnish border to make frequent duty-free shopping trips over the border. Lappeenranta, located about 30km from the Russian border, is the most popular destination in Finland for Russian tourists. The town is visited by a third of all Russians crossing the border in south-eastern Finland. Of all Russians entering the country through the border stations of south-eastern Finland, 30% go on to Helsinki, one fifth visit Imatra, 15% Kotka while 4% head to Kouvola.

Germany is the next most popular destination for Russians, as outlined by Rosstat. It has very strong business and family links to Russia, and numerous Russians have immigrated to Germany in the last 20 years, meaning that VFR travel forms a key component of Russian arrivals to Germany.

The German National Tourist Board (GNTB) found that in 2009, 37% of Russian arrivals visited Germany for leisure, 13% for business and the remainder for both VFR and other purposes. That year, Russians stayed for an average of 9.8 nights, compared to 6.7 nights for all visitors to Germany. However, Russians spent only €57 per night versus the overall average of €80 per night. In 2009, some 26.6% of Russian arrivals to Germany visited Bavaria. Naturally, Munich was the most popular city with Russian tourists, followed by Berlin, Frankfurt and Düsseldorf.

FIGURE 8: OUTBOUND TOURISM FROM RUSSIA TO SELECTED NON-CIS EUROPEAN DESTINATIONS, 2005-10

2005 2006 2007 2008 2009 2010 % change 000 000 000 000 000 000 2005-10

Europe 2,672 3,233 3,497 4,173 3,600 4,607 +72.4 Finland 391 563 657 667 556 709 +81.2 Germany 231 226 231 330 363 471 +103.7 Italy 206 246 334 398 336 452 +119.6 Spain 219 246 319 365 296 411 +88.1 Greece 146 199 244 349 282 387 +164.3 Czech Republic 125 136 178 227 214 268 +114.0 Bulgaria 121 148 173 208 207 263 +117.2 Cyprus 108 113 151 172 155 234 +116.7 France 174 139 171 229 200 223 +27.9 Montenegro n/a n/a 67 85 108 143 0 Austria 51 53 77 102 97 136 +168.3 Switzerland 41 44 58 83 106 121 +193.7 UK 72 61 79 87 96 120 +65.7 Croatia 58 74 116 119 75 99 +70.7 Netherlands 27 24 33 49 56 73 +174.7 Latvia 40 33 32 46 49 73 +81.0 Lithuania 44 45 64 78 44 58 +31.7 Poland 201 169 109 46 38 43 -78.6 Hungary 21 21 22 31 27 32 +51.7 Sweden 22 12 15 21 20 25 +14.0 Serbia 33 66 55 54 19 19 -42.0 Malta 14 16 18 19 12 18 +29.7 Norway 16 18 19 21 14 13 -19.5 Estonia 19 71 27 77 8 12 -40.4

Note: n/a = not available

SOURCE: ROSSTAT Italy has been a popular choice for Russians for over a decade, heading to the country to soak up its rich culture, enjoy its gastronomic delights and revel in its relatively warmer climate. Rome is normally the first stop for Russians, and visits to the capital are often combined with trips to the Adriatic. Russians who head to Italy tend to rely heavily on excursion tours. However, a small but rising number of repeat Russian visitors to Italy now prefer to travel independently. Charter flights to Bergamo from Moscow, Naples from Rostov, and Sicily from Yekaterinburg and Samara were introduced in early 2011. According to ATOR, those living in Moscow are the most inclined to visit Italy.

The growth in the number of Russian tourists to Spain has been slower than that of the other top five non-CIS European destinations, due to the extreme popularity of resorts in both Egypt and Turkey. Nonetheless, due to unrest in the Middle East, more Russians are now flocking to Spain for their summer holidays, especially to its beach resorts.

A loosening of visa regulations for Russians has also helped to stimulate the influx of Russian tourists to Spain. First-time Russian visitors to the country can apply for a multiple-entry visa that lasts six months. A visa with a validity of one year is issued when a Russian sends in an application for a multiple-entry visa the second time round. On the third occasion, Spanish authorities will grant Russians a multiple-entry visa lasting three years if their application is successful.

Russian arrivals to Greece have grown dramatically in recent months, according to the Greek Ministry of Culture and Tourism, due to the uncertainty in the Middle East, although official statistics have yet to be released. In the first six months of 2011, Russians were issued with eight times as many multiple- entry visas than in the previous year. Plans are also in the pipeline to introduce a ten-year visa for Russians who own property in Greece and to enable Greek consulates in Russia to issue visas within 24 hours. To facilitate travel demand from Russia, Greece will open visa centres in Samara, Kazan and Krasnoyarsk. Furthermore, Greece is planning to employ visa consultants in another three or four cities, so that a decision can be made on the spot and the visa-issuing process can be made quicker and more efficient. At present, Greek visa centres operate in Moscow, St Petersburg, Novosibirsk, Ekaterinburg and Rostov-on-Don.

“The Russian market is constantly growing, becoming a leading market worldwide. For the Greek travel industry, the Russian market continues to be a vital market.” – Angela Varela, director of tourism, Greek Tourism Organisation

More Russians are going to the Czech Republic, particularly during the New Year. They tend to venture to the capital, Prague, as well as Pilsen, the home of Czech beer, and to visit ski resorts in the Krkonoše Mountains. Generally, holidays in the Czech Republic are cheaper than that of comparable breaks in Russia.

The inflow of Russian tourists into Bulgaria for the first five months of 2011 increased by 23% over the same period in 2010. According to the Bulgarian Ministry of Economy, Energy and Tourism, a total of 66,814 Russian tourists visited the country between January and June. Official statistics indicate that Russian tourists spend on average 12 nights in Bulgaria, with half of them choosing four- and five-star hotels. Some 90% of them arrived in Bulgaria by plane.

According to the Cyprus Statistics Office, Russian arrivals grew by 53.4% in June 2011 in comparison to June 2010. During the first six months of 2011, Russians spent €960 on average in Cyprus during a trip, €200 more than the average foreign arrival.

Outbound traffic from Russia to France peaks each January, coinciding with the Orthodox Christmas and New Year. Affluent Russians tend to favour the fashionable ski resort of Courchevel, the resorts of Cote d’Azur, and the capital, Paris. Statistics published by France’s Tourism Development Agency (Atout France) showed a 25% growth in Russian visitors between 2009-10. In comparison, 700,000 went to France in 2008, and in 2009 the figure dropped by 23%, to 540,000. According to the Paris Convention Bureau, 350,000 Russians visited Paris in 2010, which is 10% more than 2009, equivalent to 4% of all foreign tourists coming to the French capital.

Russians comprised about 10% of arrivals to Montenegro in 2010. The number of air passengers between the two countries has grown by 28% since the start of 2011. Most of the tourist flow from Russia comprises of individual tourists, some of whom own real estate in the country.

According to the Austrian Agency for Tourism, in the first 11 months of 2010, 273,000 Russians visited ski resorts in Austria. Salzburg is a popular destination for Russians heading to Austria, especially for young families. According to Emanuel Lener, the Head of the Austrian NTO in Moscow, half of the Russian visitors who went to Austria in 2009 did not use a travel agency. Comparatively, he estimates that as much as 70-80% of all Russians travelled to Europe via a tour company.

As pinpointed by the Swiss National Tourist Office in Moscow, arrivals from Russia to Switzerland increased by 10% month on month over 2010, and by 21% during the summer. Although the bulk of Russian tourists still head to Switzerland to ski, a growing number are visiting in the summer, particularly to its pristine lakes. Lugano, Askona, Luzern, Interlaken and Lake Geneva are popular stops for Russians, alongside Leukerbad’s thermal springs. Four- and five-star properties are often preferred, and Russians tend to stay for one to two weeks, and some for even up to two months.

Outbound traffic from Russia to the UK has been significant, although it was not as robust as other non-CIS European countries. The protracted visa-application process for Russians wishing to visit the UK has been cited as the main cause behind the relatively muted pace of growth. Visa procedures for Russians require filling in a long and detailed questionnaire as well as furnishing biometrical data. The Schengen visa process is seen by Russians to be far simpler. The rules of the UK Border Agency are seen to be too complicated and unclear. Moreover, many Russians worry that their visas would be rejected, which puts them off visiting the UK.

Research carried out by the British Tourism Authority (BTA) has consistently shown that Russians are drawn to the UK for its history and heritage. The majority of Russian visitors to the UK head to London, with the bulk of these coming from the country’s wealthiest city, Moscow. In 2010, according to the BTA, some 39.2% of Russian arrivals to the UK were there for a holiday, a third were on business and 16.1% were there for VFR. In 2010, as pinpointed by the BTA, some 45% of Russian visitors to the UK were aged between 25-44 years. Croatia welcomed 65,000 Russians to its shores in the first half of 2011, a rise of 16% on the previous year, according to the Croatian National Tourist Board (CNTB).

Africa and the Middle East Turkey and Egypt have been the perennial favourites of Russian tourists since the early 1990s, when the first waves of Russians began taking breaks abroad. A recent poll taken by the Turkish Culture and Tourism Office in Moscow highlighted that 48% of the Russians interviewed said they had visited Turkey before and intend to visit again. A further 30% stated that they have never been to Turkey but would like to visit. Turkey expects a 20% increase in the number of Russian tourists by the end of 2011 due to the visa-free regime implemented between the two countries in May 2010. The agreement allows Russians to travel within Turkey for 30 days visa-free over a 90-day period.

Most Russian visitors to Turkey still arrive in the country via package tours, with most opting for four- and five-star properties. Antalya, Marmaris, Bodrum, Kusadasi, Dalaman and Istanbul are the most popular spots. Russia is now the largest tourism source market for Turkey, accounting for around a fifth of all foreign arrivals into the country.

Egypt has seen the number of Russian tourists fall since the Arab Spring at the start of 2011; the Russian government banned its citizens from flying to Egypt in February. The ban was lifted in April but numbers going to Egypt remain muted, as the traffic has filtered to other destinations, most notably Turkey and Israel. Hurghada and Sharm El Sheikh are deemed by the Russian government to be the safest destinations in Egypt.

FIGURE 9: NUMBER OF TRIPS TAKEN BY RUSSIANS TO SELECTED MIDDLE EAST DESTINATIONS, 2005-10

2005 2006 2007 2008 2009 2010 % change 000 000 000 000 000 000 2005-10

Middle East 2,547 2,674 3,571 4,132 4,064 5,228 +105.3 Turkey 1,563 1,476 1,923 2,213 1,967 2,368 +51.5 Egypt 696 903 1,255 1,427 1,615 2,198 +216.0 UAE 167 174 207 228 214 287 +72.1 Israel 28 24 45 99 135 185 +567.1 Tunisia 91 93 130 149 123 180 +99.0 Jordan 4 5 10 16 10 10 +191.4

Note: UAE = United Arab Emirates

SOURCE: ROSSTAT Most Russians head to Dubai when visiting the United Arab Emirates (UAE), going on shopping sprees, particularly for jewellery and electronics. Dubai can be directly accessed from Russia, flying with Emirates – Dubai’s national scheduled carrier – or Aeroflot, Russia’s legacy airline, both of which offer daily scheduled services as well as charter flights. A flight to Dubai from Moscow takes around four hours. However, Russian nationals still require a visa to visit the UAE, a regulation that has capped growth in the volume of Russian visitors in comparison to North African destinations.

As political turmoil continues to undermine stability in Egypt and Tunisia, more Russians are heading over the border to the Israeli resort of Eilat. The surge in Russian visitors to Israel can also be accredited partly to the Israeli’s government scraping of the visa requirement for Russian tourists. Israel has allocated €6 million for destination marketing programmes aimed at Russians in 2011, with half being spent on advertising and the other half on joint promotion campaigns with Russian tour operators.

A poll conducted by the Israeli Tourism Ministry in July 2010 found that 65% of Russians who travel are interested in visiting Israel. The poll found that the number of Russian tourists who visited Israel in February of 2010 was twice that recorded in the previous year. Russia is now the second-largest source country for incoming tourism to Israel after the US – a spot previously occupied by France. About 45,500 visitors arrived from Russia in January – 12% more than January 2010. In February, that number increased by 20% to 18,000.

Asia Pacific Russia is the third-largest source of inbound arrivals for China after Korea and Japan. The influx of Russians to China has risen year on year since 2000, with the exception of 2009, when the worldwide recession curbed the Russian appetite for travel. According to the China National Tourism Administration (CNTA), 897,000 Russian tourists visited China in the first quarter of this year.

Arrivals to China from Russia no longer head to the country for trade purposes. Leisure visitors now dominate, and in June 2011, 54.9% of Russian arrivals, as outlined by the CNTA, entered China for sightseeing or leisure. Some 27.4% of Russians who visited China during the same month stated that were on business. However, Mintel regards this figure as an underestimation of the business traffic between the two countries. It is probable that many Russian business travellers are combining leisure with business during their stay. A significant 11.8% of Russians entered China in June 2011 to visit friends and relatives. Harbin, in the north of China, is home to the highest number of Russian expatriates.

The number of Russian tourists to Sanya, China’s premier resort destination on Hainan Island, is projected to hit 200,000 in 2011. In 2009, the number of Russian tourists reached 147,000. Sanya and Russian tourism authorities launched a series of collaborative tourism promotions aimed at boosting tourism flows between the two countries in 2010. In April 2010, Pegas-Tour, one of the biggest travel agencies in Russia, launched non-stop flights linking the Russian cities of Khabarovsk, Irkutsk, Krasnoyarsk, Novosibirsk, and Kemerovo with Sanya. The Sanya Tourism Development Board predicts that the volume of Russian tourists to Sanya will continue to rise in the second half of 2011.

Some 86,800 Russians visited Hong Kong in 2010 – an increase of 102% over 2009; Russia is the fastest-growing market for Hong Kong and the two have mutually relaxed visa rules in 2009. Since then, Russians staying for no more than 14 days have been able to enter Hong Kong without a visa. Two Hong Kong airlines – Cathay Pacific Airways and Hong Kong Airlines – have been operating direct flights connecting Hong Kong and Moscow since the summer of 2010, making Hong Kong more accessible for Russians.

“We believe that the number of Russian overseas travellers will continue to increase in the future and hope that Hong Kong will become one of the key travel destinations for Russians.” – Anastasia Shatokhina, HKTB Moscow Representative Office

FIGURE 10: NUMBER OF TRIPS TAKEN BY RUSSIANS TO SELECT ASIA-PACIFIC DESTINATIONS, 2005-10

2005 2006 2007 2008 2009 2010 % change 000 000 000 000 000 000 2005-10

Asia Pacific 1,312 1,544 1,995 2,464 1,379 1,882 +43.4 China 1,152 1,307 1,652 2,059 999 1,440 +25.1 Thailand 71 145 232 259 233 264 +272.5 India 35 40 53 64 64 77 +119.3 South Korea 30 29 33 49 59 74 +151.5 Japan 25 23 25 32 24 26 +4.4

SOURCE: ROSSTAT Thailand and India are also seeing robust levels of growth in Russian visitor numbers. Despite their obvious cultural and historical appeal, Russians tend to visit these two destinations overwhelmingly for their comfortable, affordable and well-established beach resorts. India draws mainly charter traffic to Goa, while Thailand’s hot spots are Phuket and Pattaya, with Koh Samui gaining popularity.

Russia was Thailand’s 11th-largest market in 2010, based on the number of arrivals, just after Germany. According to the Tourism Authority of Thailand (TAT), the number of the Russian tourists increased by 50% during the first half of 2011. ATOR believes that the majority of their Russian clients prefer luxury hotels when holidaying in Thailand.

Russians can obtain visas on arrival in Thailand. Prior to 2006, they had to apply for a visa to enter the country and vice versa. An agreement was drawn up between the two countries in November 2006, allowing visa-free entry for each other’s nationals. This boosted Russian tourism flows into Thailand despite the political and civil instability that has created rifts within the kingdom since the ousting of its Prime Minister Thaksin Shinawatra in the latter half of 2006.

“The Russian travel market is continuously developing. Big tour operators for all destinations are strengthening. Thailand became the most popular tourist destination for Russian tourists in South East Asia, with more than 600,000 Russian visitors in 2010. We hope that during the next year, the number of Russians visiting Thailand will increase to 660,000 people.” – Gennady Tomilin, Tourism Authority of Thailand

Goa, on the western coast of India, has gradually emerged as a popular tourism destination for Russian tourists in the last decade. With more than 40,000 Russian tourists hitting the sunny Goan beaches annually since 2008, Russia ranks a close second after the UK in terms of foreign tourist arrivals in the state. The tourism department of Goa revealed that 889 charter flights landed in the state between October 2010 to March 201l. According to the tourism department, most passengers on these chartered flights were Russians flying from Moscow or St Petersburg.

India and Russia signed a visa pact in December 2010 that will become effective as of 1 December 2011, making it easier for Russians to enter India and vice versa. It is envisioned to boost tourism and business traffic between both countries. Visitors from Russia to India will be issued with a six-month visa upon successful application.

In March 2011, Russia’s Foreign Ministry advised Russians against travelling to Japan due to a radiation threat posed by the Fukushima nuclear power plant, which was severely damaged as a result of the devastating earthquake and powerful tsunami that hit the country at that time. According to Japan Tourism Marketing, between January and April 2011, some 11,063 Russians had visited Japan – a decline of 31.1% on the same period the previous year. Just over half of Russian visitors to Japan in the first four months of 2011 entered the country for tourism purposes, 26.1% for business and 22% for other reasons, such as studies or visiting friends and relatives. Okinawa, Tokyo Disneyland, Kyoto and ski resorts in Hokkaido are the main destinations for Russian visitors to Japan.

Although visas are still required for Russians wishing to visit Japan, the application process has been simplified and it now takes as little as three days to obtain a visa if an application is submitted in person.

South Korea is becoming a hot spot for Russian tourists due to the growing popularity of ‘K-pop’ (Korean pop music) in Russian subculture, and Seoul is now home to some 50,000 Russian expatriates. Busan is another popular pit stop for Russian arrivals, partly due to its reputation as a medical tourism and cosmetic surgery hub.

Americas Traffic from Russia to the US dropped drastically between 2000-03 due to a combination of extenuating factors, including 9/11 and the threat of terrorist attacks on US airlines or in cities – a situation compounded by the US invasion of Iraq in 2003. Even though the market picked up in 2004, the pace of growth was hampered by strict visa legislation and immigration clearing procedures implemented by the US Department of Homeland Security, which deterred Russians, as it did with other nationalities, from travelling to the US. Numbers edged back slowly in 2005, as the US made it easier for Russians to apply for visas.

The visa application process for Russians was streamlined in 2007, and visa procedures were made available online. Applicants can now send their fee and supporting documents via courier to US offices across Russia. In addition, Russians now have the option to apply for a two-year multiple-entry visa if they wish to do so. For individuals wanting to renew a visa, an interview is now waived. Russian tour operators are also educating their customers regarding these changes.

The increase in the number of direct flights between Moscow and key US cities has been another key driver behind the year-on-year increase in the number of Russian arrivals since 2005. Delta Air Lines, Continental Airlines, Aeroflot and Singapore Airlines connect Moscow to various US destinations. The US Ministry of Trade estimates that the number of Russians visiting the US in 2011 will increase by 19% on 2010.

FIGURE 11: NUMBER OF TRIPS TAKEN BY RUSSIANS TO SELECTED DESTINATIONS IN THE AMERICAS, 2005-10

2005 2006 2007 2008 2009 2010 % change 000 000 000 000 000 000 2005-10

Americas 35 48 61 109 133 190 +444.0 US 21 25 33 56 72 86 +306.6 Dominican Republic 5 7 13 30 39 67 +1,236.0 Cuba 9 16 16 22 22 38 +324.7

SOURCE: ROSSTAT Historically, owing to the Cold War, few Russians made their way to the US. When the Iron Curtain was dismantled, Russians began making trips to the US, although this was more for business and VFR purposes than for leisure and has since altered.

In 2010, according to the Office of Travel and Tourism Industries (OTTI), some 41% of Russian arrivals entered the US for leisure, another 34% for VFR, 11% for business and 8% for teaching. Interestingly, according to the OTTI, some 87% of Russian tourists in 2010 combined business with pleasure. New York is the most popular city destination for Russians, due to the presence of a large swathe of Russian diaspora living there. Miami and Las Vegas are also popular.

The number of Russian holidaymakers heading to the Caribbean island of the Dominican Republic increased by over 12 times between 2005-10. Russians receive visas on arrival, making it one of the few places in the world where they have a hassle-free entry. Some 40,321 Russians visited the Dominican Republic in the first four months of 2011, according to the Central Bank of the Dominican Republic. Aeroflot currently flies direct to Punta Cana from Moscow.

Cuba is also becoming a popular choice for Russian sun-seekers, and they are now one of the top ten sources of arrivals for the communist state. The number of Russian tourists to Cuba doubled in the first nine months of 2011, reaching about 46,000 as highlighted by the Cuban Ministry of Tourism. Cuban authorities anticipate an influx of Russian tourists, as economic and diplomatic ties between Havana and Moscow has improved substantially since 2001. Cuban tourism authorities expect Russian visitors not only to enjoy the country’s sun, sand and sea, but also to seek out historical places from the Cold War era.

The Russian Association of Tourist Agencies (RATA), claimed that in 2011, Mexico, Brazil and Peru are growing in popularity with Russians. According to RATA, there was a 25-30% rise in the number of Russians travelling to Latin America in the summer of 2011. Peru and Russia signed a Memorandum of Understanding (MoU) in June this year to offer visa-free entry to each other’s nationals. Now, Russians can travel to Peru for up to 90 days without a visa, and the Peruvians can come to Russia under the same conditions. Chile abolished visa requirements for Russians in January 2011 – a move that will certainly bolster the number of Russians heading to the country.

Market Characteristics Detailed information into the behaviour of Russian tourists is quite sparse as it has only been in recent years that it has been acknowledged as a lucrative source of tourists. Consequently, alternative sources have been referenced to build an in-depth picture of the typical Russian outbound traveller.

Pre-booking behaviour and booking methods At the time of writing, the most reliable source in regards to Russians’ pre-booking behaviour was the BTA. (Note that data compiled by the BTA on the Russian market covers only how they make bookings to the UK, and not any other destination. Hence, although it does provide some insight into Russian pre-booking behaviour, it cannot be assumed that Russians behave in the same manner for all destinations.)

According to the BTA, key sources of information for Russians when planning a trip are the Internet and travel agents, whereas recommendation from friends and family are important sources of inspiration. The Internet is the first stop for Russians wishing to research different holiday destinations, although there are those who rely instead on friends or travel agents. Usually, individuals already have a place in mind before they turn to the Internet. Internet World Stats estimates that there were 59.7 million Internet users in Russia as of June 2010, an 1,825.8% increase over 2000. A report published by Travelport in 2010, entitled The Well Connected Traveller, highlighted that Russians are one of the nationalities most inclined to carry out offline research prior to a trip.

As in other major outbound segments, an increasing number of Russian tourists are not buying package tours from travel agencies, instead preferring to organise their own trips using the Internet. In the second quarter of 2011, according to Global Blue, some 45% of Russian tourists claimed that they were ready to plan their own itinerary via the Internet. About 57% of respondents in an online poll by Rambler’s Rumetrica conducted in June 2011 choose to travel independently instead of going through tour operators. This is a 10% increase from November 2010 and a 21% hike from May 2009.

Russians are late bookers, which is the key reason why they tend to gravitate to destinations that offer visa-free access or visas upon arrival such as Israel, Turkey, Egypt or Thailand. According to Eventica Communications, some 80% of all Russian holidays are sold in the four weeks before departure. Around half of all bookings made in Russia go through travel agents. Russians generally prefer relying on travel agents as they take the fuss out of applying for visas.

E-commerce is growing in Russia but consumers still have strong reservations regarding security. Overall, according to eMarketer, 98% of Russian Internet users are aware of e-commerce, but only half had actually made purchases online. Online travel constitutes only a minute share of these transactions. In Russia, as highlighted by Travelport, some 65% of travellers paid for travel bookings offline, versus 36% in the UK and 29% in the US in 2010. The majority of Russians paid travel agents in cash (72%) while one in ten used a credit card. According to Travelport, only 17% of Russian bookings were made through online channels in 2009.

Even though the online travel market accounts for a relatively small proportion of total e-commerce in the country, the Internet adoption rate in Russia is high, and Russians, as highlighted by comScore, have become the world’s most engaged users of social media, spending 6.6 hours per website visitor, per month on social-media sites.

According to Skyscanner, the number of Russians booking their flights online will increase four-fold in the near future. The majority of Russians using Skyscanner are based in Moscow (46%), followed by St Petersburg (21%).

During February-July 2010, Russian traffic on Skyscanner increased by 138%. Some 60% of all requests were for international flights. The metasearch travel engine found that the top ten cities searched for by Russians were: Moscow, Bangkok, Paris, St Petersburg, Barcelona, Tel Aviv, Prague, Milan, Munich and Berlin.

Credit Suisse’s inaugural Emerging Consumer Survey 2011, published in January 2011, showcased that Russian consumers are the most likely among the four BRIC markets to report that they were planning a foreign holiday in the next 12 months. Unsurprisingly, income levels have a deeper impact on foreign travel plans than on purchases of less costly consumer goods such as sportswear and smartphones. In Russia, as highlighted by the report, 26% of respondents in the top income level plan to go on a foreign holiday in the next year. The share of foreign holiday planners drops to 13% of Russians in the middle-income tier earning the equivalent of US$1,000-2,000 per month and 6% of Russians earning less than US$1,000 per month.

Demographics Rosstat does not publish any statistics concerning the profile of Russian outbound travellers. However, a study carried out by Eventica and the European Travel Commission (ETC) in 2010 provides some insight into the different clusters that make up the Russian outbound travel market. On the whole, looking at various NTOs, Russian travellers are aged between 25-55 years old.

According to the ETC, over 40% of all Russian outbound travellers live in Moscow, with St Petersburg the second most important source. Demand from large provincial cities such as Yekaterinburg and Novosibirsk had been growing faster than that from the capital but these segments posted huge declines during the economic recession in 2008-09.

Generally, as highlighted by Eventica, the most well-travelled segments among Russians, in addition to the very wealthy, are those working for foreign companies, banks, in the energy sector, or in government posts. This can be divided further into three distinct segments, detailed below.

The ultra wealthy  discerning and very affluent high-net-worth individuals (HNWIs)

 cash- and time rich and therefore have the means to take multiple trips a year

 extremely difficult to reach by marketing and promotions and rarely use tour operators

 initially hit hard by the financial crisis of 2008-09, but a new class of ultra wealthy has since emerged.

Young professionals  even during the crisis this group was unwilling to sacrifice their holidays; to them, travel is no longer a luxury but a lifestyle must

 foreign holidays are perceived as a status symbol and they have a strong preference for five-star properties

 most possess significant disposable incomes as Russia has a 13% flat-rate income tax

 they enjoy jetting off for weekend breaks

 they are becoming increasingly adventurous as they look further afield for new destinations

 they tend to be the offspring of wealthy Russians.

Emerging middle-class families  this segment takes one or two trips a year and has a greater propensity to spend on leisure activities

 family holidays, predominately travelling to sun and beach destinations, are often booked at the last minute

 very susceptible to marketing and promotions, especially for family-friendly offerings, kids’ clubs and competitive pricing policies

 they choose destinations that have visa-free access or visas on arrival

 with the recovery of the financial system, banks are offering credit facilities again, including for holidays

 after the financial crisis, a new appetite emerged for bargain travel offers; more people are booking services separately in a bid to keep costs down

 in 2010, just over half of Russian households are expected to have an annual disposable income of US$5,000-15,000, putting them in the middle-class bracket.

Purpose of visit Official figures provided by Rosstat on the purpose of outbound trips should be treated with caution due to the large numbers of business travellers who report that they are travelling for leisure purposes in order to simplify the visa process.

In 2006, IPK International’s Russia Travel Monitor suggested that holidays accounted for 56% of total trips, other leisure (including VFR) for 19%, and business travel for 25%. Naturally, the breakdowns vary according to destination. Looking exclusively at statistics given by Rosstat, in 2009, 27.8% of outbound trips from Russia were for tourism and 62.4% were for private purposes, such as VFR and border shopping or trading.

FIGURE 12: NUMBER OF TRIPS TAKEN BY RUSSIANS TO SELECTED ASIA-PACIFIC DESTINATIONS, BY PURPOSE OF VISIT, 2004- 09

2004 2005 2006 2007 2008 2009 % change 2004-09 000 000 000 000 000 000

All countries: 24,410 28,476 28,920 34 219 36,487 34,276 +40.4 including purpose of travel: Official 2,285 2,357 2,340 2,162 1,968 1,294 -43.4 Tourism 6,557 6,785 7,752 9,369 11 314 9,542 +45.5 Private 13,604 17,205 16,957 20,232 20,667 21,404 +57.3 Transit 0 0 0 0 0 0 0 Staff* 1,964 2,129 1,871 2,456 2,538 2,006 +2.1

Non-CIS: 13,147 14,838 15,495 18,691 20,464 21,641 +64.6 including purpose of travel: Official 1,748 1,864 1,900 1,712 1,614 1,043 -40.3 Tourism 5,791 6,405 7,132 9,041 10 822 9,192 +58.7 Private 4,194 5,149 5,247 6,070 6,072 9,881 +135.6 Transit 0 0 0 0 0 0 0 Staff* 1,414 1,420 1,217 1,868 1,956 1,526 +7.9

CIS: 11,263 13,638 13,263 15,527 16,023 12,605 +11.9 including purpose of travel: Official 537 493 442 450 354 252 -53.1 Tourism 766 380 621 328 492 350 -54.3 Private 9,410 12,056 11,711 14,162 14,595 11,523 +22.5 Transit 0 0 0 0 0 0 0 Staff* 550 709 489 587 582 480 -12.7

Note: *vehicle drivers and ship/boat/railway crew; CIS = Commonwealth of Independent States

SOURCE: ROSSTAT A presentation carried out by Travelport in 2010 at its Russian Conference showed that 41% of the Russians surveyed had cited the climate as the main motivating factor to visit a destination. This was followed by VFR at 40%, sightseeing at 39%, cost at 38% and the family-friendliness of a particular location (35%). Comparatively, only 25% of Chinese interviewees cited climate as a key factor, with sightseeing (53%) being their most crucial reason for travelling to a particular place. The same presentation highlighted that the cost of travel (41%) was a major deterrent to Russian travel plans, followed by time constraints (25%).

Expenditure Russians generally spend lavishly while on holiday, and consequently, shopping is a key activity. According to Global Blue, Russian visitors spent €292 million on tax-free goods in Italy during 2010, and this figure is expected to grow exponentially in 2011. After Italy, Germany is the most popular shopping destination for Russian shoppers, followed by Finland, France and the UK.

The most popular category by far is fashion and clothing and in 2010, Russians are estimated to have spent €600 million worldwide. Global Blue also uncovered that Russian shoppers are likely to be from the new ‘elite’, and to be young, multilingual and upwardly mobile.

When Russia’s economy picked up in 2010, so did Russian tourists’ spending. A total of US$5.8 billion was spent by Russians in 2010 on their Visa cards – a 36% rise on 2009, according to the credit-card company in its July 2011 report Tourism Outlook: Russia. Holiday expenditure peaked in July and August. Notably, Visa’s transaction data highlight that more Russians are using their credit cards to make their own travel arrangements. Visa cardholders spent more on airline tickets, auto- rentals, accommodation and other travel‐related expenses, the report stated.

Aggregate expenditure made by Russians abroad in 2011 has reached pre-crisis 2007 levels, according to Citibank. The bank’s experts estimate that the total amount of purchases made abroad by Russians until the end of 2011, including credit-card spend, will amount to 3% of the GDP, or US$40 billion. This year, travellers have stopped trimming hotel spend and are once again booking luxury hotel accommodation.

In a presentation made in 2010 by Travelport, the firm revealed that Russian leisure tourists spent 18% of their total travel expenditure on air travel, 18% on hotels, 20% on food and drink and the remaining 48% on other items such as sightseeing and shopping. Russian business travellers, on the other hand, spent 21% on air travel, 16% on hotels, 14% on food and drink, with the remainder taken by other forms of spending such as mobile phone charges and Internet usage.

Length of stay Rosstat does not track the length of stay of Russian citizens while abroad. Naturally, the length of stay varies considerably depending on the destination, with anecdotal evidence suggesting that when it comes to far-flung destinations, Russians tend to stay for extended periods – even up to three months, particularly in Asian beach resorts – in order to avoid their home country’s harsh winters.

In 2010, according to the BTA, Russians stayed for 9.9 nights on average in the UK, compared to the overall average of 7.6 nights. The GNTB found that in 2009, Russians stayed in Germany for 13.4 nights on average, with VFR travellers staying for 13 nights, versus 13.4 and 11.8 nights by leisure and business visitors respectively. Russians, on the other hand, stay for approximately nine days while in Goa, as outlined by the state’s tourism ministry. According to the Turkish Culture and Tourism Office, in 2010, Russians stayed for between 10-15 days at a time. In contrast, trips to Finland, as highlighted by VisitFinland, last for only around 1.4 days.

Seasonality Christmas and the New Year are the peak periods for outbound travel for Russians, when two-week trips are common. Wealthy Russians tend to take at least seven to ten days off every year to travel abroad every two months. Middle-class Russians take at least two trips per year, including one to a beach destination during the summer months. With the school holidays lasting three months (June- August), most families tend to spend at least two weeks on the beach.

Generally, Russians are entitled to a minimum of 28 days’ leave plus 12 public holidays per year. However, for the first year of work, leave is only granted to workers upon the completion of six months of employment. Seven public holidays fall in January in Russia in 2012, making it an ideal time to take a holiday, especially to warmer, sunnier climes.

Transport As expected, Russians tend to travel by car or use other forms of land transport to get to countries bordering their country. In the first half of 2011, for instance, according to the CNTA, 50.4% of Russian arrivals to China entered the country by car, compared to 21% who came by air and 17.8% by sea. Russians tend to travel by sea to Japan and Korea via ferries or cruise ships. However, for the majority of Russians, air travel is still the dominant and most viable mode of transport.

Air The year 2009 was difficult for Russian aviation. According to the Russian Ministry of Tourism, passengers numbers on Russian carriers dipped by 9.5% during the year to 45 million. However, the market made a comeback in 2010, rising by 10% against 2009, to 57 million. Historically, 2009 was the only year in the century’s first decade where air-transport demand recorded an annual fall. Passenger numbers on Russian airlines have more than doubled since 2003. As highlighted in the Figure below, the number of passengers to and from international destinations has continued to grow, particularly between Russia and the CIS nations.

The EU continues to be the biggest recipient of air traffic from Russia. Air-passenger flow between Russia and the EU has increased by around 9% per year since 2006 – growth rates for 2010 were particularly impressive, both for passenger traffic (+18%) and even more so for freight (+38%). In 2010, EU destinations accounted for over 40% of Russia’s international air traffic. However, this was down compared to 75% in 2008, reflecting the growing popularity for travelling outside the EU.

FIGURE 13: NUMBER OF INTERNATIONAL PASSENGERS CARRIED BETWEEN CIS AND NON-CIS DESTINATIONS, JAN-JUN 2010 AND 2011

Jan-Jun 2010 Jan-Jun 2011 % change 2010-11

Total 11,805,582 13,058,109 +10.6 Between Russia and foreign countries outside the CIS 10,276,392 10,871,255 +5.8 Between Russia and the CIS 1,529,190 2,186,854 +43.0

Note: CIS = Commonwealth of Independent States

SOURCE: RUSSIAN MINISTRY OF TRANSPORT Not only is demand on the up once more, supply is also growing. According to OAG schedule data, total capacity at Russian airports grew by 20% in May 2010 compared to the same period in 2009. New airlines, both home-grown and international, have introduced new routes, augmenting capacity in the last 18 months.

For instance, in 2010, Sheremetyevo Airport in Moscow welcomed seven more new passenger airlines, including Avianova, China Eastern, China Southern, Windrose, Donbassaero, Hong Kong Airlines and Orenburg Airlines. Seven new airlines began serving Moscow’s Domodedovo in 2010, including Air Baltic, Aegean Airlines, Cathay Pacific, Nouvelair, Arkia, Czech Connect Airlines and Ukraine International. Sri Lankan Airlines’ twice-weekly service operating from Colombo via Dubai, launched on 15 September, and Oman Air’s twice-weekly flights from Muscat is due to start on 16 November.

Airports Around half of Russia’s airports are state-owned. As of 2010, the country had 1,213 airports – a decline from 2,743 in 2002 – and only 13 serve international passengers. The Russian government implemented an extensive refurbishment programme in 2008 to update major international airports to create transport hubs by consolidating or closing airports.

The Ministry of Transport is developing hubs in key cities such as Moscow, St Petersburg, Novosibirsk and Krasnodar. Their design, service and logistics systems have undergone a radical transformation. Preparations have now begun for the next stage, which will eventually see the refurbished airports battling in the global competitive market.

Russia’s three leading airports are all located in Moscow – Domodedovo, Sheremetyevo and Vnukovo. However, this will soon be trimmed to two – the government unveiled plans to unify Sheremetyevo and Vnukovo airports in April 2011.

Domodedovo Airport, located in south-west Moscow, is the largest airport in Russia, based on passenger volume. In 2010, the privately-owned airport welcomed 22.3 million passengers. On average between 2002-10, the annual passenger growth at Domodedovo has been 17%. For the first half of 2011, it saw passenger numbers grow by 15%. Some 60% of its growth derives from passengers flying on international services. In terms of seat capacity, Germany takes the largest share, followed by Spain, Azerbaijan, Uzbekistan, Egypt, Ukraine, the UK, Tajikistan, Greece, Israel, Montenegro and the US. The airport gained 22 new routes in 2010.

Sheremetyevo, Moscow’s second-largest airport, is home to Russia’s flag-carrier, Aeroflot. In 2010, the airport handled a record 19.3 million passengers and in March 2011 became the first in Russia to offer direct flights to Morocco, when RAM Airlines started three-times-weekly flights to Casablanca. According to Airports Council International (ACI) Europe’s November 2010 Traffic Report, Sheremetyevo was the fastest-growing airport globally in the 10-25 million passengers a year category, posting a growth rate of 28.4%. The other two contenders were Moscow Domodedovo (+16.2%) and Helsinki (+13.6%).

The smallest of Moscow’s airports, and its oldest, Vnukovo is the closest to the city centre. Passenger numbers have grown rapidly, and in 2010, around 9.4 million passengers passed through its gates. Vnukovo is building a state-of-the-art terminal, which is expected to increase passenger throughput to 18-20 million annually and is scheduled for completion in 2015. Most airlines serving Vnukovo are home-grown, with domestic routes dominating. Germanwings is the most prominent foreign low-cost carrier at Vnukovo. It flies to Berlin Schönefeld, Cologne-Bonn, Stuttgart as well as Hannover. Of airlines from outside the CIS, Syrian Air is the only carrier to serve Vnukovo.

Airlines The top five airlines in Russia – which together account for about 36.7% of all international passenger traffic – are Aeroflot, Transaero, S7, UTair and Orenburg Airlines. Transaero recorded the largest growth in international passenger volume in 2010 compared to 2009 (46.8%). Orenburg Airlines came in a close second, with 45.7%, and Aeroflot third, with 36.4%.

FIGURE 14: MARKET SHARE OF MAJOR RUSSIAN AIRLINES, BY INTERNATIONAL PASSENGER TRAFFIC, 2009 AND 2010

2009 % 2010 % m m

Aeroflot 17.3 27.3 23.6 27.0 Transaero 13.9 21.9 20.4 23.3 S7 3.9 6.2 3.6 4.1 UTair 0.4 0.6 1.4 1.6 Orenburg Airlines 4.6 7.3 6.7 7.7 Other airlines 23.2 36.6 31.7 36.2

Total 63.4 100.0 87.5 100

SOURCE: RUSSIAN MINISTRY OF TRANSPORT In July 2011, Hainan Airlines began operating twice weekly between Manzhouli in the north-east of China and Chita in Russia. China Southern also launched a weekly service between Shenyang in north-east China and Irkutsk in Russia in July 2011. Vladivostok Air relaunched services between Vladivostok in easternmost Russia and Dalian in China on 1 July, after a two-year hiatus.

In August 2011, UTair launched two new international routes out of its hub at Vnukovo to Samarkand and Bukhara in Uzebekistan. That some month, the airline introduced daily flights to Tallinn, Estonia. Cyprus Airways also introduced weekly flights to St Petersburg in July. Vladivostok Air will begin services to both Singapore and Hong Kong in October. Currently there is no regular air service between Vladivostok, Hong Kong and Singapore. Travellers have to fly to Seoul or Beijing and from there continue to their desired destination. Emirates is scheduled to serve St Petersburg from November 2011 onwards.

Road Some 14 sovereign states border Russia, namely Norway, Finland, Estonia, Latvia, Lithuania, Poland, Belarus, Ukraine, Georgia, Azerbaijan, Kazakhstan, China, Mongolia and North Korea. Its land border stretches for 57,792km, making it the second-longest land border worldwide after China. There are roads into these various countries but they tend to be in relatively poor condition.

Most border crossings from Russia to China take place from Manzhouli, in the north-eastern corner of China. Border crossings from Russia to Finland are found at Brusnichnoe and Torfyanovka. There are also several daily buses ferrying passengers between St Petersburg and Helsinki, Finland. The inter- European road, the E30, connects Brest in Belarus to Moscow.

Just over 16,000km of Russian roads link up to the Asian Highway Network – a 141,000-km route consisting of standardised roadways criss-crossing 32 Asian countries, with links into Eastern Europe. Routes AH3, AH4, AH6, AH7 and AH8, which run across the whole Eurasian continent, link Russia to China, Thailand, Turkey, Pakistan and Finland.

Rail Russian Railways carried over 1.2 billion passengers in 2008. Apart from planning for the future, Russian railway officials have been busy modernising the country’s railway infrastructure and cutting the time of high-speed train journeys. By 2020, Moscow’s airports will be interconnected by rail. ATOR claims that most Russians only travel by train domestically, with 1% of tourists going abroad in this way. The most popular rail destinations among the respondents interviewed by ATOR were Finland (75%), the Czech Republic (5%), Hungary (5%), the Baltic States (5%), France (2%) and other countries (8%).

Spanning over seven time zones, the Trans-Siberian, which melds into the Trans-Mongolian and Trans-Manchurian tributaries, is one of the most popular railway routes worldwide. The classic journey links Moscow with Vladivostok, Beijing and Ulaanbaatar, and runs only from May to the end of September every year. Minsk in Belarus is connected by train to Moscow, St Petersburg and Smolensk. Moscow is also linked to Almaty in Kazakhstan by train. From Warsaw in Poland, Riga in Latvia and Vilnius in Lithuania, train passengers can head to Moscow or St Petersburg.

A direct train from Moscow to Nice in the French Riviera was launched in September 2010; fares for the 53-hour journey start from €306. The line is operated by both Russian Railways and France’s SNCF.

Sea Ferries connect passengers from Helsinki and Tallinn to St Petersburg, Istanbul to Sochi and Novorossiysk in the western corridor of Russia, from Honshu (Fushiki) in Japan to Vladivostok, and from Hokaiddo (Wakkanai) to Korsakov in Russia’s Far East region.

Cruising After a low in 2009, the Russian cruise industry bounced back and in summer 2010, bookings, according to members of the industry, were up by 70%. However, it is unclear what proportion of bookings was made by Russians themselves. The most popular routes out of Russia are to the Mediterranean regions of Italy, France, Spain and Malta. According to Costa Cruises, almost 5 million Russians had the potential to go on a cruise in 2008.

Accommodation Little information is available regarding the type of accommodation used by Russians while abroad. Rosstat does not keep tabs on Russian travellers’ accommodation preferences and few NTOs track Russian behaviour when it comes to selecting where to stay during their trips overseas. Nonetheless, information can be gleaned from two primary resources – the BTA and the ETC – to gain some insight into Russians’ accommodation choices.

According to the ETC, Russian tourists prefer mid-market to upscale hotel accommodation, and they often expect en-suite bathrooms and larger rooms. Research carried out by the BTA suggests that Russians prefer the reassurance of branded chains, as well as all-inclusive trips. Self-catering is not an option for Russians, as they do not like the idea of doing chores while on holiday. In 2010, 62% of all Russian arrivals to the UK stayed in hotels and guesthouses, while a quarter stayed with friends and relatives. The BTA also found that spa facilities and fine-dining restaurants are highly valued by Russians.

Notably, more Russians are looking to buy second homes or holiday properties abroad as prices in the Russian property market have soared, pushing them out of reach for some of its citizens. In the early 1990s, only the wealthiest Russians owned overseas property, mainly for investment, and as an immigration route into a Western nation.

Generally, Russians are keen to improve their quality of life by acquiring a leisure retreat in a country with a sunnier climate and access to a white-sand beach. Holiday or second homes, as outlined by Jones Lang LaSalle, are seen chiefly as a capital investment and for seasonal relaxation.

As highlighted by an informal online pool conducted by Prian.ru in 2008, 20% of Russian buyers purchased property in resorts as holiday homes. A further 20% are looking for a retirement property. An even larger number – 27.5% – stated their intention to immigrate to the country of their purchase. A small proportion, just 5%, perceive owning property overseas as a status symbol. The rest buy for investment- and business-related purposes.

Villas with small land plots are the preferred property type purchased, with most Russians choosing to buy second homes in the Mediterranean; Bulgaria, France, Spain, Montenegro, Ukraine, Croatia, Italy, Cyprus, Greece and Turkey are the most popular spots. The UK and US have long been hot spots but due to high property prices relative to Mediterranean destinations in these two locations, Russians buying in these areas are often highly affluent. More Russians are also looking further afield, albeit from a small base, to the Asia Pacific, with Australia, Thailand and Singapore being firm favourites. Conversely, the UAE, Turkey, Bulgaria and Egypt are less popular now than they were in recent years, as owing to a combination of economic, political and civil instability, few Russians are ready to carry such a huge financial risk. Ireland, where property prices have plunged since the financial crisis, is another destination on the radar of Russian investors.

It is difficult to ascertain the exact sum spent by Russians when buying real estate abroad. Buyers tend to keep quiet about their purchases for tax reasons. Some carry out transactions through corporate bodies they own, rather than in person, and others adopt complex payment schemes involving foreign banks. However, various experts suggest that around US$10 billion was spent by Russians buying homes abroad in 2009.

Tour Operators and Travel Agencies Before the fall of the Soviet Union, only three travel agencies existed in Russia, all of which were state-owned. In 1994, the State Committee of the Russian Federation for Physical Culture and Tourism was given the task of issuing licences to travel agents.

As of 2007, some 5,000 outbound tour operators were officially registered. In 2009, a new law was passed, which legislated that tour operators now had to furnish financial guarantees before they could operate legitimately within Russia. compelling tour operators to furnish financial guarantees. After this new system was implemented, the number of tour operators dwindled to only 1,548 by the end of 2009. Today, as outlined by the Russian Union of Tourism Industry, 1,974 outbound tour operators exist. However, this segment remains highly fragmented, consisting of around 20 major players specialising in certain regions or destinations.

The top 50 operators deal with mainstream destinations such as Turkey and Cyprus, and often have allotments with hotels as well as charter and block arrangements with airlines. The largest players also tend to have their own or franchised retail outlets. Medium-sized players usually work closely with foreign destination management companies, and have contracts with hotels. Niche players catering to the luxury end of the Russian outbound market also exist, numbering around 150 in total. These operators offer customised products.

Direct sales account for approximately half of tour operators’ total revenue, but the large operators now deal less directly with customers, preferring to work through a network of travel agents or online. The top 20 Russian outbound tour operators are based in Moscow, although as the outbound market continues to flourish, a number are entering the fast-growing areas of St Petersburg, Yekaterinburg and Vladivostok, as well as smaller regional capitals such as Samara, Rostov and Novosibirsk.

Russia has about 15,000-18,000 travel agencies nationwide, including 4,200 in Moscow, 350 in St Petersburg and up to 100 in other cities. The leading retail travel agency networks include Kuda.Ru, Hot Deals Shop, TBG and VKO Travel.

FIGURE 15: TURNOVER OF MAJOR TRAVEL COMPANIES IN RUSSIA, 2008 AND 2009

Turnover % change (US$m) 2008 2009 2008-09 Head office

Intourist 938.5 715.5 -23.8 Moscow OTI Russia 541.9 591.6 +9.2 Istanbul Capital Tour 650.0 507.0 -22.0 Moscow Natalie Tours 650.0 485.0 +25.4 Moscow TUI Russia & Cis 243.2 469.2 92.9 Moscow Neva 608.8 457.6 -24.8 St Petersburg S7 Tour 562.7 326.1 -42.0 Moscow Transaero Tours 200.5 170.7 -14.9 Moscow Biletour 162.9 161.0 -1.2 Vladistok Vladivostok Academservice 164.8 135.4 -17.8 Moscow PAC Group 152.3 128.7 -15.5 Moscow Intair 123.4 127.3 +3.2 Moscow KMP Group 196.6 126.9 -35.5 Moscow Youznhy Krest 161.4 125.8 -22.1 Moscow Ascent Travel 182.5 122.3 -33.0 Moscow Biblio Globus 121.4 110.2 -9.2 Moscow Lanta-Tour Voyage 143.5 103.9 -27.6 Moscow Sunrise Tour 106.8 86.8 -18.7 Moscow Megapolus Tours 107.9 60.7 -43.7 Moscow Vodohod 63.0 54.1 -14.1 Moscow

SOURCE: COMPANY WEBSITES/MARKETING In March 2010, TUI Russia & CIS announced the launch of the TUI brand in Russia and the Ukraine. The joint venture between TUI and S-Group Capital Management (SGCM), which involved a US$60- million investment, laid the foundations to build the TUI Russia & CIS businesses – Mostravel, VKO Group and Voyage Kiev – in the areas of brand, e-commerce, management and technology. In November 2010, UK-based travel group Thomas Cook announced a joint venture with the Russian travel company VAO Intourist.

What Next? The Russian market is less elastic and far more resilient than other outbound segments, as it is still primarily the political elite and wealthiest classes that head abroad. Arguably, they are less likely to feel the full brunt of a downward spiral in currency value and an economic slowdown.

According to Boston Consulting Group’s Global Wealth report 2011, Russia ranks fifth in the highest number of ‘ultra-high-net-worth’ (UHNW) households. The report highlighted that Russia is home to 561 households with assets in excess of US$100 million. The number of Russian millionaires is expected to increase by 241% between 2011-20. The middle class, another key component of the Russian outbound segment, is also projected to grow. Data drawn from the World Bank shows that the middle class in Russia, defined as households earning US$7,000-7,500 per annum, will increase to 56 million by 2030 versus just 7.3 million in 2000. Nonetheless, Mintel anticipates that the growth in demand for outbound tourism from Russia will be less robust compared to five years ago, as the smaller but escalating number of middle-class consumers are increasingly put off overseas travel due to economic uncertainty looming over global markets once again.

Presently, the Russian outbound sector is dominated by young as well as middle-aged travellers – both of which are forecast to shrink considerably over the next four decades. The only group projected to see growth over the 2011-50 period would be the over-65 bracket, who generally do not have the financial means to travel. Average pensions in Russia are shamefully inadequate, allowing the old to barely survive, let alone go abroad on holiday.

Based on these considerations, Mintel estimates the Russian outbound market will grow by 10-15% in 2011. Thereafter, it will expand at around 6% to a highly optimistic 10%, up to 2014. Despite its enormous potential and Russia’s economic vigour, its share of the world outbound tourism industry remains painfully low, comprising of only 4.6% of all arrivals worldwide, although this is marginally higher than the 3.3% achieved in 2007.

A rising number of Russians are expected to favour independent travel as they take more frequent trips and gain confidence. On the other hand, despite using the Internet as a research tool, travel agents will still play a crucial role when it comes to bookings, as Russians are still sceptical of the security of making online transactions. The SITA/Air Transport World Passenger Self-Service survey, conducted in 2010, discovered that 45% of Moscow travellers have experience of using online booking at some point, compared to the global average of 80%, and it is highly evident that there is potential for this segment to grow.

Europe will remain the favourite destination for Russian tourists, although the share of total outbound traffic there is anticipated to decline as more Russians travel further afield. Turkey will remain top of the list for short-haul, sun-and-sand destinations, unless its fragile political situation sours. Egypt and Tunisia stand to lose out considerably as political turmoil continues to deter Russians from travelling to their shores. Competition for Russian tourists is heating up, especially between Asia-Pacific and Middle Eastern nations. Numerous countries in these two regions – including Thailand, Hong Kong, Malaysia, Vietnam, the UAE and Israel – offer Russians visa-on-arrival facilities. Owing to this, these destinations will be the ones to watch, as they are projected to continue experiencing an exponential increase in the volume of Russian visitors for at least the immediate term.

Author: Linda Haden is an assistant editor at TTG Asia, based in Singapore.

Index to Travel & Tourism Analyst

Since March 1986, Travel & Tourism Analyst has published an extensive range of studies covering all sectors of the industry worldwide.

Travel & Tourism Analyst embodies a rich source of researched analysis and data on the industry. To assist subscribers and researchers, the following is an index of the most recent reports published on specific subjects since the beginning of 1993.

Back copies of all issues and individual articles are available from Mintel’s Travel & Tourism Intelligence.

Index grouped by geographic area

Issue

AMERICAS Transport

Air Airlines in South America. No. 6 1994 Airlines in the Caribbean No. 6 1997 Latin American Airlines No. 15 2005 The North Atlantic Air Travel Market No. 2 1994 The US Airline Industry No. 3 1997 The US and European Airline Commissions No. 6 1993

Cruise The North American Cruise Market No. 9 2004

Other Bus Travel in the USA No. 1 1995 Car Rental in the USA No. 4 1996 Rail Travel in North America No. 4 1999

Accommodation Accommodation in the Caribbean No. 6 2002 All-Suite Hotels in the USA No. 3 1996 Boutique Hotels in the US No. 12 2011 Capital Investment in the US Hotel Industry to 2005 No. 5 1999 Extended Stay Hotels in the USA No. 2 1998 Hotels in South America No. 17 2008 International Growth Strategies of Major US Hotel Companies No. 3 1993 Problems and Opportunities for the South American Hotel Industry: Argentina, Brazil and Chile No. 3 2002

Outbound Markets Brazil Outbound No. 7 2007 Canada Outbound No. 3 2010 Central and South America Outbound No. 14 2005 Mexico Outbound No. 18 2008 Prospects for the US to Europe market – special length focus No. 1 2004 US Outbound No. 6 2008

Market Segments Aboriginal Tourism in North America No. 6 1998 The Adventure Travel Industry in North America No. 6 1997 Health and Spa Tourism in North America No. 1 1998 The Mature Market in North America No. 3 2000

The Post-War Generation and North American Travel Industry No. 3 1997 Prospects for the Europe to North America Market No. 6 1995 Sports Tourism in North America No. 3 2001 US Business and Conference Travel No. 5 1993 The US Gaming Business No. 1 1999 USA to the Caribbean No. 3 1996 US Business and Conference Travel No. 6 2006 US Youth Travel Market No. 2 2011 Winter Sports in North America No. 6 2000

Travel Distribution Prospects for the US Travel Agency Sector No. 5 1995 Travel Agents in Canada No. 1 1999 Travel Agents in the USA No. 6 1994

Resorts/Attractions Theme Parks in North America No. 4 1994

Occasional Studies Circumpolar Tourism: North America and Scandinavia No. 3 2003 Measuring Tourism’s Economic Importance – A Canadian Case Study No. 4 1994 Negative Publicity about Tourism Destinations – A Florida Case Study No. 5 1995

ASIA-PACIFIC

Transport Air Air Travel in Asia No. 12 2004 Airlines in Australasia No. 6 1995 Airlines in China No. 2 1996 Asia’s New International Airlines No. 2 1993 Asian Airport Development No. 2 1998 Low-cost Carriers in Asia No. 13 2011

Cruise The Cruise Business in Asia Pacific No. 2 1999

Accommodation The Asia Pacific Hotel Industry No. 18 2010 Capital Flows in the Asian Hotel Sector No. 3 1998 Hotel Chains in the Asia Pacific Region No. 4 1993 Hotel Investment in the South Pacific No. 5 1997 Hotels in Australia No. 4 2003 Hotels in China No. 8 2007 Hotels in India No. 18 2007 Resorts in Asia No. 4 1996 Update on Asia’s hotel sector No. 3 1999

Outbound Markets Asia Outbound No. 4 2006 Australia Outbound No. 2 2002 Australia and New Zealand Outbound No. 17 2011 Australasia Outbound No. 13 2009 China Outbound No. 5 2011 India Outbound No. 19 2010 Indonesia Outbound No. 11 2011 Japan Outbound No. 14 2010 Malaysia Outbound No. 9 2009 New Zealand Outbound No. 3 2003 South Korea Outbound No. 6 2010 Taiwan Outbound No. 6 2000 Thailand Outbound No. 3 2002

Market Segments Backpacker Trails in Asia Pacific No. 20 2011 The Asian Conferences, Meetings and Incentives Market No. 2 1997 The Japanese Golf Holiday Market No. 2 1996 The Timeshare Industry in the Asia Pacific Region No. 4 1997

Financial Services Japanese Aid and Investment Assistance for Asia Pacific Tourism No. 3 1995

Travel Distribution Outbound Travel Agencies in Asia No. 4 2000 Travel Agents in Australia No. 3 2003

Occasional Studies The Fall-Out from the Asian Economic Crisis No. 6 1998 Fiji after the Coups No. 2 2001 The Main Players in Asia’s Travel Industry No. 1 1995 Secondary Tourism Destinations in Asia No. 5 1995 Trends and Developments in South East Asia No. 1 2003

EUROPE

Transport Air Airlines in Russia No. 7 2010 British Airways and the New Airline Economics No. 6 1999 Bus and Coach Travel in Europe No. 12 2009 Challenges and Opportunities for Europe's Airports No. 6 1998 Charter Airlines in Europe No. 4 1995 Low-cost Airlines in Europe No. 7 2008 The Emergence of No-Frills Airlines in Europe No. 1 2000 The Growth of European Airports No. 6 2001 Regional Airlines – The European Scene No. 2 2001 European Airport Capacities and Airport Congestion No. 5 1994 Europe’s Airports No. 2 2006 No-Frills Airlines in Europe No. 3 1996 The US and European Airline Commissions No. 6 1993

Cruise/Shipping Cross Channel Ferries No. 5 2001 Cruising in Europe – Special length focus No. 2 2004 European River Cruises No. 14 2006 European River Cruising No.13 2010 European Cruises No. 14 2007 The Cruise Market in Mainland Europe No. 1 1998

Other European Bus and Coach Travel No. 3 2003 Car Rental in Europe No. 1 1999 Cross-Channel Traffic No. 1 2003 European Rail Travel No. 2 2003 Europe’s Railways in the 21st Century No. 4 1997 Rail Travel in Europe No. 3 2008 The Channel Tunnel – A Progress Report No. 3 1995

Accommodation Budget Hotels in Europe No. 2 2010 Eco-accommodation in Europe No. 10 2011 European Hotel Branding No. 6 2000 European Hotel Chain Expansion No. 8 2004 Franchising Hotels in Europe No. 1 1996 Hard Budget Hotels in France Hotel Chains in Europe

Hotel Grading Schemes in Europe No. 6 2004 Hotel Incentives Policies in Europe No. 5 1994 Hotels in Eastern Europe No. 4 1997 Hotels in Russia No. 11 2008 The German Hotel Sector No. 5 2008 The Impact of Branding on the UK Hotel Industry No. 2 2000 Improving Performance in Small and Medium sized hotels: The Swiss Experience No. 5 2001 Spanish Leisure Hotel Chains No. 17 2009 The Turkish Hotel Sector No. 4 2010 The UK Budget Hotel Sector No. 4 1998 UK Regional Hotel Transactions in the 1990s No. 4 2000 UK Group Hotels No. 1 2003

Outbound Markets Austria Outbound No. 4 2002 Balkans Outbound No. 19 2009 Baltics Outbound No. 3 2010 Belgium Outbound No. 5 1999 Europe Outbound No. 16 2004 Finland Outbound No. 5 1996 France Outbound No. 9 2008 Germany Outbound No. 14 2011 Hungary Outbound No. 2 2000 Ireland Outbound No. 11 2010 Italy Outbound No. 15 2007 Netherlands Outbound No. 6 2009 Nordic Outbound No. 15 2006 Outbound Travel in the Baltics and Eastern Europe No. 18 2005 Poland Outbound No. 16 2009 Republic of Ireland Outbound No. 3 1994 Russia Outbound No. 19 2011 Scandinavia Outbound No. 14 2008 Spain Outbound No. 3 2000 Sweden Outbound No. 2 1997 Switzerland Outbound No. 5 2002 UK Outbound No. 5 2003

Market Segments Adventure Travel in Central/Eastern Europe No. 7 2005 Agritourism in Europe No. 11 2004 Camping and Caravanning in Europe No. 18 2009 Educational Tourism in Europe No. 7 2011 The Emergence of Central and Eastern Europe No. 4 2008 E-travel in Europe No. 7 2004 Europe to the Asia Pacific Region No. 1 1994 Europe to Sub-Saharan Africa No. 5 1996 European Adventure Travel No. 5 2003 European MICE Destinations No. 2 2003 Europe’s Senior Travel Market No. 4 1993 The European Business Travel Market No. 4 1998 The European Conference and Meetings Market No. 4 1994 The European Exhibition Market No. 2 2000 The European International Short-Break Market No. 2 1995 The European Leisure Travel Industry No. 5 2001 The European Market for Very Expensive Holidays No. 2 1993 The European Meetings and Incentive Industry No. 4 2002 The European MICE Market No. 3 2001 The European School Travel Market No. 5 1999 European Snowsports: Markets & Destinations No. 6 2002 The Future of the European Package Holiday No. 7 2009 Health Tourism in Europe No. 1 2000 The International Ski Market in Europe No. 3 1994 The Market for Cultural Tourism in Europe No. 6 1993

The Package Holiday Market in Europe No. 4 1996 MICE Tourism in Europe No. 8 2005 Redefining Ecotourism No. 5 2004 Religious Travel in Europe No. 2 1994 Rural Tourism in Europe No. 16 2007 Urban Tourism in Europe No. 6 1997 Watersports Holidays in Europe No. 20 2006 The West European Incentive Travel Market No. 1 1997 Where Germans Travel To No. 1 2001

Travel Distribution European Leisure Groups No. 4 2002 EU Legislation and the Travel Industry No. 5 2000 The European Tour Operator Market No. 1 2006 Travel Agents in Europe No. 3 1994 Travel Distribution in Germany No. 5 1996 Who Owns Whom in the European Travel Industry No. 3 1998

Resorts/Attractions Attendance Trends at Europe’s Leisure Attractions No. 4 1996 The Future of Visitor Attractions No. 1 2000 Marinas in Europe No. 6 1995 Rejuvenating Holiday Resorts – A Spanish Case Study No. 2 1997 Spa Tourism in Central & Eastern Europe No. 6 2002 Theme Parks in Europe No. 5 1997

Financial Services Foreign Investment in Eastern Europe’s Travel Industry No. 3 1993 Travel Insurance Market in the UK No. 4 1994

Occasional Studies Circumpolar Tourism: North America and Scandinavia No. 3 2003 Database Marketing in Travel and Tourism No. 1 1999 The European Community’s Tourism Development Programmes No. 5 1993 The European Union and European Tourism: Search for Policy No. 3 2002 European Union Progress on a Common Tourism Sector Policy No. 1 1997 The Impact of the Single European Currency on the Travel and Tourism Sector No. 5 1997 Legal Liabilities in the European Travel Trade: The EC Package Travel Directive, Part I No. 1 1993 Legal Liabilities in the European Travel Trade: The EC Package Travel Directive, Part II No. 2 1993 Naturism in Europe No. 9 2005 New Europe: markets and destinations No. 10 2004 The Package Travel Directive: Implications for Organisers and Suppliers No. 1 1996 Trends and Issues in the European Travel Industry No. 6 2000 Visitor Management in Small Historic Cities No. 3 1998

MIDDLE EAST/AFRICA Transport Air Airlines of the Arabian Gulf No. 6 1996 Airlines in Sub-Saharan Africa No. 5 1995

Cruise The Cruise Industry in the Arabian Gulf and the Indian Ocean No. 1 2000

Accommodation Hotels in the Middle East: Trends and Opportunities No. 4 1999 Middle East Hotels No. 8 2006 The Middle Eastern Hotel Sector No. 8 2011

Outbound Markets Africa Outbound No. 3 2005 Israel Outbound No. 4 1997 Middle East Outbound No. 10 2006

Saudi Arabia Outbound No. 4 1996 South Africa Outbound No. 11 2007 Sub-Saharan Africa Outbound No. 17 2010

Market Segments Adventure Tourism in Africa No. 16 2011

GLOBAL/NON-GEOGRAPHIC STUDIES Transport Air The Aircraft Operating Lease Companies No. 3 1994 Airport Catering No. 2 1999 Airport Security No. 1 2002 Airports and Airport Security No. 6 2011 Destination Marketing No. 5 2005 Frequent Flyer Programmes No. 3 1993 Global Aviation Outlook No. 3 2004 Global Trends in Airline Alliances No. 4 1997 The Growth & Long-term Potential of the Low-cost airlines No. 4 2000 The Future of International Airline Alliances No. 6 2000 The Legal Framework for Airline Competition No. 3 1997 Low-fare Airlines – Global trends and developments No. 6 2002 Low-cost airlines – an international overview No. 5 2003 Low-cost Airlines Worldwide No. 19 2006 New Commercial Strategies for Airports No. 3 1999 The Outlook for International Corporate Aviation No. 3 2002 Simplifying Passenger Travel No. 6 2001 The Strategic Importance of CRSs in the Airline Industry No. 4 1994 World Airport Development Plans and Constraints No. 1 1996

Rail International Rail Packages No. 15 2009

Cruise Cruising in Crisis? No. 5 2000 The Cruise Ship Industry to the 21st Century No. 2 1995 The World Cruise Market Update No. 1 2002

Accommodation All-inclusive Resorts No. 6 1998 All-inclusives: The Major Players No. 3 2003 Alternative Accommodation No. 6 2005 Boutique Hotels No. 2 2002 Casino Hotels Worldwide No. 5 2009 Condo Hotels Worldwide No. 12 2006 CRS Development in the Hotel Sector No. 2 1994 Eco-accommodation No. 20 2007 Hotel Frequent Guest Programmes No. 1 1995 The International Timeshare Market No. 3 2002 Limited Service Hotel Brands No. 5 2000 Measuring Hotel Portfolios’ Performance No. 3 1996 New Management Practice in the International Hotel Industry No. 1 1997 Operating Performance of the World’s Hotel Industry No. 6 1999 Recession and its Implications for the International Hotel Industry No. 6 2001 Timesharing Opportunities for the Hotel Sector No. 4 1993 Youth Travel Accommodation No. 10 2009

Market Segments Agritourism No. 9 2010 Alternative Destinations No. 1 2002 Alternative Destinations for the Future No. 2 2003 Bespoke Holiday Packages No. 16 2010 Developments in the Global Timeshare Market No. 4 1995

Driving Holidays No. 13 2007 Educational Tourism No. 3 1997 The Evolution of Slow Travel No. 4 2011 Health and Wellness Tourism No. 14 2004 Holiday Rental Intermediaries No. 15 2004 Hotel Loyalty Schemes No. 17 2005 Leisure Extensions to Business Trips No. 5 2002 Literary Tourism No. 15 2011 Loyalty Schemes No. 16 2006 Loyalty Schemes in Tourism No. 12 2010 Luxury Travel No. 12 2007 Niche Market Tourism No. 13 2006 The Major International VFR Markets No. 6 1994 Rail Tourism No. 2 2005 Religious Travel in the New Millennium No. 5 1999 Skiing Holidays No. 3 2006 Spa Tourism No. 18 2011 The Seniors’ Travel Market No. 5 1997 Tourism Along the Silk Road No. 16 2005 Volunteer Tourism No. 16 2008 Watersports Holidays No. 5 1994 Wildlife Tourism No. 10 2008 The World Gay Travel Market No. 2 2001 The Youth Travel Market No. 18 2004

Technology The Changing Face of Hotel Electronic Distribution No. 5 2001 The Changing Face of Destination Management Systems No. 2 2002 Delivering E-Travel Services No. 4 2001 E-Business Models in the Travel Industry No. 3 2000 eCRM in the Travel Industry No. 1 2001 Global Distribution Systems No. 7 2006 Hotel Technology No. 10 2010 The Future of Global Distribution Systems No. 3 1998 The Future of Technology in Travel No. 9 2011 The Impact of Technology in the Hotel Industry No. 3 2001 Online Intermediaries – Revolutionising Distribution No. 1 2003 Online Social Media and Travel No. 15 2008 Online Travel Intermediaries No. 14 2009 Tourism Satellite Accounting No. 19 2005

Travel Distribution The Future of Travel Agents No. 3 2001 The Impact of Electronic Distribution on Travel Agents No. 2 1998 The Impact of Information Technology on Destination Marketing No. 3 1995 Ticketing and Distribution in the Airline Industry No. 3 2009 Tourism and the Internet No. 1 1998

Financial Services Paying for Travel No. 6 1993 The World Bank Group and Tourism No. 5 1998

Occasional Studies Environment Environmental Impact of Tourism in Developing Countries No. 2 1996 Green Innovations in Tourism No. 1 2011 Green Strategies for Tourism Worldwide No. 4 1999 Holistic Tourism No. 2 2007 Practical Environmental Policies in Travel and Tourism I No. 6 1993 Practical Environmental Policies in Travel and Tourism II No. 1 1994 Sustainability in the Hotel Industry No. 6 2001 Sustainable development in the Hotel Industry: Implications & Case studies No. 5 2002 Sustainability in Protected Tourism Areas No. 1 2010

Sustainable Tourism No. 1 2005 Sustainable Tourism Practices No. 1 2008 Tourism and Climate Change No. 1 2007 Tourism and Poverty Alleviation No. 1 2009 Yoga and Pilates Tourism No. 8 2009

National Tourist Organisations Funding of National Tourist Organisations No. 6 1996 The Changing Role of International Travel and Tourism Organisations No. 5 1994

General Adult Gap Years No. 12 2008 Adventure Tourism No. 8 2008 Advertising and Promotion in the Travel Industry No. 4 2000 Circumpolar Tourism No. 13 2008 Community-based Tourism No. 5 2000 Cultural Tourism No. 20 2004 Cycling Tourism No. 20 2009 Deep Vein Thrombosis (DVT) and the future of long-haul air travel No. 4 2002 Diving Tourism No. 5 2007 Film Tourism – The Global Picture No. 5 2003 Festival Tourism No. 13 2005 Fishing Tourism No. 10 2007 Gap Year Tourism No. 12 2005 Gastronomic Tourism No. 4 2009 Golf Tourism No. 15 2010 The GATS and its Impact on Tourism No. 3 2000 The Impact of Festivals and Special Events on Tourism No. 4 1998 The Impact of Fuel Price Fluctuations No. 1 2001 The Impact of Political Unrest and Security Concerns on International Tourism No. 2 1994 The Impact of Terrorism on Tourism No. 4 2003 The Impact of 9/11: Caribbean, London and NYC No. 5 2002 International Cultural and Heritage Tourism No. 8 2010 The International Duty-Free Market No. 6 1996 The Marketing of Tourism for Ethnic Minorities No. 1 2001 The Legacy of Mega Events in Tourism No. 20 2010 Leveraging the New Millennium for Tourism No. 3 1999 Luxury & Tailor-made Holidays No. 20 2005 Music Tourism No. 20 2008 Prospects for Tourism in 1995 No. 6 1994 Prospects for Tourism in 1996 No. 6 1995 Real Exchange Rates and International Tourism Demand No. 4 1995 Religious Tourism No. 4 2005 Set-jetting Tourism No. 4 2007 Short-term Trends and Key Issues in the Tourism Industry No. 6 1999 Spa Tourism No. 9 2007 Sponsorship in the Travel and Tourism Industry No. 6 1996 Sports Tourism No. 17 2004 Stadia and Tourism-related facilities No. 2 2001 Study Tourism No. 9 2006 Taxation and Tourism No. 2 1998 Theme Park Tourism No. 11 2006 Tourism and the Performing Arts No. 1 1998 Tourism Satellite Accounts No. 3 1999 Tourist Health and Safety No. 5 2002 Trekking Holidays No. 5 2010 Yachting Tourism No. 11 2009 Youth Travel Market No. 18 2006

Index to TTI Destination Reports Hungary No. 3 2009

Country reports Iceland No. 4 2010 India No. 1 2010 ABC Islands No. 4 2008 Indochina No. 2 1993 Albania No. 3 2011 Indonesia No. 2 2011 Algeria No. 3 2008 Iran No. 4 1998 Andorra No. 1 1993 Ireland No. 1 2001 Antarctica No. 1 1999 Israel No. 1 2000 Antilles, Netherlands No. 4 1994 Italy No. 2 2008 Argentina No. 2 2010 Australia No. 2 2011 Jamaica No. 4 2008 Austria No. 3 2009 Japan No. 2 2011 Jordan No. 3 2010 Bahamas No. 1 2005 Bahrain No. 3 2010 Kenya No. 4 2009 Barbados No. 3 1999 Belgium No. 3 2004 Laos No. 2 2009 Belize No. 2 2001 Latvia No. 3 2011 Bermuda No. 4 2008 Lebanon No. 3 2010 Bhutan No. 1 2008 Libya No. 3 2008 Borneo No. 1 2010 Liechtenstein No. 1 1993 Bosnia & Herzegovina No. 3 2009 Lithuania No. 3 2011 Botswana No. 4 2009 Luxembourg No. 2 2001 Brazil No. 1 2009 Bulgaria No. 1 2007 Madagascar No. 2 2006 Malawi No. 4 2009 Cambodia No. 2 2011 Malaysia No. 2 2011 Canada No. 2 2010 Maldives No. 2 2004 Chile No. 2 2010 Malta No. 3 2006 China No. 1 2010 Mauritius No. 4 2009 Colombia No. 1 2009 Mexico No. 2 2010 Costa Rica No. 3 2007 Monaco No. 1 1993 Croatia No. 3 2011 Mongolia No. 2 2009 Cuba No. 3 2007 Montenegro No. 3 2009 Cyprus No. 3 2009 Morocco No. 1 2011 Czech Republic No. 3 2006 Mozambique No. 2 2006 Myanmar No. 1 2010 Denmark No. 4 2010 Dominican Republic No. 4 2008 Namibia No. 1 2011 Nepal No. 1 2010 Ecuador No. 3 1998 Netherlands No. 4 2010 Ecuador & Galapagos No. 4 2006 New Zealand No. 2 2011 Egypt No. 1 2011 Nicaragua No. 3 2007 El Salvador No. 1 2009 Nigeria No. 2 2007 England No. 3 2000 Northern Ireland No. 3 2001 Eritrea No. 4 1997 Norway No. 4 2010 Estonia No. 3 2011 Ethiopia No. 2 2007 Oman No. 3 2008

Fiji No. 1 1998 Pacific Islands No. 1 1996 Finland No. 4 2010 Pakistan No. 3 1996 France No. 2 2008 Panama No. 3 2007 Paraguay No. 1 2009 Gambia No. 1 2011 Peru No. 2 2010 Germany No. 2 2008 Philippines No. 1 2010 Ghana No. 2 2007 Poland No. 3 2006 Greece No. 2 2008 Portugal No. 3 2004 Guatemala No. 3 2007 Puerto Rico No. 4 2003

Hawaii No. 4 1993 Qatar No. 3 2010 Honduras No. 1 2009

Romania No. 1 2007 Delhi No. 3 1999 Russia No. 1 2004 Dublin Report 2003 Dubrovnik Report 2003 Saudi Arabia No. 4 2007 Scotland No. 1 2002 Edinburgh Report 2001 Senegal No. 2 2007 Seychelles No. 4 2009 Geneva No. 4 1999 Singapore No. 2 2005 Glasgow No. 1 2000 Slovakia No. 3 2006 Slovenia No. 1 2007 Hong Kong No. 3 1999 South Africa No. 1 2011 South Korea No. 1 2006 Istanbul Report 2003 Spain No. 2 2008 Sri Lanka No. 3 2003 Jakarta No. 4 1999 Sweden No. 4 2010 Jerusalem No. 4 2000 Switzerland No. 3 2009 Syria No. 3 2010 Kuala Lumpur No. 2 2000

Taiwan No. 2 2004 Lisbon Report 2003 Tanzania No. 1 2011 London Report 2003 Thailand No. 2 2009 Tunisia No. 3 2008 Madrid Report 2003 Turkey No. 3 2011 Manchester No. 3 1999 Turks & Caicos No. 4 2008 Melbourne No. 1 1999 Milan No. 3 2000 Uganda No. 2 2006 Montreal No. 2 1999 Ukraine No. 1 2007 Munich Report 2001 United Arab Emirates No. 3 2010 Uruguay No. 1 2009 New York No. 3 1999 US No. 2 2010 Nice Report 2001 UK No. 2 2008 Paris Report 2003 Venezuela No. 3 2007 Perth No. 3 2000 Vietnam No. 2 2009 Prague No. 3 2000

Wales No. 2 1999 Quito No. 2 1999 Windward & Leeward No. 4 2008 Islands Rome Report 2003

Yemen No. 4 2007 Stockholm Report 2003 Zambia No. 4 2009 St. Petersburg Report 2003 Zimbabwe No. 2 2007 Sydney No. 4 1999

Tallinn Report 2003 Tokyo No. 3 2000 City reports Toronto No. 1 2000

Amsterdam Report 2003 Vancouver No. 3 2000 Athens Report 2001 Vienna Report 2003 Auckland No. 2 1999 Warsaw No. 4 1999 Barcelona Report 2003 Wellington No. 4 2000 Berlin Report 2001 Boston No. 1 1999 Zurich No. 2 2000 Bruges No. 2 2000 Brussels Report 2001 NOTES: REPORT 2001 REFERS TO EUROPEAN CITY Budapest Report 2003 REPORTS, PUBLISHED IN MARCH 2001; REPORT 2003 REFERS TO EUROPEAN CITY DESTINATIONS PUBLISHED IN Cairo No. 2 2000 NOVEMBER 2003. Chicago No. 1 2000 Copenhagen No. 1 2000

Special Reports Index

2003

European City Destinations European Leisure Travel Industry International Hotel Industry World’s Leading Outbound Markets

2004

Timeshares - Global European Tourism Statistics Emerging Destinations - Global International Tourism Forecasts

2005

European Leisure Travel International Hotel Industry Cruises World’s Leading Outbound Markets

2006

Asian Airlines Top 15 City Destinations in Europe Home Ownership Abroad & Timeshare International Tourism Forecasts

2007

International Growth Strategies of Major Hotel Chains The Impact of Terrorism on International Tourism The European Leisure Travel Industry The International Hotel Industry

2008

Airports and Airport Security (March) Cruises (June) Business Travel Worldwide (September) Top Ten City Destinations in Europe (December)

2009 Timeshare and Secondary Residences Worldwide (March) Airlines Worldwide (June) European Leisure Travel Industry (September) International Hotel Industry (December)

2010 Cruises (March) Branded Serviced Apartments and Residences Worldwide (June) Business Travel Worldwide (September) Air Travel in Asia (December)

2011 The European Leisure Travel Industry (March) Airlines Worldwide (June) The International Hotel Industry (September) Rail Travel Worldwide (December)

Need to know more about Mintel?

To view a complete index of Mintel reports, or find out about the latest titles published please go to reports.mintel.com

To find out how the whole range of Mintel products can enhance your business, visit the group site at www.mintel.com.

To speak with our information team about any aspect of Mintel’s solutions please call +44 (0)20 7606 6000 (UK) or (1) 312 943 5250 (US)

Mintel Research Consultancy For further analysis on this report, or to design a tailored report, contact Mintel Research Consultancy on +44 (0)20 7606 4533.