The impact will be far-reaching. Industry members who adopt a “it is not my problem because I don’t do Russia” may want to think twice.
Russian travellers have fuelled (oops, no pun intended) demand for many destinations, but thanks to Vladimir Putin’s dependency on the energy industry – devastasting when oil prices whittled by half over six months – and sanctions on his economy following the Ukraine crisis, the rouble has all but collapsed and, along with it, a darling outbound travel market.
The impact will be far-reaching. Industry members who adopt a “it is not my problem because I don’t do Russia or have little exposure to it” may want to think twice.
The fact is, in its wake, there is a huge capacity that needs to be filled, considering that not only is Russia a volume market, its travellers have a healthy length of stay (in Thailand, an average of 11 nights – see page 7).
Already, a UK tour operator I spoke to said getting space in Thailand and southern Vietnam, two destinations that have focused on the Russian market, “is certainly much easier” now, and while hotels at present aren’t panicking with rate reductions due to a still-strong regional business in the first couple of months, he believes that from March onwards, “the hotels will have to be really aggressive and I fully expect the lower spring rates to kick in early in many places”.
As DMCs, hotels and destinations that have relied heavily on the Russian market scramble to find alternative volumes, protecting market share is the name of the game. Besides, it is not as if the pie is expected to grow by leaps and bounds. Japan is in a recession, the eurozone is trying hard to avert a deflation, China’s economic growth is slowing and Australia is struggling to rebalance its economy away from mining investment-led growth. It is also not as if there are new emerging markets to count on, the way Russia and China had saved the day for many players and destinations in recent past crises. Where are the new darlings? India and Indonesia are indeed promising but they will take some time still to bloom.
So, do expect the competition to be in full swing as soon as the first tradeshow of the year, the ASEAN Tourism Forum, opens next week in Myanmar. Do come prepared with a sound strategy.
South-east Asia itself needs to do more to gain market share. The region chalked up the smallest growth in international arrivals compared with other regions in the world in the first 10 months of 2014 over the same period in 2013, according to the latest UNWTO data. Its two per cent growth is below the five per cent growth in international arrivals overall.
But that’s another opinion.