The impact of the Ukrainian conflict and Sanctions on the Russian outbound Market
The primary impact of the Ukrainian crisis on Russian outbound tourism can be evaluated based on the Russian tourism officials’ statistics for the 1st half of 2014, as they can serve as an indicator of the overall trend. Europe still accounts for 41% of all the international travel and European countries top the list of the preferred outbound destinations, so sanctions have not had a negative impact on travel to Europe so far and it is still the preferred summer destination. However, since the start of the political crisis with Ukraine, demand for international travel by while leisure travel has decreased by 9% compared to the 1st half of 2013. The main reasons for this are the following:
- The weakening of the Rouble against major currencies almost by 19% since January 2014. This has made international travel less affordable especially for the price-sensitive segment of the package tour traveller.
- The Russian government introduced a travel ban on employees from law enforcement organisations such as military personnel, police officers etc, this ban is estimated to have affected around 1.5 million people.
- Although there were no sanctions directed towards the travel sector, it still generated concerns and confusion among Russian travelers, with some believed it would be more difficult to obtain a Schengen visa and this affected the destination choice. The overall uncertainty of the political and economic situation made Russians more cautious and forced to temporary cut down their tourism spend.
- The comparative table below based on traffic for 37 key markets, show that Europe was less affected than other continents such as Asia, which had an over decrease of 1%, the Middle East had a 4% growth in traffic as Russian tourists became more price sensitive and only Jordan had a major decrease of -24%.
- Amongst the European destinations, there were only 7 countries with a significant decrease of 7% or more namely: Finland, Estonia, Lithuania, the Czech Republic, Croatia, Malta and Slovakia. It should be noted that Croatia has been in decline since the introduction of visas. Several other destinations had a minor decrease including: Germany, Greece, France and Austria, but the other 14 European destinations had an increase in visitors. Turkey had the most impressive growth rate of +14% and is probably the key winner. Other market leaders such as Egypt (+3%) have seen a modest growth rate, while Thailand (-4%) had a small decrease. but this was mainly due to issues in Thailand not in Russia. China had a large reduction of -25% which is part of a general year on year trend, while South Korean had an impressive growth rate which is due to the removal of visas and the importance of Seoul as a major hub for Russians from the Far East. The United Arab Emirates grew by 3%, Israel by 15% and Tunisia by 11%.