Russia Tourism Report Q3 2009

Tourism Overview Official data for 2008 show that foreign visitor arrivals were up a modest 3% year-on-year (y-o-y) to nearly 23.7mn - slightly ahead of the previous year's growth rate. Included in these data, foreign tourist arrivals increased a relatively low 4% y-o-y, but this still represented a recovery compared with 2007.

The most important source markets (outside the former Soviet Union countries) for tourist arrivals were, in order of importance, Germany, the US, Italy, Finland, the UK and China. Of these source countries, growth in arrivals attributed to tourism was strongest for the UK, Italy and the US. By contrast, tourist arrivals from Germany, Finland and China, recorded y-o-y declines.

Forecast Scenario This quarter, we have revised down our growth forecasts for Ukraine, Kazakhstan, the eurozone and the US - the key source markets for Russian foreign visitor arrivals. Considering the pace of the forecast economic decline in these major markets, the outlook for foreign visitors in 2009 is extremely poor.

Moreover, taking into account evidence that suggests relatively sharp falls in the number of foreign visitors to Moscow and St. Petersburg in the early months of this year, BMI forecasts a decline in arrivals to Russia in the order of 12% y-o-y in 2009. Price rises (especially in accommodation) are also likely to have a negative influence on the tourism sector in the short term, with annual inflation at 14% y-o-y in March 2009. In line with broad economic recovery in key source markets in 2010, however, we expect a slight pick up in arrivals from next year.

Aeroflot Latest data confirm the anticipated marked slowdown in Russian air passenger traffic. Figures for the first three months of 2009 show that Russian national airline Aeroflot carried nearly 1.8mn passengers, which represents a sizeable fall of 13.4% compared with the corresponding period a year earlier. Furthermore, passenger numbers in March fell nearly 17% compared with the same month in 2008.

Transaero The 2009 summer flight schedule of Russian airline Transaero has a greatly expanded domestic route network of 20 destinations, which is more than double the number of destinations compared with the same period in 2008.

Domodedovo International Airport From May 2009, Transaero, S7 Airlines, Ural Airlines, Region-avia and Wind Rose Airlines (a Ukrainian charter airline) opened new flights from Russia's main aviation hub, Moscow's Domodedovo International Airport, to major Russian and Ukrainian cities.

Rezidor Hotel Group In March 2009, the international hotel operator Rezidor Hotel Group and the domestic company Regional Hotel Chain (RHC) announced a strategic development agreement for at least 20 Park Inn hotels across the Russian Federation. Firm locations have already been identified in 10 key Russian cities, while a further 10 sites are still being considered.