5 Facts about the Russian Travel Industry from a Local Expert

The past year in Russia has impacted user behavior and how Russians are spending their time and money. When it comes to travel and vacations, Russian behavior has shifted a bit but there has been very little negative impact on travel related businesses.

For more insight on some of the trends in the Russian travel industry, I interviewed a local expert on the travel industry, Valentin Dombrovsky, head of market relations at Excursiopedia. Dombrovsky regularly writes on startups and the Russian travel industry and is always up to speed on the latest information and trends from user behavior to new players entering the market.

Local opinions like Dombrovsky’s offer the type of insight your data or number of queries will not. Second to realizing the opportunity in Russia, learning from a local and changing your mindset and approach for the foreign market should be at the top of any successful businesses’ agenda. Here are five important things about the online Russian travel industry to consider, according to Dombrovsky.

Fact 1: The Russian online travel industry is still growing

According to Dombrovsky, the online travel industry in Russia is still in the early stages of development. Estimations from Data Insight [Russian] claim that 9 million Russian people use travel related services online- in this case, Dombrovsky notes, “Russia is the biggest online market in Europe but many still aren’t using the Internet for travel services, so there is a great amount of potential.” For Russians, travel is something they still aren’t purchasing as much online. Many like to have a consultation about their travel plans and appreciate the interactions provided by travel agencies.

Major international brands are doing great in Russia right now. To name a few Dombrovsky listed Booking, Tripadvisor, Airbnb, Uber, BlaBlacar, Hoteltonight. Dombrovsky commented on the great brand awareness and strong SEO rankings seen by these sites that make them popular among Russian users. Dombrovsky explained that there are fewer local players in Russia and these major international brands all see the opportunities in the market –especially trends on shared economy accommodations.

Fact 2: Package Tours are all the rage

Russians prefer to purchase package tours for the ease of covering all the travel details at once but especially due to issues acquiring visas. Russians need visas to travel abroad including the US and destinations in Europe etc.

Mainly, tour packages are purchased through agencies but there is a big online market. The launch of Yandex.Travel, last spring made an impact on the online market. The service brought a lot of attention to the segment of buying tour packages online. Russians started comparing the online experience to the in person experience and found the online options to be just as efficient.

Yandex travel queries 2015

“For many, the process of getting a visa is quite new and also a bit complicated. It requires a lot of paperwork and organization. People tend to see that is it hard and not knowing a foreign language is difficult because most of the applications are in English.”

Usually people prefer to buy package deals because tour agencies help with all of the visa needs. Also. countries that are popular with those who buy packaged tours like Egypt or Turkey, don’t require visas beforehand. In addition the visa issue contributing to the popularity of package tours, one local player, Visa2home, runs a service for helping Russians get their travel visas.

This service simplifies the process to get visas. A user simply enters their information and Visa2home will help with the process of getting them the correct visa for the specific country.

Fact 3: Local travel dominates

Despite a significant amount of international travelers, fewer Russians tend to travel abroad in comparison to their domestic travel.  According to statistics of one of the leading Russian OTAs, Biletix, inbound airline tickets account for 60% of its sales. That still leaves a significant amount of travelers who are going abroad.

Russia's top destinations

Inbound travel in Russia has risen a lot in the past year. Local travel requires less planning in advance and of course, avoids the aforementioned visa problem. Russians also appreciate the ability to travel by train.  In terms of foreign destinations, the most popular countries abroad for vacation are Turkey and Egypt.

Fact 4: Peer-to-Peer market place is trending but not new

When I inquired about the peer-to-peer market, Dombrovsky explains, “Right now in Russia we are feeling a tough situation. Of course, if you are trying to save money, turning to some of these more affordable options is great.”  Dombrovsky ponders the relationship between the rise of the peer-to-peer industry and the crisis of 2008 and 2009. The rise of some of the big brands happened during tough economic times.

Dombovsky continues, “In this case, Airbnb is a great opportunity. In fact, this concept of peer to peer sharing was invented during Soviet years. There are even films that depict so called “wild travelers” who would just buy train tickets and go to Sochi for example, where they would meet random people waiting at the train station to rent rooms. These connections or peer-to-peer rentals have been popular for a long time.”

The concept of renting a room from someone is still a popular type of accommodation in Russia. However, many of these transactions are happening off line. “The Russian people are very open to this idea but there is a market that the online industry isn’t even touching yet,” says Dombrovsky.

Russians in Moscow and St. Petersburg have adopted online sharing sites quite well. Still Airbnb is growing in Russia and is very popular. Domborvsky concluding that according to Similarweb, Airbnb has 2.3 million visitors and it is one of the top 10 travel websites in Russia.

Fact 5: Mobile matters

Like every other major online industry, mobile searches and purchases come into play. Naturally, more travel sites are coming out with mobile apps. There is a greater drive to get people to make travel purchases from their phones. Sites want to offer users another quick and accessible method for making a purchase.

When I asked about the mobile scene, Dombrovsky explained, “I have seen a recent report prepared by Svyaznoy.travel that said they are making sales via desktop and their mobile app that was launched last year. The report says in 2015 45% of airplane ticket purchases were made on phones – not apps but through the browser. 25% of purchases were bought through mobile app. Overall 10% of sales are made on the app. I would say this is a good reflection of the mobile impact on the industry in general.”

Conclusions

Thanks to Valentin for clarifying his perspective as first a Russian who needs to make his own travel plans and second, as someone in touch with the success of some of the businesses entering the Russian travel industry.  Russians are getting accustomed to booking their vacations online – and now through their smartphones- but there is still significant room for growth in the market.  International players are having great success in the Russian market but should continue to be aware of some of the major domestic travel issues and preferences that impact sales.