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By: Michelle Grant

The recent terrorist attack on Domodedovo Airport in Moscow is not expected to cause a major drop off in demand in the short term due to the city’s reliance on business travel. However, the ongoing violence stemming from the conflict in the Caucasus is likely to threaten the long term development of Russia as a tourism destination as it gears up to attract leisure visitors to the Winter Olympics and FIFA World Cup.

Short term impact will likely be minimal on tourism demand

On 24 January 2011, a suicide bomber attacked the arrivals gate at Domodedovo Airport, leaving 36 dead and injuring over 100.  The bomber was identified as a 20 year old from the Caucasus region, which is a volatile region with insurgents fighting to separate from Russia.  A Chechen rebel leader later claimed responsibility for the attack and promised that these attacks would continue.

Domodedovo is the largest airport in Russia with 24 million passengers passing through in 2010—66% of which are international.  While the location of the attack suggests it was aimed at harming foreigners, no significant travel warnings were issued against Russia (many already had travel warnings against the Caucasus region in place). Furthermore, the airport returned to normal operations the following day with tightened security.

Although horrific, the attacks are not likely to impact tourism to Moscow in the short term.  About 56% of tourists visit the city for business reasons, so to a certain extent, the trips are unavoidable.  Furthermore, 66% of tourists are from the region and are likely well aware of the risks involved in travelling to Moscow, which has experienced numerous terrorist attacks in recent years, including a lethal attack on the metro in March 2010.  In the case of the Mumbai hotel attacks in November 2008, arrivals to Mumbai grew by 2% in 2008 and dipped 3% in 2009, suggesting that Moscow may only see a slight decrease in arrivals as a worst case scenario as Mumbai is far more dependent on leisure and long haul tourists.

Growth in arrivals, however, may be possible.  Euromonitor International forecasts 2.5% growth in arrivals to the country as a whole in 2011. Moscow experienced only an anemic 1% increase in visitors in 2010 after a disastrous decline of 10% in 2009 due to the recession and wildfires in August 2010 that surrounded the city.  A lack of natural disasters and terrorist attacks, coupled with a stronger economic rebound, could cause arrivals to rebound strongly in 2011, despite a short term drop due to the terrorist attack.

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Long term consequences likely

In 2014, Russia will host the Winter Olympics in Sochi.  The government has put together a US$12 billion investment package to prepare the city for the Winter Games with the government covering 60% of the cost and private investors the remaining 40%.

In addition to the financial stakes, Russia’s reputation as a tourism destination is also at stake, especially as the country plans to make Sochi into an international ski and resort destination after the Games.  Ongoing deadly terrorist attacks could undermine demand for the Games among international visitors.  This is further compounded by the fact that Russia did not tighten security when it received intelligence warning of the airport attack.

However, it seems that the government is taking the potential threats to the Games seriously.  In February 2011, industry sources reported that Russia will spend US$2 billion on security during the games—more than double the cost of security at the Vancouver games.  While this is a step in the right direction, Russia will need to make a concerted effort to demonstrate its seriousness about safety and security at this high profile event over the next four years to ensure high attendance, and similarly for the FIFA World Cup in 2018.

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