Despite the crisis in Crimea, which could possibly escalate to envelop the whole of Ukraine, it is the economic consequences which will likely have more of an impact on outbound travel from Russia to Western Europe, causing slower growth in Russian arrivals.
Political Difficulties do not Influence Destination Selections
Although Western European politicians have tabled discussions to ease visa restrictions for Russian travellers, the ongoing political manoeuvring with regard to Crimea and Ukraine is not likely to influence Russian travel decisions. Instead, the slowing economy and weakening rouble are likely to cause outbound trips to slow. Euromonitor International expects that total Russian departures will increase by only 5% in 2014, down significantly from the 15% gain experienced in 2013.
Turkey, Greece and Spain the Top Western European Destinations
Turkey is a primary holiday destination for Russians thanks to its sand and sea offerings, all-inclusive resorts, proximity and visa-free travel. Because of its overall affordability, it is not likely to be significantly impacted by a Russian economic slowdown.
Spain and Greece are now the second and third most popular destinations in Western Europe for Russians, posting respective growth rates of 275% and 375% over 2008-2013. As a destination for high-earning Russians, Spain is not likely to be impacted by economic turmoil. As a result, Spain is expected to see a 23% increase in Russian arrivals in 2014—a strong performance, albeit down from the 32% gain achieved in 2013.
Greece, on the other hand, is expected to see only a 6% rise in Russian arrivals following a boom of 49% in 2013. Part of this slower growth will be due to the spike seen in 2013 but Greece is also more vulnerable to Russians shifting to less expensive non-Eurozone countries.
|Top 10 Western European Destinations for Russian Arrivals in 2014|
|Russian Arrivals in 2014||2014 % Growth||2014 % of Total Arrivals|
Source: Euromonitor International
Finland and Cyprus Have the Highest Dependency on Russian Tourists
Russians are expected to account for 28% and 23% of total arrivals to Finland and Cyprus, respectively, in 2014, making those countries the most vulnerable in Western Europe to a slowdown in Russian departures. Like other destinations, however, this is likely to result in slowing growth rather than an outright decline.
Finland is a popular destination for Russian tourists thanks to a rise in shopping tours. Finland has a tax-free area for Russians while the majority of shopping centres in Helsinki accept roubles. Cyprus has been actively courting Russian tourists by expanding airlift and trying to implement an open skies agreement with Russia.
No More Easy Growth from Russian Arrivals
Euromonitor International predicts that Russia’s economic growth will average 2% over the remainder of the decade, assuming a containment of the crisis in Crimea and the continuation of the current modest sanctions. But if the events of this week lead to stronger sanctions and a weaker currency, it is possible that a combination of increased capital flight and a large uncertainty shock could hit consumer and business spending much more severely, leading to a small recession where real GDP growth declines by 1.2% in 2014 instead of eking out slight growth of 0.9%. As a result of the slowing economy, departures from Russia are expected to grow at a much slower pace over the next five years – at an average rate of 5% compared to the 9% average growth seen since 2008. It is likely that Western European destinations will experience, at best, slower growth in Russian arrivals over the next five years, forcing industry players to be creative in attracting Russian tourists to their destinations. In the unlikely event that a conflict erupts, there will be a much more negative impact.