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Analysis & Opinion
15.01.09 The Last To Be Sacrificed
By Svetlana Kolchik

Along with other industries that have been affected by the global financial crunch, the travel and leisure segments have also taken a blow, as consumers begin monitoring their expenses more closely and vacations end up in the “not essential” category. But this is hardly the case in Russia, where tourism is one of the population’s favorite pastimes, especially among the better-off individuals for whom the ability to travel is as much of a status symbol as any luxury item.

As this year’s winter break approached, Alexandra Chirkova, 51, was counting the days until she was finally able to start sun tanning on the beach at one of her family’s favorite winter destinations: Oman, a small country on the Southeast coast of the Arabian Peninsula. In spite of the recent alarming reports on the failing markets, Chirkova, an editor at one of Russia’s largest publishing houses, and her husband, a medical professional, couldn’t resist doing what they have both always enjoyed the most: traveling. “My husband lives for this,” Chirkova said. “If he goes for a long time without seeing new places and getting new experiences, he becomes depressed. Besides, living in Russia, we always miss the sun so much.”

This Moscow couple is not alone. The tourism industry, which in the last decade has boomed here and in some other wealthy Russian cities, does not seem to have been affected by the global financial crisis as much as other industries in the country and worldwide. More so, industry watchers insist that for many Russians, traveling may be one of the last things to let go of during these economically unstable times. For some middle class families like Chirkova’s, which are already used to taking leisure trips abroad as often as four to five times a year, traveling has become an essential part of the lifestyle. So essential that in order to stick to it they might be willing to give up other things, like going out or shopping.

This trend became apparent during the recent winter break, when Russians officially have 11 days off and many choose to travel at this time. This fall, however, many tourism experts were worried that the New Year holidays, a long-awaited “hot season” for most travel agencies, would be a flop. Surprisingly, this didn’t happen. On the contrary: the amount of requests for a tourist visa to Austria, one of the most popular winter skiing destinations for Russians, was so high this year that as early as in October one could get an appointment at the embassy only for January. “The year 2008 has surpassed our boldest expectations,” confirmed Anna Polz, the manager of the Moscow branch at the Austrian National Tourist Office. She said that in October, Russian tourists accounted for almost a million overnight stays in Austria, compared to the 800,000 during the whole of 2007. “So far we have not seen any sign of the crisis whatsoever,” Polz said. “And we look forward for an even more successful year.”

Viktoria Kleschenko, the public relations director of Jet Travel, one of the largest and oldest Russian tour operators which sell ski trips to multiple Alpine resorts in Austria, France, Italy and Switzerland, agrees. “Believe it or not, we are doing just fine,” she said. She explained that one of the reasons the company is doing so well despite the overall demand plunging is the overwhelmingly strong popularity of alpine skiing in Russia, the big-time favorite sport of former President Vladimir Putin. “I’d say those Russians who really love skiing would find means to go do it no matter what, even if it means not going on vacation in summer,” Kleschenko said.

Or, perhaps, it’s simply part of the Russian people’s mentality to try to enjoy life to the fullest today, even if tomorrow is unpredictable. The cost of a ten-day trip (including hotel accommodation, flights (often charter ones) and visa assistance) with Jet Travel to one of this winter’s trendiest skiing destinations, the Italian Dolomites, during the high season in January started at ?2,500 per person. Even so, according to Kleschenko, most tours for late December and January were sold out. She also said that many clients are opting for more expensive hotels this year. “We really didn’t expect this,” she said.

Industry experts indeed observe that the upper middle class and luxury segments of the tourism business in Russia have so far been the least affected by the crisis, and some insist that they would continue to thrive during the spring and summer of 2009. And there are plenty of examples to confirm this trend. The company Sodis, one of Russia’s top and most experienced luxury travel agencies reports that it had sold out the New Year VIP charter tickets to the Maldives (the price starting at ?9,000 per person) as early as in October. And although this year the agency’s customers weren’t exactly fighting to book a villa in French Courchevel or a hotel with a private beach on the Seychelles for the winter break (like they used to do previously), there has not been any major drop in sales, except for just a few last-minute cancellations. “Last year, especially around winter break, we could barely breathe, and getting a hotel, say, in the Maldives for New Year’s Eve was nearly impossible,” said Irina Manuilskaya, the senior sales supervisor at Sodis.

Asked about this year’s figures, she claimed that things did not look as hectic as they used to be, but that the demand is still there. “Take Courchevel: last year, clients just bombarded us, saying they’d pay any price to get a reservation there, and the demand exceeded the supply by 50 percent,” Manuilskaya said. This year, she stated, the demand, at least for moderately priced accommodation at this status-concerned skier hotspot, still exceeded the supply, buy only by ten percent. “For the first week of January, you could surely get a chalet in Courchevel for ?150,000 a week, but less expensive accommodation options were long gone. For many Russians, taking a trip during the New Year holidays is indeed a status thing, and they weren’t ready to miss it even when the crisis came,” Manuilskaya added.

Neither are some avid Russian travelers ready to change their vacation routine during other seasons. In November and December, exactly when the Russian currency began to fall compared to the euro and the dollar, a sizeable chunk of Sodis’ regular clients had begun booking their trips for 2009, including renting ?50,000 a month villas in Sardinia’s Forte Village or Tuscany’s Forte dei Marmi, both favorite locales for Russia’s rich and glamorous.

But not everyone from the extravagant camp is able to keep up with the travel lifestyle they were used to during the last few years of the economic boom. Ekaterina Mukhina, 31, the fashion director at the Russian edition of Marie Claire magazine, who used to come to St. Moritz, a posh ski resort in the Swiss Alps, with her family every Christmas for the past five years, said that this year she’s had to pass. Why? She simply didn’t have the ?15,000 needed for the ten day long January St. Moritz vacation on her hands. “If I can’t afford a quality vacation, I’d rather stay home,” she said. “Cheap places like Egypt and Turkey are not for me.”

In addition to Switzerland, last year Mukhina, a tall striking blonde who’s the breadwinner in the family, took her folks to Barbados in the Caribbean in March, Rhodes Island in August, and the Maldives in November. For 2009, she has not made any travel plans so far. “I’ve lost all my freelance contacts and have only my main job left, which is not enough,” she said. “I don’t know what my financial situation will be like this year.”

But while the likes of this successful and resourceful high achiever would still probably be traveling for business, it’s mostly the not-so-affluent who would have to postpone their vacations for an uncertain amount of time. “Those who’d tell you that the crisis has not hit them, are not honest,” said Mikhail Lapshin, the director of sales at Natalie-Tours, one of the largest Russian tour operators which sells trips to Turkey, Spain, Thailand and other popular destinations. The key clientele of this company, which works with as many as 2,000 smaller travel agencies across Russia, is the middle class on the lower side of the economic scale. “You can’t not feel the problems, the tourism business included,” Lapshin said.

He said that while the ski trips are selling quite well, other highly popular winter destinations such as Thailand and the United Arab Emirates the company also promotes are experiencing a noticeable decline in clients, especially when it comes to budget accommodation. Another travel segment which has been affected by the crisis is excursion tours. “I guess people might be postponing these until better times come,” Lapshin explained. “Or at least till we have a better idea of what’s going to happen with our economy and our jobs in particular.”

Ekaterina Ignatova, 34, a single mother of two and a long-time traveling aficionado, is one of those who have had to rethink the trip schedule for the whole year and move most of them from the “plans” to the “dreams” category. For example, she had to cancel a skiing trip to Austria with her younger son in February, and said she might even say “no” to a long-awaited dream of renting a house in Spanish Costa Brava for a month with friends in summer. “I’ve made no bookings so far, I’m waiting to see what happens with the ruble to the euro rate in spring.”

Ignatova said that she’s cutting her expenses in other areas as well. The reason is that like many Russians, she might have to be looking for a new job soon. To earn a living, she has been doing public relations for “Bratya Grimm,” a popular rock’n’roll band which shot up the charts a few years ago all over the country with several hits. Lately, however, the band hasn’t been doing as well cash-wise—partly because of the numerous corporate party cancellations where the band was supposed to play.

Even so, Ignatova said that she tries to be optimistic and is by no means ready to completely give up travel. “It’s just that this year and maybe in the next few years to come, I’ll most likely have to travel not where I want to, but only where I can afford,” she said.

Travel agents and other professionals in the field don’t sound too pessimistic either. “Times are indeed quite challenging, but the problems are coming gradually,” said Marina Senkevich, the director of Apriori, a marketing company that promotes luxury hotels and destinations worldwide. “It’s not like we’re expecting a major crash, like it once happened in Russia,” she said. Asked to predict what’s going to happen to the country’s tourism business in the immediate future, she speculated that companies will probably cut corporate travel significantly, and individuals will look after their spending more carefully. “Perhaps they’d go for less lavish accommodation and opt, say, to take a train instead of flying, or fly economy instead of business class,” Senkevich said.

Lapshin from Natalie-Tours said that he expects an overall ten to 15 percent decline in sales for his company and about 25 percent for the industry in general. The agency’s latest reports, however, indicate that things could be a bit worse, especially in the regions which are not doing as well as Moscow. “Some cities, like Togliatti and Chelyabinsk, are losing up to 50 percent in tour sales,” Lapshin said. Still, he was quick to add that hardly anyone in the business is expecting major cataclysms.

Other experts agree. In fact, many hypothesize that the industry might actually benefit from the challenges of the economic crisis. “The travel business will become more balanced, and the product will have more quality,” said Anatoliy Garkulin, the commercial director at Panteon, a 12-year-old Moscow-based tour operator which specializes in such destinations as Greece and exotic countries like Sri-Lanka and the Philippines. “I hope that the crisis will catalyze the industry a bit,” Garkulin said. “There would be more integrity and flexibility in the business.” Asked to specify the potential effects, he said that the airlines “will get more responsible in terms of pricing and billing, and the tour operators less greedy [for the clients].”

“And those unable to adapt to the new realities [of the economy] would simply have to leave the market,” Anatoliy Garkulin said.

Yet all experts agree that for many Russians, the “desire to change places,” as poet Alexander Pushkin had put in “Eugene Onegin,” will remain alive and well no matter what. Take the editor Alexandra Chirkova, who said that she hopes that the economic crisis will not force her to cancel the two trips she and her husband have planned for the first six months: a long weekend in Istanbul and a week-long trip to Andalucia, Spain. “For the amount of money we spend on traveling each year, we could have long bought a luxury car we never had,” she laughed. “But taking trips is our favorite thing to do as a couple. Besides,” she said, “we only live once.”
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