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Thursday, October 27, 2016

The sharp rise in prices for Russian resorts this summer is inevitable

The closing of the resorts of Turkey and Egypt for mass Russian tourists means that this summer the internal direction pereorientirovanija to half of those Russians who used to spend their holidays abroad. Together with a number of factors that can cause a serious increase in the price of a resort vacation in Russia. And in peak dates demand can exceed supply at times.

The head of the Federal tourism Agency Oleg Safonov once again urged the representatives of travel business not to raise prices, but many players and market analysts agree that higher prices at the black sea resorts will inevitably happen, but the quality of rest and it may disappoint.

Import substitution necessarily

“Most significantly – 30-40% – the cost of leisure will increase in the upper segment, where the choice of proposals is limited, and the price increase helps a large number of people with money that is prohibited or not recommended going abroad”

The forecasts of some tour operators that after a couple of months after the crash of the Airbus-321 in the sky over Sinai Egypt will return to the Russian tourist market, was not justified. These assumptions were based on analogies with the situation in 2011, when the sale of tours to Egypt are temporarily closed due to “Arab spring”, but the story is not repeated twice. No confident signs of resolution of the political conflict with Turkey, which began in November last year, when the Turkish air force shot down a Russian su-24.

For the tourist market, this means that a lot of Russians this summer will be forced to seek an alternative to the most popular areas of mass recreation. The number of Russian tourists in Turkey in 2014 is estimated to be from 3.8 to 4.5 million people (data of Association of tour operators of Russia and the Turkish Association of travel agencies). In Egypt in 2014, according to ATOR, visited 1,5 million Russians. Even if we assume that some of them went to these countries several times, and individual citizens for the year managed to visit in Turkey and in Egypt, the total amount of those who are left without the usual holiday abroad, it is still high, at several million people (according to the Executive Director ATOR Maya Lomidze – 4,5–5 million people).

Now for this share of the market starts a serious struggle between alternative directions, the most obvious of which are the black sea resorts in the southern regions of Russia – Krasnodar territory and the Crimea. Therefore one of the main intrigues of the upcoming holiday season is to know what proportion of the Turkish-Egyptian flow preoriented on vacation in Russia.

According to the Vice-President of the Federation of restaurateurs and hoteliers of Russia Vadim Prasov, it would be naive to expect that domestic tourism will get the whole flow, and most importantly, all the money that the Russians leave abroad, especially given the continuing fall in real incomes. Assessment Prasowa, rest on the Russian resorts will prefer a 1.5–2 million Russians who vacationed in Turkey and Egypt. CEO network of travel agencies “Pink elephant” Alexan Mkrtchyan more optimistic. In his opinion, the Russian direction will choose half of those who are not able to get into the usual foreign resorts, and in absolute terms it’s 3-4 million people. At the same time, Mkrtchyan said that the foreign directions will make every effort to take back some of the Turkish-Egyptian flow and the drop in sales of overseas tours will not be as rapid as in the previous two years.

Prices under the pressure of demand

The main question in connection with the expected growth of the tourist flow in the Russian resorts is how prices rise on holiday, especially in the hotels of level “three stars” and above. That they will focus the main demand of the guests yesterday of Turkey and Egypt, accustomed to a relatively high level of service and the system “all inclusive”. The share of this segment in recent years has grown significantly, primarily in Krasnodar Krai: many new hotels of a high level, it was built for the Olympics 2014, but they are still insufficient to meet the growing demand. Evaluation of the Kuban authorities, in peak dates it already exceeds the available supply three times, and almost all places in hotels of interest for tour operators for the summer have already bought.

It follows from this simple conclusion: prices on vacation in the coming season is expected to grow on the basis of the law on the ratio of supply and demand. However, in recent months, representatives of the state recommended to the tourist industry not to raise prices. “We often have such thoughts among hoteliers and restaurateurs, we’ll go anyway. But that doesn’t mean you can inflate the price to make them completely inadequate for the ratio “price-quality”. And if our hoteliers will raise prices, Russian tourists will come to rest abroad”, – said the head of the Federal tourism Agency Oleg Safonov.

The Minister of resorts, tourism and the Olympic legacy of Krasnodar region Yevgeny kudelya persistently refrained to give any comments regarding the prices on vacation in high season. At the meeting in mid-March in the Krasnodar branch of the conference, he asked the participants of the market possible not to do early public projections, but a few days later, speaking to ITM, still gave to understand that without price increases can not do. “In 2016, gas prices rose by 7.5%, cold water – by 11.2%, heating – by 10.8%, electricity – by 8%, on food – 5-45%. We have a sanatorium-resort complex needs to operate at a loss?” – inquired of the kudel. He, however, recalled that the state also does not regulate.

Alexan Mkrtchyan believes that due to a number of factors in the growth of prices in this tourist season will happen, but will not be indiscriminate. Most significantly – 30-40% – the cost of leisure will increase in the upper segment, where the choice of proposals is limited, and the price increase helps a large number of people with money that is prohibited or not recommended to travel abroad (e.g., law enforcement officers). But the sensitivity of this group of vacationers to higher prices, not the highest. “If last year a room in the five star hotel in Sochi cost 9 thousand rubles per day, and this year will cost 11.5 million, it is unlikely to frighten those who are attuned to “five stars,” says Mkrtchyan. – They are willing to spend on leisure and 10 thousand Euro, but for several reasons it will have to do not abroad, and in Sochi or in Crimea.”

At the same time in the lower price segment (2-3 thousand rubles per night) price increase, according to the forecast of the representative of tourist industry, is not too large – in the range of 10%. This is due primarily to the already mentioned factors – the decline or lack of growth of income of the General population. In a geographical sense, this group of people will focus on those places where there is no or not yet sufficiently prestigious hotels: the hotel, Arkhipo-Osipovka, Krasnodar, and a number of resorts of Crimea. But Sochi, is convinced Mkrtchyan, not to avoid price increase, as officials have not exhort hoteliers.

“The effect of Parmesan”

Even if these projections are correct and the prices will be proportional to the capabilities of different groups of tourists, remains the main risk of failed expectations in terms of quality of rest. For example, only a few hotels on the Russian coast is able to offer a full replacement of the Turkish-Egyptian “all inclusive” – largely because historically domestic resorts was developing a completely different model. And the forced actions of the authorities, urging hoteliers to move EN masse to the Turkish-Egyptian system, can give the opposite effect.

Known Krasnodar business consultant, doctor of economic Sciences Alexander Polidi recalls that from the point of view of management of “all inclusive” – is primarily a financial model that works only in the case when the hotel business has a large scale and has significant resistance to seasonal fluctuations. However, in the Krasnodar region the main part of the accommodation facilities represent a relatively small hotel, and the seasonal factor is quite high. “The hotel with system “all inclusive” – continues Polidi, – 70% of the costs of a permanent nature, and these fixed costs have “spread” among tourists. But if tourists in the winter or in the offseason no? It turns out that this is a road to nowhere – to dependence on credit resources, which are very expensive, and even to bankruptcy.”

The situation in the Russian resort business after the withdrawal from the market of Egypt, the expert compares to the one that emerged in the grocery market after the introduction of Russia’s counter-sanctions in August 2014. A ban on the import of the proverbial cheese, domestic producers reacted quickly, but not to say that consumers for the most part was satisfied. “Those who have ever tried the Russian Parmesan for 1200 rubles, in most cases, said, we are never going to spend that kind of money, for a product of unknown quality”, says Polidi, hinting that the same risk is now relevant for domestic resorts.

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