Following international sanctions over the Ukraine crisis and a steep drop in oil prices, Russia’s economy has been suffering from the effects of an economic downturn in recent months. One of the major industries affected by the economic crisis has been the Russian tourism industry, which has seen an estimated 35% decline in visitors since the beginning of 2014. Spending by Russian tourists has also declined as the financial crisis has deepened, resulting in a 44% drop in spending during December and a 51% decline in January. The loss of tourists has hurt all facets of the industry, and has forced many businesses to take cost cutting measures.
The airline industry is one of the sectors of the travel industry that has seen a significant impact from the financial crisis. Many airline companies have reduced their flight offerings in recent months, including Delta Air Lines, which recently suspended its New York to Moscow flight for next winter. Other airlines, including easyJet and Air India, have also reduced the number of flights to and from Russia, reflecting the drop in the demand for flights to Russia. Domestic travel has fallen even further during the crisis, with 50% fewer Russians traveling out of the country, leading to the suspension of several routes to major worldwide destinations such as Barcelona and Vienna.
The drop in travel to Russia has also affected other sectors of the travel industry, including hotels and tourist attractions. Hotels in Russia experienced a 7% reduction in occupancy during 2014, while the falling value of the ruble has cut into the revenues for many tourist destinations in Moscow and St. Petersburg. With the looming recession and continued Western sanctions, many within the travel industry expect the numbers to get worse in the coming months.
Russia’s economic downturn is not only hurting the travel industry within the country, but is also impacting surrounding countries that are popular tourist destinations for Russians. Turkey saw a 21% drop in Russian visitors during 2014, forcing hotels around the country to reduce nightly rates. Egypt, where Russians normally account for 30% of annual tourists, only saw half as many Russian visitors in December. With the Russian economy continuing its downward slide, Russia, as well as several other countries, will have to adapt to the financial crisis’s effects on tourism and the travel industry.