Majority of Russian consumers not yet fully familiar with the utility of web
Published: 26 Sep 2008
Travel Distribution Russia Special
The emergence of international hotel brands in Russia is expected to play a significant role in nurturing the online travel market.
The entry of established players is expected to strengthen the online booking infrastructure. Also, the campaigns initiated by some of the airlines to push their web bookings, too, will have a future impact on the hotel web booking market.
Currently, several major operators in the hotel distribution market are very active in Russia. According to EyeforTravel Research findings, the majority of hotel bookings are handled by the indirect channels, featuring travel agents and tour operators.
Commenting on the relationship between hotels and such intermediaries from Rezidor Hotels' perspective, Antoine Moubarak says, "Our hotels will look into their needs based on the business type they are getting from those operators. In some destination, we do have collaboration, but we consider factors such as the way we contract business, how we protect our brand, image and margins."
Rezidor has enhanced its own online operations by undertaking SEO and SEM activities. At the same time, it has also worked on online indirect associations via third parties sites be it OTAs, travel meta search engines etc. Its website focuses on the business travel segment without omitting the leisure segment. "It (website) should be fast, reliable, secure and a destination where the Gold Points Plus travellers (Rezidor loyalty programme) can have access to the dedicated page, and companies have access to their preferred rates," shared Moubarak.
The number of Russian sites offering a full range of travel and tourist options to visitors is rising quickly. It is estimated that the value of the online travel agent (OTA) market in Russia is currently around 0.5 percent, and is forecasted to grow to 18 percent by 2012.
On the role of OTAs in near future, Moubarak said, "If you are located in Moscow or St Petersburg, foreign OTAs are already making an impact when it comes to the inbound market due to the place of those two cities in the business and the cultural world map stage. Local OTAs haven't made a big impact yet on the inbound. But with heavy investment, the market will become more competitive and the money will be spent on advertising, SEO, web marketing and IT infrastructure that will allow them to have the biggest share of the estimated growth. We need to keep a close eye on how the market is developing, who is emerging, what is the sustainability of the emerging operator, and how positively it will affect the profitability of our business."
In 2007, there were around 28 million Russian citizens with access to the Internet and the total turnover from online shopping in 2006 was estimated at US$1.5 billion. In terms of the proportion of online sales relating to the travel industry, the current estimates are around 2-3 percent.
According to Moubarak, visa regulations and credit card penetration are the major hurdles in the development of outbound online travel market, especially when it comes to the region where people have to travel to the main cities to apply for a Visa.
"For them, it is easier to pay a travel agency that can handle everything - visa, airlines ticket and hotel accommodation. But if you consider the opposite side, nearly all travellers visiting Russia need a Visa and a lot of them book their accommodation online, so why not the Russian do the same? The question is how long it will take the young population to be educated and start using the Internet as booking tool rather than searching and booking after through traditional offline agent? How the mass tourism can adapt itself to the online travel? The presence of the major foreign OTAs will contribute to the development of this market but a lot of marketing and advertising efforts need to be done locally in order to educate the market to cross the barriers," pointed out Moubarak.
It is acknowledged that the current technical infrastructure, broadband access and secure payment systems in Russia will take time in getting fully developed in Russia.
"In general, when talking about Russia – we are talking about the whole country and therefore it's important to understand that in general people are not educated about the Internet. It's only the new generation that will be able to take advantage of the full capabilities of the Internet. There is still a lot of education that's needed for the average Russian to use and to trust the Internet for financial transactions. With reference to some of the more developed cities like Moscow, St Petersburg, Ekateirnburg, Novosibisk etc, there the level of advancement will be faster in realising the full power of the Internet," said Moubarak.
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