"Russia is rapidly catching up with Internet and web-payment technology"
Published: 14 Aug 2008
Travel Distribution Russia Special
The online travel market in Russia currently accounts only for a small share of the total travel e-commerce pie but it is one segment, which is being tipped to grow aggressively in the time to come.
The potential is definitely there but the market needs to overcome quite a few challenges in order to have a substantial share of the total e-commerce pie.
Assessing the situation, Vadim Zelenski , General Director, Zelenski Corporate Travel Solutions told EyeforTravel.com's Ritesh Gupta: "There are number of challenges that naturally hold back the online travel shopping."
According to Zelenski, who is scheduled to speak during EyeforTravel's inaugural Online Travel Market Russia 2008 conference on 24-25 September 2008 (to take place during the Leisure Exhibition at Crocus Expo in Moscow), the challenges include the complexity of Russian GDS market, which makes creation of online booking tools very expensive and difficult.
"Plus, the fact Russians still require visa to travel nearly to every foreign destination, majority of customers are forced to book their trips through traditional offline agents in order to be able to apply for visa. As a result of visa regulations for Russians, the last-minute air or travel package offers are nearly non-existent, except for Turkey or Egypt tour packages," pointed out Zelenski.
He added that the visa regulations for Russians are holding back the online hotel booking abroad.
"As for the Russian Federation local hotel bookings, the general lack of technology and mentality of hoteliers in various regions result close to zero online availability of those hotels. Plus, Russian immigration rules to foreigners are making it impossible for tourists from other countries to freely travel or go for last-minute travel along Russian territories; those potential tourists could have pushed Russian region hotels with bookable online capability but that not has been the case," he said.
Overall, Zelenski added that the Russian online travel market is in the early stages of its development.
"Its clear that the share of online bookings will grow, but how exactly we will know only by the end of this year when sales figures will be revealed," he said.
Commenting on the current technical infrastructure, broadband access and payment systems in Russia, Zelenski said Russia is rapidly catching up with Internet and web-payment technology now.
"From this perspective, the support to online travel development is tremendous, though the cost of credit card acquiring is still a painful point, as its 3-3.5 percent comes in with agency's only five percent mark-up for the sold service. Such a high cost of acquiring forces online travel companies to look for alternative ways for payment settlements, but obviously holds back the development of industry in general," he said.
From travel supplier's perspective, a number of low cost foreign carriers have started operating in Russia in the last two years. With reference to EyeforTravel Research figures, online sales started in 2006 with a share of around two percent of total bookings; by 2007 it increased to around three percent, and the predicted increase by 2012 is an average of 15 percent online.
On such forecast for growth of overall airline bookings, Zelenski said: "The so-called "low cost" newcomers operate from the same airports as the other carriers, they provide nearly same service on board, and their fares are hardly cheaper. Yes, they operate relatively new foreign aircrafts, they would not have Business-class service on board, and try to distribute online. But all of them actually mainly distribute offline through TCH (Transport Clearing House) ticket stock, and this is a specialty of Russian market… Certainly, the online share of sales is growing together with market overall tendency, but those airlines are not ahead of it."
Vadim Zelenski , General Director, Zelenski Corporate Travel Solutions is scheduled to speak during EyeforTravel's inaugural Online Travel Market Russia 2008 conference on 24-25 September 2008 (to take place during the Leisure Exhibition at Crocus Expo in Moscow).
For more information, contact: Tim Gunstone - +44 (0)207 3757557/ tim@eyefortravel.com
In order to know more about EyeforTravel Research's Travel Distribution in Russia report, please contact:
Amy Scarth
Tel: +44 (0)207 3757545
Email amy@eyefortravel.com
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