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- Time for change: prices for tours to Turkey and Egypt may rise due to the war in the Middle East
Time for change: prices for tours to Turkey and Egypt may rise due to the war in the Middle East
This week, the Ministry of Economic Development recommended travel agencies to freeze the promotion of tours to several Arab countries of the Persian Gulf, where missile and drone attacks have exacerbated the risks of staying to an unprecedented level. Tourists were advised to refrain from traveling until complete stabilization. The situation is hitting tour operators — the industry's total losses since the restrictions were introduced amount to about 10 billion rubles. Experts disagree: some see the collapse of outbound vacations with an outflow of personnel and an increase in the cost of insurance, while others see a chance to rebuild for Turkey, Egypt and domestic resorts, where demand is steadily growing despite the chaos. Details can be found in the Izvestia article.
Disruption of tourist flows
Earlier this week, the Russian Foreign Ministry and the Ministry of Economic Development recommended that Russians refrain from traveling to six Arab countries of the Persian Gulf (UAE, Saudi Arabia, Oman, Qatar, Bahrain, Kuwait). Tour operators were ordered not to sell tours to these countries due to military operations in the region.
In total, according to preliminary estimates by market participants, the Persian Gulf region is already losing up to 30% of seasonal outbound traffic from Russians, forcing operators to urgently rebuild routes away from Iran.
According to the combined forecast of industry representatives, by the end of the week, the damage to tour operators could reach 3-10 billion rubles (500-773 million rubles are spent daily on accommodating tourists stuck due to force majeure), which threatens personal responsibility funds, customer payments and the financial stability of companies in the event of a protracted crisis.
— At the moment, the losses are still being calculated. However, according to a preliminary assessment by Artur Muradian, a member of the board of the Russian Union of Travel Industry and CEO of the Space Travel tour operator, the total losses of the industry since the introduction of restrictions amount to about 10 billion rubles, the Russian Union of Travel Industry confirmed to Izvestia.
Meanwhile, the commercial director of Tez Tour, Voskan Arzumanov, stressed that the real volume of business losses due to the crisis around Iran will not be revealed soon. "There will be more court proceedings that will take a long time, and we also need to prepare for this," he warned.
It is possible to compensate for the costs incurred solely by providing access to personal responsibility funds, representatives of the PCT note. Such measures will make it possible to reimburse the costs incurred in connection with the evacuation and accommodation of Russian tourists from hotels in the Persian Gulf and other countries of the Middle East region.
Experts assess the risks of bankruptcy of travel agencies as critically high due to cash gaps (prepayment to partners without revenue from customers), dumping in popular destinations and external shocks from political instability (when rehabilitation plans and reserves are required to cover debts).
"It is clear that the recommendation to suspend sales of tours to six Persian Gulf countries is dealing a very significant blow to the tourism industry: in destinations where up to 30% of the outbound flow was concentrated in winter, key dates will be "lost" in the near future — March 8, May holidays and, most likely, subsequent holidays," notes the Dean of the Faculty of Hospitality and Tourism. RANEPA Sports Industry Maria Belyakova.
Some tour operators will be forced to reconfigure their routes to destinations where the risk is estimated to be lower, says Alexander Osaulenko, director of the Turpomosh Association.
— The situation around Iran will greatly affect Russian outbound and partly inbound tourism. We have well-established flights and transit corridors with the Middle East, and, of course, logistics routes will lengthen. All this will affect both the choice of tourists and the cost of transportation," says Marina Morozova, General Director of the International Center for Tourism and Hospitality Competencies.
In particular, daily spending of half a billion rubles on stranded tourists undermines the stability of staff, increasing migration to stable niches and destinations, market players warn.
Given the impossibility of medium-term planning, the industry urgently needs government support measures, otherwise the risks of staff outflow and curtailment of programs in this area will become systemic, warns Maria Belyakova.
— The tourism industry has experienced many different crises, this is far from the first difficult situation even in the last five years. Of course, some specialists may decide to change their profession, but new personnel always come in their places," the press service of the Russian Express tour operator emphasizes.
Insurance at gunpoint
Standard insurance policies in the tourism industry exclude military risks, but insurers adapt flexibly, balancing tariffs and customer loyalty in areas of turbulence, says Denis Platonov, director of the Ingosstrakh Health and Finance domain.
"Currently, we do not plan to change the tariff policy for tourists traveling to the Middle East," he clarifies.
However, Marina Morozova doubts that this approach will turn into a trend. She is convinced that the cost of insurance policies will definitely change, because the risks of loss of property and threats to life increase significantly against the background of conflict. And insurance companies will take this into account and include it in the final cost of their services.
"Basic policies, as a rule, do not cover losses from military operations, however, a number of companies promptly extend the validity of medical policies until the actual return of tourists and introduce instant payments for flight delays or cancellations, even if the reason is flight restrictions," adds the Izvestia interlocutor.
Currently, it is virtually impossible to count on obtaining insurance against travel to countries located in the conflict zone, confirms Galina Dekhtyar, Professor of the Department of Business Process Management at the Faculty of Market Technologies and Management at the Presidential Academy.
—Insurance companies, as a rule, do not undertake such obligations when it comes to areas with increased risks," she is convinced.
Alternative hubs
At the moment, Turkey and Egypt remain the most preferred alternative destinations for safe tourism, the Russian Union of Travel Industry said. Previously, the United Arab Emirates also occupied the top position, but due to the closure of the region's airspace, the tourist flow there has significantly decreased.
— Now, following the recommendations of the Ministry of Economic Development, new alternative routes are being considered and proposed by tour operators: Thailand, Vietnam and other Southeast Asian countries stand out among them. These are the destinations that tour operators recommend now," the PCT explained.
The press service of the Russian Express tour operator added that "in general, all destinations outside the conflict zone remain accessible to Russians: Southeast Asian countries, the Caribbean, and island exotics."
However, Southeast Asia will be able to replace the Middle East destination only if, in addition to Russian companies that redirect flights to Southeast Asia, Chinese or other Asian carriers also increase the volume of flights to Russia, including to the regions, Voskan Arzumanov warned.
— The conflict in the Middle East is not a local conflict. Tourists could fly to different destinations through Middle Eastern countries, and in some of them the shortage of transportation from Russia would be very noticeable. For example, you can now only get to Mauritius on Turkish airlines," the representative of the tour operator explained.
The closure of the UAE and Qatar as transit giants accelerates demand for competitors, but overflights of conflict zones threaten a general rise in the cost of travel packages, the surveyed market participants and industry representatives predict.
— Turkey is a traditional competitor of the United Arab Emirates, their tourist hubs as a transfer hub. In this case, Turkey will benefit from this situation in the short and maybe medium term, because tourists will choose safer and more predictable transport corridors," Marina Morozova admits.
In turn, Maria Belyakova notes that the redistribution of demand is already underway: a significant part of tourists who planned to visit the UAE are reorienting to Egypt, where prices are still stable (a week-long tour for two costs from 90 thousand rubles), and weather conditions are close to the Emirati. However, with the protracted nature of the restrictions, logistical costs such as overflying tension zones and increased competition for slots can trigger price increases not only for Egypt, but also for Turkey, she points out.
"The UAE is one of the largest aviation hubs with a route network around the world, and therefore it's not just about trips to the Middle East,— emphasizes Voskan Arzumanov. — A large number of flights to all parts of the world are carried out through this region. When the situation in such an aviation hub changes, this affects the availability of transportation.
As a result, demand may exceed supply, which affects the cost of flights and travel packages in the direction of higher prices, the expert does not exclude.
So far, the cost of tours to African countries — primarily Egypt and Tunisia — has not changed significantly, confirms Galina Dekhtyar. However, the flight may become longer as airlines choose routes over safe areas. And this can theoretically lead to an increase in the cost of transportation if the organization of tours requires a significant lengthening of routes.
In the current situation, multi—operators are actively looking for where to redirect customers: from foreign tours to corporate trips (M.I.C.E.) and vacations in Russia.
— Many companies today are actually multi-operators and work simultaneously with outbound, domestic and corporate tourism. Therefore, when the situation in individual countries changes, there are more frequent redistributions of demand and workload within the industry, rather than any dramatic changes for the market as a whole," explains Voskan Arzumanov.
However, Russians who are used to vacationing abroad, in particular in the Middle East, are often people with above-average incomes. And in the domestic market, they do not find the infrastructure and level of service they are used to, warns Svetlana Simonenko, founder and managing partner of Detek Group of companies.
Protect a single person
The geopolitical storm scares away solo tourists, making package tours with evacuation the only reliable option for travelers, experts say.
— In terms of recommendations, tourists are primarily looking for safety and reliability, so even if they want to travel independently in the Middle East, most Russians will prefer to arrange trips through travel companies, — Alexander Osaulenko is sure.
According to him, a mass transfer of tourists to the online segment or to independent trips is unlikely: in difficult geopolitical conditions, an independent tour becomes risky not only from the point of view of security, but also in terms of financial and insurance issues.
In the current situation, which required evacuation, organized travelers who bought a package tour are primarily being taken out, Marina Morozova confirms.
— Independent travelers are the last in line. In this regard, given the risks of geopolitical turbulence, people may think that a package tour is an additional insurance, allowing them to receive guaranteed assistance if they need it," she summarizes, not ruling out that the proportion of those who travel independently will fall as a result.
Переведено сервисом «Яндекс Переводчик»
