Market Watch Review of the Russian market of tourism and services for travelers, : volume, structure, dynamics March2013

Transcription

1 Market Watch Review of the Russian market of tourism and services for travelers, : volume, structure, dynamics March2013 Review of the Russian market of tourism and services for travelers The company J'son & Partners represents the results of market research of tourism services of the Russian Federation. The volume of Russian market of tourism and services for travelers has been increasing steadily throughout the last decade. In 2012 its volume (compared with 2011) has increased by 14% (or by 149 billion rubles) exceeded 1 trillion dollars (about 1.7% of GDP of the Russian Federation). If current growth rates are maintained in 2013, the market of tourist services will reach 1.35 trillion rubles. Figure 1. Market volume of the tourism of the Russian Federation, billion rubles, Source: J son & Partners Consulting, the Federal State Statistics Service Passenger air transportation form more than half of the market volume, quarter of the volume is ensured by the accommodation facilities (hotels, motels and etc.), about 13% - by passenger transportation with the use of rail transport. 1

2 Figure 2. Distribution of the tourism market of the Russian Federation relative to the types of services, 2012 Source: J son & Partners Consulting, the Federal State Statistics Service Prerequisites for positive dynamics of the market are the growth of population solvency and consistent development of the tourist infrastructure, growth of the level of penetration of remote banking services, Internet and Internet services in our country. The tourism industry is one of the clearest examples of the introduction, development and active use of ICT (information and communication technologies) in the world. To book tickets, select and pay for the hotel room in any city around the world, at any time, anywhere with your mobile device by electronic payment methods is customary for travelers of all ages with a wide range of income levels. Russia also increases the use level of Internet technologies and online services by the main market players. There are two major directions: the introduction of modern information systems by service providers (the greatest potential is in the segment of «accommodation facilities») and the development of distribution channels (the greatest potential is mobile sales channels). In the area of distribution of tourism services in the Internet (under agency scheme) there are notable projects such as OneTwoTrip, Anywayanyday, OZON.travel, Oktogo and Ostrovok.ru, which are the illustrative example of successful use of ICT. The most visible suppliers of tourism services are JSC FPC and JSC Russian Railways (RZhD), which incorporate and popularize the technology «electronic railway ticket» and increased the share of electronic tickets sold in 2012 in half (from 7% to 15%). Besides that one can also note the high activity of new players in the framework of traditional (offline 1 ) market of service distribution for travelers, where major mobile retail networks are working actively (in particular, Svyaznoy and Euroset), and Federal State Unitary Enterprise Russian Post. J'son & Partners Consulting experts note the high level of investment attractiveness of this segment of Russian economy and predict the emergence of the significant number of new companies (including international companies) involved by favorable market conditions observed at present time. 1 Offline the term, which is usually applied to something other than the Internet - as opposed to «online». 2

3 Market of tourist services is moving in the direction of greater transparency and accessibility for the end user. Increase of the share of tourism services, which are drawn in the Internet 2, can be considered as the most notable trend in the Russian market in The structure of demand is changing moving in the direction of self-issuance of tourist services in the Internet by population (with the use of desktop computers and mobile devices). The level of competition is rising, and in the near future new contenders for the leadership will appear. If the largest traditional market players do not want to lose their positions, they should promptly react to changes and pressure from innovative IT solutions and the means of access to tourist services, which are occurring now. 2 Aviation EXplorer, 3

4 Passenger air transportation In 2012 the growth rates of passenger turnover 3 in Russia were significantly faster than the world average indicators, the growth of which was 5.3%, according to the International Air Transport Association (IATA). Passenger turnover increased by more than 17% and reached million passenger-kilometers. Figure 3. Aviation passenger turnover, billion passenger-kilometers, Source: J son & Partners Consulting, Federal Air Transport Agency (Rosaviatsia) This was primarily due to the positive dynamics in the framework of international directions. During the first half of 2012 the number of trips of Russian citizens abroad with the purpose of tourism has increased (compared to the same period in 2011) by more than 6.6%. As a result of the year the volume of international transportation has grown by 24%. Dynamics of growth of the volume of domestic transportation was significantly more modest. As a result of the year this segment showed the increase of about 7% 4. 3 Passenger turnover indicator reflecting the volume of passenger transportation in passenger-kilometers. It is calculated as the multiplication of the number of passengers by the transportation distance for each type of transport. 4 Federal Air Transport Agency (Rosaviatsia). 4

5 Figure 4. Distribution of the passenger turnover in the Russian Federation relative to the types of air transportation, 2012 Source: J son & Partners Consulting, Federal Air Transport Agency (Rosaviatsia) In 2012 year the airlines have been transporting 10 million passengers more than in 2011 (a relative growth was about 15.5%). The total number of passengers exceeded 74 million people in Figure 5. Air transportation of passengers in the Russian Federation, million people, 2012 Figure 5. Distribution of total number of transported air passengers in the Russian Federation relative to the types of transportation, 2012 Source: J son & Partners Consulting, Federal Air Transport Agency (Rosaviatsia) The leaders of the air transportation market relative to number of passengers are «Aeroflot», «Transaero», «UTair», «Siberia», which in 2012 carried more than 62.5% of the total number of passengers, and the passenger turnover of which was more than 65.5%. The most significant growth 5

6 among these companies in 2012 was demonstrated by the airline «UTair», which, compared to 2011, carried 40% passengers more increased passenger turnover by more than 36% 5. Despite the impressive dynamics airlines operating in the framework of the Russian market face with significant problems in their work. The main challenges for the aviation market are the negative profitability of domestic transportation (about 6-7%), the price rise of jet fuel and airport services, and lack of flight personnel. In Russia there is the vacant niche of low-cost 6 transportation, although outside of the area of the country this direction is developing faster pace. There is the interest to the Russian low-cost transportation from the side of foreign airlines that specialize in this area. In particular, in 2013 the airline EasyJet said about the intentions to work in Russia. Low-cost transportation may be one of the main drivers of future growth of the market. 5 Federal Air Transport Agency (Rosaviatsia). 6 Low-cost airline (discounter) airline that offers very low transportation price in exchange for refusal from the greater part of the traditional passenger services 6

7 Railway passenger transportation Passenger turnover on the railways did not grow as much as in the segment of aviation. In 2012 the market of long-distance passenger transportation, which include domestic and international traffic, has grown by 1.5% reaching the value of 300 billion passenger-kilometers against 296 billion passengerkilometers in According to J'son & Partners Consulting data the market volume in monetary expression exceeded 160 billion rubles. Figure 6. Passenger turnover in the Russian Federation, railway, billion passengerkilometers, Source: J son & Partners Consulting, JSC Russian Railways, JSC Federal Passenger Company (FPC) The main trend in the market of long-distance railway passenger transportation is the significant increase of the share of sales of electronic tickets from 7% in 2011 to 15% in In 2012 the passengers bought 17 7 million electronic tickets on long-distance trains. Actually the monopolists on the market of railway passenger transportation are JSC FPC (more than 95% of passenger turnover) and JSC Russian Railways (more than 3% of passenger turnover). It should be noted that railway passenger transportation, as well as domestic air passenger transportation, had the negative profitability (about 6%) in The most serious competitive threat for railway passenger transportation in Russia, as elsewhere in the world, is air transportation. The advantages of airlines is the speed and, as a consequence, delivery time of passengers, absence of price regulation, as well as higher price, commercial and marketing flexibility of airlines. 7 EIA Prime: in 2012 sale of electronic railway tickets on a train grew in 2 times in Russia (February 13, 2013) 7

8 Accommodation facilities In 2012 the market volume of collective accommodation facilities was 279 billion rubles. The market grew by 14.21% 8 compared to The main share of revenues (more than 70%) was ensured by the hotels, 30% was ensured by the revenues of sanatorium and health organizations. The impressive growth rates were mainly due to the rapid growth of revenues of hospitality enterprises. This is due to several factors: 1. Putting into operation of new hotels including members of such networks as: Carlson Rezidor Hotel Group, InterContinental Hotel Group, Marriott International Inc. and, consequently, growth of room stock. Only in 2012 Russia was put seven such hotels into operation: Courtyard Moscow Paveletskaya (Marriott International Inc.), Ibis Samara and Mercure Arbat (Accor Hotels), Domina Prestige St. Petersburg Hotel (Domina Hotel Group), InterContinental Moscow Tverskaya (InterContinental Hotel Group), Park Inn by Radisson Odintsovo Greater Moscow and the Radisson Blu Resort & Congress Centre (Carlson Rezidor Hotel Group) Increase of average daily rate (ADR 10 ) and revenue per available room (RevPAR 11 ). 3. Efforts from the side of the government to stimulate the supply and demand under the federal target program «Development of domestic and inbound tourism in the Russian Federation» 12. In 2013 according to the forecasts of J`son & Partners Consulting the positive dynamics of the market will maintain. The market volume will increase by 17% to 326 billion rubles. 8 Federal State Statistics Service 9 «Expert South» (239) (December 3, 2012) To overcome offseason 10 ADR (Average Daily Rate) statistical indicator of the average cost of room sold per day 11 RevPAR (Revenue per available room) Total revenue of the room stock divided by the total number of available rooms (mathematically equal ADR multiplied by hotel occupancy). 12 Federal targeted investment program of Russia 8

9 Figure 7. Revenues of collective accommodation facilities, billion rubles, Figure 8. Distribution of collective accommodation facilities relative to the types of accommodation, 2012 Source: J son & Partners Consulting, Federal State Statistics Service It should be noted that, despite the steady increase in the number of rooms, occupancy rate of Russian hotels (Occ 13 ) has remained the same for over 10 years - about 70% 14. In addition, we can say almost continuous positive dynamics of average daily rate (ADR) and revenue per available room (RevPar). Local decrease of these indicators in was caused by fundamental reasons to a greater extent (the unfavorable situation in the Russian economy as a whole). Figure 9. Increasing of room stock, Source: J son & Partners Consulting, Federal State Statistics Service The market has a high potential for further development. As one of the most promising directions of development we can identify increasing of occupancy of room stock by introducing of modern technologies of room stock management, quality control and development of distribution channels in 13 Occupancy rate - population density (number of people actually staying in rooms or buildings) 14 It was calculated according to the data of Federal State Statistics Service 9

10 hotels. High activity in this direction has already been observed from the side of the companies such as Expedia, HRS, Booking.com, Ostrovok.ru. Figure 10. Occupancy rate of room stock, Source: J son & Partners Consulting, Federal State Statistics Service 10

11 The main trends of the market development in 2013 In 2013 the market of tourist services will steadily develop in Russia. It will be caused by the following reasons: 1. Relatively favorable economic market conditions. 2. Significant investment in the sector from the side of the government aimed, in particular, to the formation of regional brand of tourism region and its promotion outside the territory of the Russian Federation High activity of the world's leading players of the tourist market in Russia. Permanent growth of the competition level will contribute to improving of the quality and changing of sales schemes of tourist services. The most significant changes can be: 1. Increasing of the share of offline and online agents providing a full range of tourist services. Expanding of the range of specialized agencies offering transportation to customers by all available types of transport, hotel booking, order of taxi, cars, transfers, special maintenance, insurance, tickets to entertainment and sporting events and other services. 2. Expanding of the range of services offered on the websites of suppliers (airlines, railway carriers, hotels, etc.), offer to set the additional services in conjunction with the purchase of the «basic» service, such as during the purchase of air and/or railway ticket - hotel accommodation, transfer and insurance. 3. Investment (both from suppliers and from the agents) for the creation, development and promotion of mobile sales channels: websites adapted for mobile devices and mobile applications. 4. Active involvement in the consumption of tourist services of social networks with the proposal of the projects specializing in targeted products in the framework of narrow segments of the audience (group trips for communities, individual tours, etc.). Sources of information used in this research Federal State Statistics Service Ministry of Economic Development of the Russian Federation International Air Transport Association (IATA) Federal Air Transport Agency (Rosaviatsia) Federal Agency for Tourism (Rosturizm) Federal Tax Service Expert evaluations of the sector Materials of the major players of the sector Sectoral print and electronic publications 15 Rossiyskaya Gazeta (Russian Newspaper). «Tourism development in Russia» 11

12 REPORT «The Russian market of tourism and services for travelers (tourist services) in : volume, structure, dynamics» CONTENTS 1. Introduction 2. World tourist market This section provides the brief overview of the world market of tourist services, its structure, dynamics and main trends. 3. Russian market of tourist services Section describes the current status of the market of tourism and services for travelers of the Russian Federation, its structure. There is the characterization of market segments, major players and nuances of the legislation governing their interactions, structure of supply and demand, and pricing. The potential of these segments, opportunities and threats present in the framework of them, main directions of further development are determined Volume and structure 3.2. Analysis of state initiatives aimed at market development 3.3. Railway transportation Normative and legal regulation Structure, major players Supply and demand: passenger turnover, pricing Potential, restrictions, opportunities and risks, perspective directions of development 3.4. Passenger air transportation Normative and legal regulation Structure, major players Analysis of passenger turnover Supply and demand: passenger turnover, pricing Potential, restrictions, opportunities and risks, perspective directions of development 3.5. Accommodation facilities Normative and legal regulation Structure, major players Supply and demand: accommodation facility base and its distribution through regions, pricing Potential, restrictions, opportunities and risks, perspective directions of development 3.6. Other paid tourist services 3.7. Market of distribution of tourist services Normative and legal regulation Structure, major players Pricing, direct and agency sales. Online vs offline Potential, restrictions, opportunities and risks, perspective directions of development 4. Conclusions and recommendations This section presents the main conclusions of the research. In particular, it identifies the most promising market segments having the largest growth potential. 5. Predictions of market development in The section defines three variants of further development of the market of tourist services, as well as prerequisites that will determine the probability of implementation of some scenario Optimistic 5.2. Pessimistic 5.3. Realistic 6. Profiles of companies 12

13 Additional Services Investigated market segments Passenger air transportation Passenger transportation by the longdistance trains Market of accommodation facilities (hotels, rest homes, sanatoriums, etc.). Travel insurance Car rent Transfers Excursion services Online distribution of tourist services Main directions of the activities relative to the market of tourist services At present time the large partner information network J'son & Partners brings together experts of various segments and directions of the tourism market, among whom there are representatives of service providers (airlines, hotels, car rental agencies, etc.), tour operators, agents for the sale of air- and railway tickets, operators of electronic payment systems holding senior positions, as well as representatives of relevant ministries and departments. Expert group of the company J'son & Partners Consulting is engaged in research and monitoring of the market of tourism and services for travelers, evaluation of Internet projects and mobile applications, development of schemes of monetization, marketing strategy, mechanisms of promotion of online services, etc. Analytics: Marketing researches, analytical reviews, Ad Hoc researches Trend analysis of the sector in Russia and abroad (dynamics and market volume, forecasts of the development till 2017, assessment of market demand, potential volume of revenues, key players, shares, etc.) Business planning and investment and strategy consulting: Development of the strategy of Company progress Evaluation of the price of the Project/Company, share in business Preparation of business plan of the Company or the audit of the existing business plan Development of a financial model to assess the income and expenditure budget of the Project Roll Out the Project Analysis of the customer's business (business processes, services/products, SWOT, monetization, distribution channels) Development of a strategy and tactics of the progress of the customer's company, selection of contractors (service providers, aggregators of services), independent control of commercial conditions of work Project management for the benefit of the customer (methodology PMI PMBoK) Preparation of presentation for investors and a package of investment instruments Search for investor/partner/project for purchase M&A support, business selling/buying Integrated marketing support for the start and promotion of the Project: Development of the Concept of the Project progress and monetization strategies Development of Marketing strategy of the Project Development of the Concept of positioning and promotion of the project Additional services: Organization and support of the full cycle of sales (Complex Marketing & Sales Outsourcing) Development and recommendations for running of Internet/online portal Development of Marketing strategy (including the analysis of target segments, competitors, trends, resources and channels of promotion, advertising sites, etc.) Development of Media plan and practical implementation of the marketing strategy, production of promotional materials and start of the advertising campaign Analysis of legislative features (local and foreign markets) Search for local and foreign partners Legal support 13