Travelata.ru, a Russian online travel agency focusing on package tours, has just released an in-depth presentation on the Russian online travel market. Citing a recent report by the global travel market research company PhoCusWright, Travelata reports that the Russian travel market was worth $53 billion in 2012.
Only 14% of travel in Russia is currently booked online, which is a lower rate than in the other BRIC countries and substantially less than the over 50% rate found in the US and UK.
The Russian tourism agency notes that outbound travel in Russia is driven by a handful of destinations, both for vacation and business. Seventy percent of vacation travel traffic goes to only ten destinations with over 40% visiting the top three (Turkey, Egypt and China). Non-vacation travel is usually to former Soviet Republics, as well as to Finland and Germany, with the top ten destinations representing over 80% of trips.
Domestic travel is less concentrated than outbound but 35% is focused in just three areas, Greater Moscow, Krasnodar-Rostov and Greater St. Petersburg. With only 2.6 million international tourists a year, the world does not yet see Russia as an attractive tourism destination, and most inbound traffic comes from former Soviet Republics.
Strong growth potential for online sales
Travelata’s own research shows that the overall Russian online travel market is worth $5 billion. This segment is now growing around 50% yearly with numerous positive trends supporting this growth.
Among these trends are the easing of visa requirements for Russian citizens, fast growing e-commerce shopping habits, higher penetration of bank cards (since many online travel purchases have to be paid by card), growing spending potential in the regions and investments by VC funds in the online travel field.
Within the market, airline tickets make up 70% of purchases, but airline margins are getting thinner. This segment is the most mature with such players as Onetwotrip, Anywayanyday, Ozon Travel and Trip.ru, as well as consolidators VIPService and AviaCenter, occupying leading positions.
The online hotel-booking segment is dominated by Booking.com, while others are struggling to catch up, especially two well-funded Russian VC-backed startups, Ostrovok.ru and Oktogo.ru.
The online package tours segment is just in the initial formation phase, and the market is extremely fragmented with hundreds of players and no clear leaders. Travelata, Online Tours and Hip Club currently generate less than $5 million in monthly gross sales.
It is estimated that the leaders in the online flight segment will consolidate their positions and will start entering the hotel-booking segment to increase margins. Hotel booking projects, meanwhile, will focus on growth, will work to differentiate their sites from Booking.com and will use a wider scope of marketing instruments.
Finally, the package tour segment will focus on growth, expansion in the regions, fundraising and product improvement.
