RUSSIAN TRAVEL AGENCIES LOOK TO THE MEDIUM- TO LONG-

UNCLAS MOSCOW 000838


FOR CA, CA/VO, CA/OCS, AND EUR/RUS

E.O. 12958: N/A
TAGS: CVIS PGOV BEXP EIND RS
SUBJECT: RUSSIAN TRAVEL AGENCIES LOOK TO THE MEDIUM- TO LONG-
TERM FOR GROWTH IN TRAVEL TO UNITED STATES


1. (U) Summary: Russian travel agencies who sell trips to
America remain optimistic about their medium- to long-term
business prospects despite the recent, marked decline in
airline passenger volumes. While conceding that their numbers
will not be as strong as they were in 2008, particularly among
corporate clients, the agencies we spoke with feel Russian
tourists increasingly appreciate the customer service, value
for money, and prestige an American vacation represents. As
proof of this, Russian agencies, spurred by FCS advocacy,
easily filled the country's participation quota at an upcoming
U.S. travel industry event in Miami. Although many Russian
tourists still prefer the security and ease of booking
packaged travel through an agency, particularly for popular
sun-and-beach destinations catering to the Russian market,
they also appear open to the myriad opportunities travel to
the United States offers. End Summary.


2. (U) In recent years, Russian tourism to the United States
has increased markedly. B1/B2 visa applications in Moscow are
indicative of this trend: 65,930 in 2006; 76,657 in 2007; and
96,224 in 2008. In the past few months, however, tourism has
been hit by the overall decline in economic activity, with
2009 B1/B2 visa applications in Moscow down 11 percent to
date.


3. (U) Russian airline passenger numbers also fell sharply in
January 2009, the most recent month for which statistics are
available. According to the Russian Federal Agency for Air
Transportation's website, airlines' passenger volume for the
month was down 16.7 percent from January 2008. In 2008,
airlines flying out of Russia transported 49.8 million
passengers, 10.4 percent more than in 2007. Although exact
figures are unavailable for travel to the United States, the
agencies we spoke with indicated that corporate travel,
business incentive travel in particular, has declined much
further and faster than tourist travel.

And The Survey Says
--------------


4. (U) To better understand Russian travelers and their travel
patterns, we recently surveyed several travel agencies in
Moscow (America Travel, Holiday Time, KMP Group, and Holiday-
M),which sell tours to the United States. In addition to
discussing these issues, we also asked them how the current
economic situation is affecting their business. Despite the
recent decline in business, the agencies? representatives
remained upbeat with regard to medium term prospects. With
anywhere from two to fifteen years? experience selling their
clients travel to the United States, the agencies also were
very optimistic about the longer term prospects for growth in
the number of Russian tourists going to the United States.


5. (U) The key findings of our research are the following:

-- The most popular U.S. destinations for Russian tourists are
New York, Miami, Las Vegas, Los Angeles, and Hawaii, for
anywhere from 7 to 21 days. Cruise packages are popular, and
are often combined with one or two weeks of mainland travel.

-- Russian tourists travel to the United States because they
have already been to Turkey, Egypt, and other sunshine
destinations and wish to experience more than relaxing on a
beach.

-- Many Russian tourists still consider travel to the United
States exotic and prestigious, in part because it remains
beyond the financial reach of much of the traveling populace.
Increasingly, however, and for repeat tourists in particular,
travel in the United States represents an excellent value-for-
money proposition both in terms of customer service and
shopping bargains.

-- 2008 was a boom year for Russian tourism to the United
States, with travel agencies experiencing traveler and revenue
growth of 20 to 50 percent over 2007 figures. At present, the
companies we spoke with forecast their numbers would be down
on 2008 but no worse than in 2007.

U.S. Travel Trade Show Attracts Russian Interest
-------------- ---


6. (U) Local travel agents are attuned to this burgeoning
market. The Foreign Commercial Service in Moscow succeeded in
recruiting 27 Russian delegates for the U.S. industry's major
travel and tourism event, International Pow Wow, that will be
held in Miami from May 16-20. Attendance from Russia would
have been even higher considering the numerous expressions of
interest and inquiries but the show organizer limited the
delegation size based on previous years' attendance. The last
delegation that FCS organized was in 2007 and it totaled 20
participants. The high level of interest among Russian tour
operators and travel agents in this major U.S. industry trade
show that features U.S. destinations, lodgings, and services
for the tourism industry is indicative of the attraction that
the U.S market has for Russian tourists. The Russian travel
agents participating in the event are paying their own way, at
$995 per person (with a discounted rate of $695 for Early
Birds).

Visa-Free and Beachfront: Catering to the Russian Market
-------------- --------------


7. (U) According to a recent report issued by the European
Travel Commission, most of the travel growth out of Russia in
the last four to five years has been for sun-and-beach
destinations, notably Turkey and Egypt, both of which are
increasingly sold on a year-round basis. At the same time,
destinations that have attracted consistent growth are those
for which no visas are necessary, or which offer visas on
arrival, such as Turkey, Egypt, Dubai, Tunisia, and Thailand
(although, this year tour travel to Egypt and Turkey is down
significantly ? 40 percent or more). Many trips are decided
and booked at the last minute so Russians, notoriously late
bookers, prefer to avoid the possible hassle of applying for
visas. That said, for other destinations such as the United
Kingdom (and, presumably, the United States),Russians plan
ahead because they know they will need to obtain visas.
Current visa requirements undoubtedly discourage some Russian
tourists from traveling to the United States.

Thoughts on Current and Future Trends
--------------


8. (U) Embassy Moscow anticipates resumed strong growth in
B1/B2 visa demand in Moscow once economic recovery sets in.
At over 96,000, B1/B2 visa applications in CY 2008 were 26
percent higher than in CY 2007 (which saw an increase of 16
percent over CY 2006). Despite a slump for the first three
months of this year, which showed an 11 percent drop in B1/B2
visa applications and thus indicates a strong probability of a
decline for 2009 overall, post anticipates that there will be
a return to growth in annual B1/B2 visa applications in the
medium to long term, once Russia?s commodity-dependent economy
recovers from the current global downturn. Such a future
upward trend in B1/B2 visa applications would reflect what
post has seen in years past when the number of visa issuances
here went through troughs that coincided with hard times, for
example in 1998 (following the mid-1998 crisis) and 2002.


9. (U) Comment: Despite current economic worries and the
recent downtick in airline travel numbers, the United States
is an attractive tourist destination for many middle to upper
class Russians, and could become even more so in the future.
Once the economic situation here improves, the United States
seems well-positioned to benefit from an influx of Russian
tourists. As more Russian tourists travel to the United
States and return to Russia to share their positive
experiences with others, we expect more and more Russians to
vacation in the United States. End Comment.

BEYRLE