Report: Tourism Spending in Russia Could Double by 2016

Russia's MICE Market
"Generally, Russian markets are quite resilient, and the MICE sector in Russia is no exception." So says Kim Waddoup, organizer of the annual Moscow International MICE Forum, who last month released a report on Russia's meetings, incentives, conventions and exhibitions (MICE) market.

According to a survey of more than 1,300 Russian MICE professionals:

• 37 percent organize 10-12 MICE events abroad each year;
• 52 percent organized events with 40-100 participants;
• Incentives and seminars are the most popular MICE events, comprising 66 percent of total events; and
• 63 percent anticipate that clients will increase MICE spending by more than 35 percent.

"With robust sales and positive balance sheets, many more Russian companies than ever are looking towards MICE products to ensure competitiveness by attending or organizing international meetings and conventions," Waddoup says. "Incentive tours have become regular events for most companies ensuring loyalty from staff and leading distributors by organizing memorable trips to destinations both near and far."

The most popular international destination for Russian events is Turkey, although 70 percent of those surveyed said they're now looking for alternatives. Among the destinations they're interested in are Cyprus, Spain, Italy, Croatia, Austria, the United Kingdom, Ireland, the United Arab Emirates and portugal. Favorite long-haul destinations, meanwhile, are Hong Kong, Singapore, Mexico, the Dominican Republic, Thailand and Fiji.

"With a market that is estimated to be worth more than [$613 million] annually, how can international MICE suppliers tap into this lucrative potential?" asks Waddoup. "It's a challenge, as Russia is not an easy market. However, with hard work and tenacity to overcome the cultural differences, the potential results are excellent. Most Russian MICE groups want the best facilities, memorable events and are prepared to pay for this. The largest hurdle is the visa situation; be certain to have this under control. Suppliers will often find themselves competing with other destinations rather than local competitors, so ensure that offers are clear and indicate exactly what is and, most important, what is not included. They don't like unpleasant surprises. Personal contact is essential and participation at the specialized MICE events in Russia is required. Once a contact is made, it will generally be a loyal contact that will provide excellent future business."

If the government makes needed changes to its infrastructure and reputation, visitor arrivals in Russia could increase 5 percent by 2016, during which time incoming tourist expenditures could double to $15.3 billion, finds a new report commissioned by Hilton Worldwide.

Titled "Balancing Russia's Tourism Deficit: A Report on the Future of the Industry," the report examines Russia's tourism industry and concludes that Russian tourism suffers from a "distorted perception" among international tourists, who are turned off by the country's red tape, lack of proper infrastructure, high accommodation prices and unpredictable quality of services. In order to increase tourism arrivals and spending, the report suggests, Russia must first simplify its visa system in order to reduce the price and waiting period for a visa. In addition, the Russian government must invest in hospitality education and training to improve the quality of local tourism services, create an attractive image of itself as a travel destination, grow its online retail presence, develop event tourism, increase its number of low-cost air carriers, and invest in travel transportation and accommodation.

If it does those things, Hilton argues, Russia — already projected to become one of the fastest growing outbound markets in Europe, with an annual average growth rate of 7.4 percent from 2011 to 2016, during which time it's expected to double its outbound tourism expenditures to $67.1 billion — could increase inbound tourism dramatically within the next four years.

"Not only is there the opportunity in Russia to double the amount of revenue generated by incoming tourism, but the fact that outbound expenditure is three times bigger than spend by visitors to the country shows the long term potential that still remains," said Simon Vincent, area president, Europe, Hilton Worldwide. "The report highlights the huge opportunity that exists to make Russia's tourism industry more competitive and identifies the measures that are urgently needed to help the country attract a greater share of the growing number of international travelers."

Although tourists are attracted mostly to large cities like Moscow and St. Petersburg, Hilton believes there also is opportunity to develop more "small-scale unconventional" tourism, including event-based, ethnic, ecological, extreme and industrial tourism that's focused on the Russian regions' natural and historical sites. As such, the company has filled its development pipeline appropriately.

"We believe there is great potential for Russia's tourism industry," said Patrick Fitzgibbon, senior vice president of development, Europe and Africa, Hilton Worldwide. "The country is one of our biggest and most exciting development markets. We have 28 hotel openings across Russia over the next few years, which is more than anywhere else in Europe, with brands including Hilton Hotels & Resorts, DoubleTree by Hilton, Hampton by Hilton and Hilton Garden Inn. We look forward to building on this great momentum by working with the travel industry and government to help attract more tourists to Russia."