A Year After the Crash: Post-Crisis Tourism Picking Up

Originally published in The Moscow Times on August 17, 1999

Memories of crisis-related cataclysms are swiftly fading away among travel agents as Russia's tourism industry begins to take off.

Last August's economic chaos and the soaring inflation that followed dealt a heavy blow to the young and promising travel sector. Tour companies struggled to stay afloat while Moscow hotels operated at half-capacity. The number of Russians traveling abroad dived 15 percent to 20 percent as the weaker ruble bit into their buying power.

However, to many travel agents those hard times are now water under the bridge as sales pick up and domestic tourism booms thanks to inflation-reduced prices.

"[The situation] is stabilizing and there won't be any more change," said Svetlana Kourkovich, sales and marketing manager at the UCS Travel agency, regarding business tourism in Russia.

UCS Travel, which works mainly with corporate clients, has a typical post-crisis tale to tell.

"September '98 was excellent but a month later we had to reduce our staff by 15 to 20 percent," director Anna Fenten said.

"Our clients' budget was reduced significantly," added Kourkovich. "Now we have more clients but their budgets are still limited."

The agency says that business did not really start to pick up until April, when demand forced it to start recruiting new employees. Now the number of staff at UCS Travel exceeds that of last year.

What was the secret? "We didn't increase our prices," Fenten said. "We acted so as not to lose a kopek of our clients' money. We didn't lose our mind over the inflation."

The stabilization and recovery of business at UCS Travel appears to be a typical example of what is taking place with many Russian travel agents.

"Two months after the crisis we had to cut down on salaries," said Maria Goncharova, reception manager at the Russia Travel agency. "We have also had to reduce advertising and choose cheaper ads."

But with business now booming, the agency is quickly climbing back on top, opening new offices last month in Riga, Latvia, and the Urals Mountains city of Yekaterinburg.

Officials at Intourist, once the tour operator with a monopoly on Soviet Union travel, said they slightly reduced their staff and restructured the company following the crisis.

But now "the situation is becoming very stable," said Inna Kamurina, Intourist's deputy director of marketing and advertising.

In 1998 Intourist registered 200,000 foreign clients who came to Russia and 100,000 Russians who went abroad. Figures for this year are already showing a similar trend, she said.

Foreign travel by Russians grew robustly from 1993 to 1997 as the emerging middle class took advantage of post-Soviet freedoms, according to the Committee for Youth Matters, Physical Culture and Tourism.

Travel agencies mushroomed across the nation, reaching a high of about 9,000, The Russia Journal weekly reported.

The number of Russian travelers peaked at 4.142 million in 1997 and showed signs of growing even more in early 1998. Then travel abruptly plummeted 20 percent after Aug. 17, 1998, the Committee for Youth Matters, Physical Culture and Tourism said.

Arkady Kevorkov, marketing manager of travel agency Akademservice, said at his company reservations of Russians going overseas fell 15 percent.

"The crisis has definitely affected our business," he said. "But it's not a catastrophe. The tourism industry is still alive."

Egypt, Turkey, Poland, Finland and Spain remain among Russians' favorite foreign destinations, tour officials said…

Read the full text at The Moscow Times.