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Travel agencies keep going bankrupt, Russians travel independently

September 16, 2014, 17:24 UTC+3 Alexandrova Lyudmila
© ITAR-TASS/Ruslan Shamukov

MOSCOW, September 16. /ITAR-TASS/. An ongoing crisis of the Russian tourism industry compels the authorities to approve tough measures to revive the sector, while Russian nationals have to manage their trips themselves. The Russian Union of Travel Industry expects a wave of dissolutions and the strengthening of the remaining travel agencies through mergers and acquisitions.

This is the first time that the Russian tourism business sees such a collapse. All in all, almost 20 travel agencies and tour operators, including major companies, went bankrupt in summer and early in September. Crowds of tourists at airports thrown away from hotels and having no possibility to fly back home in time have become a routine TV spot. Almost all travel agencies have announced their bankruptcy all of a sudden. The latest bankruptcy news came on Monday, when Versa tour operator was announced bankrupt.

“Outrage in tourism industry continues,” Prime Minister Dmitry Medvedev told a session with his deputies. He urged the government to speed up work on new legal framework for the tourism market. The Culture Ministry responsible for this sector has already come up with a list of tough measures to reorganize it.

The crisis is explained by a set of reasons, including a declining ruble and a deteriorating international situation, a debt load of travel agencies who used to take huge loans to book hotel rooms and plane seats. Debts to airlines and hotels were contributing to it because of the post-payment system, as well as dishonest mechanisms of cooperation with insurers and air carriers. Experts also blame greedy tour operators who tried to slash contributions to the compensation fund as well as greedy tourists, who were not discouraged by dumping prices.

The deputy head of the TourPomoshch association, Alexander Osaulenko, is quoted by the Nezavisimaya Gazeta daily as citing working on credits and loaning up - in other words financial pyramids, as the most often reason behind bankruptcies. Imperfect regulatory environment lures companies into handling their business in a dishonest manner, as the law does not forbid sending tourists on a trip without a paid off return ticket.

One can speak about a systemic crisis in the tourism sector, but not about its collapse, specialists from the Rosturizm Federal Agency for Tourism believe.

“About 1,700 tour operators operate in the sphere of outbound tourism. Less than one percent has withdrawn from the market,” Rosturizm’s spokesperson Irina Shchegolkova said. “The situation is grave and difficult, but this in no way means that everything has collapsed. Reorganization of the market is under way,” she added.

Co-chairman of the Consumers Union of Russia Anatoly Golov is sure that the crisis will go on. “Bankruptcies of companies will continue. Unfortunately, if the economic mechanism of insurance is not changed, consumers will remain unprotected. Besides, the situation may become worse because of tourists’ opting for independent tourism,” the expert believes.

Sector authorities offer compulsory insurance. “Insurance against bankruptcy, similar to cancellation coverage, must be introduced to stabilize the situation,” the director general of the Otpusk 2.0 travel agency, Anna Minina, says.

Meanwhile, a sharp growth in individual trips has been noted in Russia. Some major online booking websites report a double growth in sales over the past month. “Moreover, the number of trips inside the country is growing more visibly than trips abroad,” the director general of Travel.ru. Marina Kolesnik said. “In view of changes in currency exchange rates, Russian tourism destinations have become more profitable as compared to foreign destinations,” she said.

 

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