Today’s fall in Russia’s currency, the rouble, following the country’s de facto takeover of the Crimea region of Ukraine, is expected to hit outbound tourism.
The rouble today fell to its lowest levels against both the dollar and the euro in five years as markets reacted to yesterday’s incursions into Ukraine by Russian forces – which though they took place without any military violence – have further destabilised the region following the recent overthrow of the Ukrainian government by pro-western factions.
The worry for the duty free and travel retail business is that many high-spending Russians will be thinking twice about travel abroad. They will be reflecting not only on the rouble’s current collapse which – as well as obviously limiting their purchasing power – could slide even further given the unstable political situation and the talk of economic/financial sanctions from the west.
It should be noted that today’s fall exacerbates the rouble’s already plunging value over the whole of 2013. In the 2014 year to date, the Russian currency has slipped by -9.2% against the euro, while in the 12 months to the end of February, the slippage was -19.7%.
CHARTERS TO TAKE A HIT
Commenting on the currency’s impact on travel, Nancy Cockerell (left), Research Director at tourism analyst, the Travel Business Partnership, tells TRBusiness: “The falling rouble should only affect certain parts of the tourism market. Cities like London are unlikely to sustain much negative fallout but destinations such as Hainan (in China), Turkey and Thailand – essentially group package destinations served by charters – will be hit.”
Cockerell maintains that the Russian super-rich, who currently flock in their droves to cities like London and Milan, and also to the French Riviera, will not change their travel plans. However, average Russian tourists on package holidays will feel the financial pressure and will either postpone vacation plans this year, or spend less if they are already booked to travel.
RussiaTourism – the federal agency for tourism of the Russian Federation – has, so far, made light of the plight of the rouble saying that it will have a positive impact on domestic tourism, a sector that the country is trying to develop this year.