Russian online travel agencies ready for competitive reset – Skift
Russia has to some extent been a humiliating market for foreign online travel giants such as Airbnb, Booking Holdings, Expedia Group and Trip.com Group – until now. The past two years have sparked upheavals that may favor local travel players for Russian-speaking travelers, such as Aviasales, OneTwoTrip, Ostrovok, Biletix.ru, and Tutu.ru – at least for now.
Russians have long shopped patriotically, often favoring local brands. Exhibit A: They use Russian search giant Yandex. Google has the second place in popularity. Yandex offers a travel price comparison search that is much more substantial than Google’s content today.
The rare foreign brand to make a significant breakthrough in Russia was Booking.com. Before the pandemic, the brand accounted for around 70% of online travel sales for Russian hotels, according to tour operator Svoy TS. But the brand has recently faced turbulence.
This summer, the Dutch giant of an American conglomerate challenges the findings of the Russian Federal Antimonopoly Service, which in December found that the brand had violated the antimonopoly law by imposing a so-called price parity requirement on hotels. While the brand has faced similar complaints in many European countries for years, Russia could take a tougher line. The law would allow it to impose a fine of between 1 and 15% of the annual revenue of Booking.com generated in Russia.
Another new law affecting Booking.com among other foreign travel brands is the requirement that they have a local office from January 2022.
In addition, since 2018, a few Russian travel agencies have pressured the Department of Tourism and Regional Policy of the Federal Tourism Agency to curb Booking.com’s operations in Russia. Turkey’s tough tactics and the temporary ban on Booking.com, lifted only in October, are seen as inspiring.
At the same time, as part of the reassessment of its global portfolio, Expedia Group has reduced the presence of its regional offices in Russia, said three executives of local competitors.
Expedia’s withdrawal could have a negative long-term impact if Russia or other players step in to win more favorable supply contracts from hoteliers and other travel suppliers.
A similar problem can affect Airbnb. The company closed its office in Russia in 2015 and closed its subsidiary in 2017, moving its activities to other European cities. The absence of a local ground game could favor other players. While it still has arguably the most home and apartment listings online of any player in Russia, the company faces complexities due to local regulations, resistance to Airbnb terms and conditions. that hosts cannot refuse guests based on their sexuality or gender, and occasional allegations of money laundering. against advertisers.
Sutochno.ru is an online booking service that claims to have more listings for apartment rentals in Russia than Airbnb.
As foreign online travel brands retreat, some Russian entrepreneurs are cautiously optimistic about their ability to compete by avoiding paid advertising wars. They use other tactics to defend or gain shares instead.
Russia turns to travel meta-research
The pandemic has accelerated a trend for the middle class to move away from traditional travel agencies as part of a larger trend towards digitization, benefiting all actors online. For example, Russians use meta-searches more frequently to plan and book trips.
This trend is good news for local player Aviasales, who has claimed to be the market leader in terms of gross transaction volume. Yandex is number two. Skyscanner, owned by Trip.com Group, slipped to third place. Far behind are Momondo and Kayak, two brands backed by Booking Holdings.
“In 2017, around 5% of all flight bookings in Russia came from Aviasales,” CEO Max Kraynov said. “Now it’s around 17%. Thus, one sixth of airline tickets sold online or offline are sold through us. “
Aviasales is tracking progress by estimating the number of 180-seat Boeing 737s it fills each day with reservations.
“This week we filled the equivalent of 430 Boeing 737s per day with ticketed passengers,” Kraynov said. “After the pandemic, this metric is expected to skyrocket. “
Avoiding paid advertising wars
As the pandemic recedes, Booking Holdings and the other global giants will step up paid digital marketing on Google and Yandex, YouTube and Facebook searches. Pushy travel brands usually can’t compete with the giants to acquire customers in this way. Yet Airbnb’s success in using word-of-mouth and social media to expand into a travel niche has inspired other smaller travel players in Russia and around the world.
About 200 million people speak Russian, and many of them prefer Russian-language social media platforms as alternatives to Facebook and Instagram. The diversity of social media provides an opportunity for brands based in Russia to outperform global players.
Content marketing, such as providing travel inspiration and destination information, has also been a way to attract and retain customers. Although Aviasales is primarily metasearch, it does offer alerts on Covid-related updates for various destinations. The content drove visitors to its travel inspirational content for cities and resorts. This may encourage consumers to visit the Aviasales site and app directly to plan their future trips.
Russian e-commerce executives want to sell travel
A generic factor for the online travel industry in Russia is the growing number of e-commerce companies that are engaging in the sale of travel.
Wildberries, Russia’s largest online retailer, has branched out into selling travel.
Ozon, another e-commerce giant, tried to create a travel division. But in the past two months, he ended this operation for unknown reasons.
OneTwoTrip, an online travel agency based in Moscow, has branched out into other lines of business. Skift recently reported on its “travel as a service” solution, where it primarily manages online travel sales on behalf of banks, telecommunications and other businesses that have “integrated” customer bases. This route avoids paid online advertising and generates around a third of OneTwoTrip’s revenue.
Business travel for small and medium-sized businesses is the next business component of OneTwoTrip. The company believes that its direct supply contracts established with hoteliers and airlines in Russian-speaking markets will give it a head start in developing a commercial agency similar to what Travelperk and TripActions have done elsewhere.
The digitization of business-to-business (B2B) travel sales is another opportunity that local entrepreneurs are looking to exploit. Emerging Travel Group is the parent company of Ostrovok, an online travel agency founded ten years ago this month. In recent years, the group has diversified, said Felix Shpilman, CEO of the Moscow-based group. Its RateHawk brand offers B2B hotel reservations and hotel reservations for tour operators and corporate clients.
“We aspire to become a global B2B [business-to-business] travel leader, ”Shpilman said. “This will include business-to-agency, direct-to-business, API-based buyers. “
Aviasales, for its part, has a separate division, Travelpayouts, which focuses on the United States and Europe for consumers, providing travel brands with a mixed market to achieve distribution and monetization through an affiliate model. . It claims to outperform Expedia Group’s comparable offering in many markets.
The course of the pandemic could further derail short-term travel sales for all players. In recent weeks, Russia has implemented more travel restrictions in some areas, as well as mandatory vaccinations.
Yet, over time, online travel is expected to experience double-digit percentage growth in revenue. Analysis firm SimilarWeb shows that visits to Russia’s online travel brands in May were back to 70% of the May 2019 level, so domestic tourism in the country made some gains.
UPDATE: The article has been updated to remove mention of Oktogo.ru, which is an affiliate site of Aviasales, and to clarify that Aviasales accounts for 17% of all tickets sold in Russia, not just online.
Photo credit: A luxury suite at the Four Seasons Hotel in Moscow, next to the Kremlin. In Russia, entrepreneurs are optimistic about the Russian online travel market. Just ask OneTwoTrip, Aviasales and Ostrovok. Four Seasons