“ATOR Newsletter” spoke with Aleksander Kurnosov, Deputy General Director, and Irina Volkova, Director of the International Marketing Department of Academservice, a tour operator, about plans to expand the agency network, the results of 2016 in BusinessTravel, as well as about the prospects for inbound tourism to Russia.

- Aleksander, how does Academservice assess the results of 2016 with regard to achievements in particular business lines?

- As you have rightly noted, today the business of Academservice consists of several main lines. The first one is, of course, a booking system for the B2B segment, serving mainly major travel management companies (TMC), which in turn use our capabilities to provide services to corporate clients. In this segment - and I suggest we speak about it first of all - we consider 2016 successful for the company. In the context of the ongoing economic recession and reduction in business trips, we managed not only to prevent a decline in business volume in this segment, but also to maintain our share in the market.

We also reckon the results achieved in the second of our important business lines last year - namely, service and support in sports and entertainment events and MICE - as very positive. More than 150 sports teams and clubs serviced by Academservice today continue to travel around the country and play. By the way, just a year ago in May 2016 the World Hockey Championship was held in Moscow and St. Petersburg and was serviced by our company. We consider it to be one of our most important achievements - both for our business and for the reputation image of the company.

- What are the development plans Academservice has for BusinessTravel this year?

- We suppose that in 2017 we will be able at least to maintain the existing business volumes in the BusinessTravel segment, but this year’s concept for company development provides for an increase in volumes. Such increase should be conditioned by the active expansion of the agency network commenced this year.

We are planning to expand our network by changing the commercial cooperation policy for agents. Whereas previously Academservice focused mainly on major TMC, now we intend to actively involve medium and small agents in our network, but, of course, to continue business in the TMC segment. The emphasis here will be primarily on the regions, in particular, on developed industrial centers and cities with a population of over a million. The focus on expanding the network by small players will certainly let us reduce dependence on large companies and plan the flows and volume of orders more proportionally.

- What in your opinion will enable you to attract such partners? Are there any changes in the terms and conditions for work of the tour operator with agencies?

- Yes, we are changing our commercial policy for this purpose. Firstly, whereas in the past years a new agency had to reach a certain volume of orders to get a bonus or commission, now we have removed this requirement. Each of our new partners will receive commission starting with the very first order irrespective of the volume of the latter. As for the commission, we assume it will be 10%.

Secondly, being eager to meet wishes of many travel agencies, from now on we are ready to work on terms of post-payment for the order - in contrast to the previous experience, when Academservice worked on the condition of deposit or 100% prepayment made.

We believe that both of these changes in our contracting practices - which, by the way, have been in effect since January 1 of this year - will enable small and medium-sized companies to cooperate with us for mutual benefit, without any difficulties with entering our network, and will ensure a sound volume of orders.

Thirdly, this year we will provide our agents with a new set of services that will create an environment more conducive to cooperation with Academservice and will make things easier for them.

- If that’s alright, could you tell us a little more about the services? It's always interesting to learn about technologies in the tourist industry.

- In particular, there is an opportunity to pay for our services not only by bank transfer but also with a bank card – this will enable travel agents to pay for and service pressing orders from corporate clients inclined to take decisions at the last moment.

In addition, we provided travel agencies with the possibility to book hotel rooms without any prepayment - i.e. the client makes a direct payment according to our tariffs with his/her corporate card at the hotel reception and the commission is credited to the agent further.

Finally, we organized the “customer's personal account” on our website. There the client may monitor the status of its order in real time as well as the status of payment and all other details ensuring the transparency of the service process.

- What are the expectations of Academservice regarding at least an approximate number of new agents in its network by the end of 2017?

- We expect that the combination of these measures will result in a significant growth of our agency network in 2017. And that such growth will be both quantitative and qualitative. We are planning to attract about 2-3 thousand new partners in 2017 in total.

-In terms of such a segment of Academservice’s business as inbound tourism, what are the results achieved last year?

- What Academservice focuses on is not mass destinations of inbound tourism, and in 2016 the main destination here was China, but on tourists from Europe, North America and South-East Asia. We believe that in this business segment the year was successful for us, we were in a trend.

As a whole the flow of tourists from Europe to Russia has not reduced, and in some areas it has even increased - we are able to confirm this fact, including based on our client database analysis. We can also see a certain increase in the number of tourists from Southeast Asia, including Taiwan, Vietnam, and also from Korea. The above is also in line with the official “new” statistics on inbound tourism, though we think that a number of indicators there are questionable.

- What are these questions, if it’s not a secret?

- They are known enough and were also partially analyzed in your publications. So, on the one hand, according to official statistics we see an actual increase in the absolute number of entries into the country. However, if we look at this picture in more detail it turns out that out of 24 million “tourist” arrivals 17 million come from the CIS and post-Soviet countries, of which 8.5 million are citizens of Ukraine, 3.5 million are from Kazakhstan, and about one million are from Azerbaijan. That means that if we face the truth these people may not be defined as tourists - in no way.

However, if we take only arrivals from the non-CIS countries it won’t solve the problem with correct assessment of the “net” tourist flow either. In this case we see such “leaders” as Finland, Estonia and Poland. It is clear to all participants of the tourism market that 99.99% of arrivals from these countries are short-term trips without overnight stays made for the purpose of near-border shopping to Leningrad, Pskov and Kaliningrad regions of Russia – nothing more. Finally, the huge number of arrivals from China (up to 50%) is also not related to tourism - it is either cross-border movements for business purposes or one-day trips to the Russian Far East to do some shopping or to play in a casino.

- Being an expert in this business, what do you think can be offered instead of this method of counting tourists? What can make calculation more accurate?

- To tell the truth, it seems to me that the method of counting used in past years is much more relevant. Let me remind you that only a foreign citizen who spends at least one night in a hotel in the territory of the Russian Federation is defined as a tourist there. Yes, it had its own shortcomings - for example, this method excluded tourists visiting Russia as passengers of cruise ships.

However, in my opinion, it was easier and more effective to modify the “old” method and to use it as a basis, adding data on cruise arrivals, than to completely replace it by “the number of arrivals of foreign citizens”. And, in our opinion, it would be reasonable to verify such statistics against statistics on the number of foreign tourists’ visits to museums.

- Speaking of tourists from China and Asia in general - what are the trends here?

- Last year we witnessed a quite active growth in the number of tourists from Korea and Vietnam. But, of course, the strongest growth of the number of conventional tourists from Asia was observed in the Chinese market. Last year a significant growth was achieved due to the simplified visa requirements for groups and the relatively low price of the tour package.

With regard to Moscow the Chinese mass tourists go mainly to three-star hotels, and excursions in the tour package include, at best, one sightseeing tour of the Kremlin. Of course, there are “expensive” tourists from China who choose expensive five-star hotels operated by international networks and VIP-service and who are deeply interested in Russian culture, but their share is insignificant.

- From your point of view, will the growth of the tourist flow from China to Russia be sustainable this year and in the following years?

- First of all, I would like to point out that analysts and reporters should not make hasty conclusions based on the growth of the tourist flow from China and delight in the “victories” on the “front of inbound tourism”. It should be understood that for the Chinese Russia was and will be a niche and non-mass destination for “cultural” tourism. And what is a huge figure for us is a small amount for China. Let me remind you that last year China gave the world 120 million tourists. And somewhat a little more than one percent of them reached Russia. In China, as elsewhere, most tourists choose the beach. The main outbound market for China is not Russia but Vietnam, Thailand, Indonesia, Australia, the United States.

Yes, the flow of Chinese tourists to Russia is growing - but not at the same rate as it is growing in Vietnam, for example. Therefore, in general, the growth of the tourist flow from China to Russia depends on the economic situation in China: if the total number of tourists coming from China increases, the Russian share will also grow. At present we are definitely supported by the policy of the Communist Party of China which together with Russia is promoting the project of the “Red Route” which has already proved to be very attractive. But according to a number of experts, this “nostalgic” tourism also has its limits – after all, it is the “vanishing generation” of the Chinese that is nostalgic about the USSR.

- There is an opinion fueled by the media that the Chinese tourist flow is “problematic”. Is it really so?

- Indeed, tour operators experience several problems related to the Chinese market. First of all, it is the relative low margin status of a mass Chinese tourist.

Secondly, a significant number of groups from China prefer to be accompanied by their own personnel - which means that the inviting company in Russia loses a number of additional sources of earnings. “Indigenous” guides, “indigenous” excursions, “indigenous” stores - Chinese groups really have all of these.

- Is it worth forbidding foreign groups to bring their guides? The media sometimes put the question this way ...

- Most likely, guiding activities should be subject to licensing. But we definitely should not prohibit bringing their own guides or impose our guides. Both Western and Asian travel companies point out that having a guide of own nationality is an important condition for comfortable stay of tourists in a foreign country. And besides we simply don’t have so many guides who speak Chinese, Persian or Swedish.

- How can we attract more foreign tourists to our country? What problems do you see here?

- It seems to us that it is essential to change the way foreign tourists perceive our country. And to change it drastically. It is impossible to piggyback off the theme of the USSR in case of China or Dostoevsky/Tolstoy in case of Europeans.

If we look at the themes of tourism in Russia developed for foreign tourists and at the average age of such tourists, we see that in the overwhelming majority (95% or more) of the cases these are cultural and informative tours and the average age of a foreign tourist in Russia is 55-65. Alas.

And I would very much like to see, for example, families with children traveling to us. Of course, to attain this objective it is necessary to develop appropriate destinations and types of tourism in Russia, to promote them outside the country. It is also necessary to solve the problem of visa barriers, improve logistics and transport accessibility of promoted facilities, ensure an optimal price-quality ratio of tourism products for foreigners.

- By the way, what role does the price play today for foreigners making a decision whether to buy a tour to Russia?

- The price is very important for everyone. And for existing “aged” tourists too - they always weigh the “price-quality” characteristic. It is clear that as a whole Russia is preferred by a small share of Western retirees who travel the world.

And if we offer a tourist from Europe to choose either a tour with a visit to Moscow and St. Petersburg or a tour to China with a visit to four or five cities at the same price, I think the choice will be obvious. A typical example - last year one of the Israeli travel agencies sent 2,000 tourists to Russia and four thousand to Georgia. Why so? The answer is simple – the price, and, of course, visa-free entry.

- Is the high price the main reason why foreign tourists in Russia travel to two capitals mainly?

- You're right, but only in part. Indeed, 90% of foreign tourists visit Moscow and St. Petersburg, sometimes going to the Golden Ring. Other destinations like Altai, Baikal, Kazan, Sochi, etc. are visited by no more than 10% of foreigners. And price is not the only reason for this. Any price is associated with something - in our case it is a tourism brand a tourist bears in his mind.

And if this brand is still “weak” in some regions of Russia the problem can be solved only in one way – by an active promotion of these destinations abroad. And we haven’t progressed much here. There is certainly some progress but ...

Let me just give an example. A small country of Morocco spends 2 million USD a year on promoting their resorts - and this is only in Russia. The entire budget of Russiatourism designated for promotion of tourism in Russia (including all destinations) is limited to 70 million rubles, that is, 1.2 million USD. In the whole world. In all countries. Do I need to say anything else? As a result at the tourism exhibition held in Germany Russian regional museums presented their materials ... in Russian.

And one more thing - when making plans to route foreign tourists to Russian destinations it is necessary to take into account the capacities of these resorts and to ask a question: do they need it? For example, does Sochi need mass foreign tourists? In winter Krasnaya Polyana is almost filled up with Russians, Adler’s capacities are filled with domestic tourists in summer. Once the Chinese refused from the idea of charter flights to Sochi - the price of the flight is too high and as we know there are only two translators into Chinese in the city. Is it worth it? Is it worth investing when the resort as a whole feels good? From my perspective, we should study this question together with experts in the tourism industry.

- What is the role of tour operators in shaping the demand for Russian tourism products abroad? How many foreigners organize tours to Russia on their own?

- If we take a look at the general structure of the flow of foreigners entering Russia, it will be as follows. Approximately 60% of them come here through BusinessTravel. Among the remaining 40% of so-called “conventional” tourists about 2/3 come as organized groups, and 1/3 comes individually.

Most of “individual tourists” in one way or another use the services of Russian tour operators when organizing the tour starting with obtaining visas up to ordering individual tours. The number of tourists organizing their tourist trip to Russia absolutely on their own is very small. Why?

First of all, tourists should feel safe in Russia. Secondly, they should feel comfortable. Both in terms of everyday life and of the language - and, as is well known, even in Moscow taxi drivers do not speak English, and a Chinese tourist cannot always get a translation of the restaurant menu.

Thirdly, in our “digital world” they should be able to comfortably receive information about the country, its cultural sites, routes, prices, menus, etc. using their gadgets.

All these needs are organic and that is why the role of tour operators is so important today. They handle most of these problems if not all of them, bear responsible for tourists and provide them with services which cannot be found in the “open market”.

- And in conclusion I would like you as experts in inbound tourism to give us your forecasts for this year ...

- If we extrapolate the results obtained in the first quarter to the whole year, then there is a reason for optimism. It is slightly better than the last year. A number of inbound European markets have notable rallied – Germany, for example.

But still, this year is most likely to be tough for inbound tourism. Firstly, the ruble has strengthened thus increasing the price of tours for foreigners. Secondly, there is a rather acute shortage of places in hotels in Moscow and St. Petersburg, the key cities of the incoming markets, and, accordingly, the price of accommodation is going up in the season. This is a pressing concern for St. Petersburg, though we are gradually resolving this problem for our tourists.

Thirdly, the recent tragic events - I mean terrorist attacks – may also entail at least a temporary decline in inbound tourism, especially in tourists from Asian countries who have been choosing Russia mostly as a safe destination. The future will show how these factors will influence the situation, but we hope for its positive evolution.