In a year marked by global upheavals, the Russian travel & tourism industry faced a significant contraction, shrinking by 16.2% in 2022 to a valuation of $38 billion. This decline, largely attributed to the geopolitical tensions stemming from the Russia-Ukraine conflict and ensuing economic sanctions, has presented numerous challenges for the sector. Despite these setbacks, projections for the future are optimistic, with forecasts indicating a surge to $90.2 billion by 2027, marking an impressive 137.3% growth since 2022.

The hotels & motels segment leads the industry, accounting for 49% of its total value, highlighting the sector’s reliance on accommodation services as a cornerstone of travel & tourism in Russia. The industry’s significant role within the European context is underscored by Russia’s 4.2% contribution to the continent’s travel & tourism industry value.

Adapting to Change: The Competitive Landscape

The Russian travel & tourism market is characterized by a blend of large international entities and smaller, niche players. This mix fosters intense competition, further heightened by the entry of foreign competitors and the advent of online platforms challenging traditional operators. The market has seen notable exits and operational pauses from U.S. brands in the food service sector due to the ongoing geopolitical conflict, shaking up the competitive dynamics and impacting the Russian food service industry.

Market Dynamics and Strategic Responses

The downturn experienced in 2022 has set the stage for a period of recalibration and potential growth, driven by a series of government interventions aimed at revitalizing the industry. These measures include extending visa-free travel, increasing flight numbers, and renewing e-visa programs for several countries. However, European air bans on Russian flights pose a significant barrier to restoring tourist flow and revenue streams for Russian travel operators.

The recovery trajectory for the travel & tourism industry is bolstered by Russia’s rich cultural and geographical diversity, from historic cities and cultural monuments to its expansive landscapes spanning 11 time zones.