Online travel players already hard hit by Covid-19 now face additional challenges from the Ukraine-Russia conflict. Many have chosen to cease trading in Russia and, while most expect minimal impact, greater challenges are apparent as a direct corollary.
Travel players follow suit by suspending operations in Russia
The news of Russia invading Ukraine at the end of February triggered a number of international sanctions and cessation of trading to the country from a long list of states and brands worldwide. The catalogue of brands includes some of the world’s largest online travel players. For example, first mover Expedia Group, and its Vrbo vacation rental unit, ceased offering travel to and from Russia. Similarly, Booking Holdings, Airbnb, and eDreams have suspended bookings in Russia and Belarus. Intrepid Travel is not currently operating any tours that visit Ukraine or Russia, and G Adventures has cancelled all tours in Russia until the end of 2023.
Largely minimal impact, but greater challenges apparent
Overall, industry players largely report that the impact is expected to be minimal. Expedia does not have a substantial amount of Russia-related business and the move to cease in Russia is largely symbolic. In an SEC filing, Booking Holdings reported that bookings in Russia and Ukraine combined are “a low single digit percentage” of total gross bookings while bookings to Eastern Europe, including the two countries, represent “a high single digit percentage” of gross bookings. The company also said, in the week through 6 March, that room nights were down approximately 10%, compared to 2019, with the drop being attributed to the conflict.
However, greater challenges are apparent as a by-product. Russia’s actions have prompted a rise in oil prices, which could have a knock-on effect on flight prices. This is being further exacerbated by longer flight paths to avoid Russian airspace, and will likely increase the cost of holidays overall. As per a GlobalData Survey*, consumers are already concerned about their financial situation, with 85% of global respondents indicating that they are either ‘extremely’, ‘quite’ or ‘slightly’ concerned. Rising costs will likely further delay travel recovery. Furthermore, the conflict will have knocked traveller confidence, particularly for travel to and within Europe. Many travellers are likely to wait and see how the situation in Ukraine evolves, and there will be additional concerns regarding possible delays and cancellations of flights, trains, and cruises, as well as the potential for border closures.
Compounding woes for the travel industry
Optimism for the return of spring and summer international travel seemed high. The travel industry, hit hard by Covid-19, had seen steady improvements towards the latter half of 2021. High vaccination rates, coupled with falling Covid-19 infections and the end of stringent quarantine requirements, signalled that 2022 would be the year that international travel started to recover in earnest. Then the Russia-Ukraine conflict happened. While it may still be too early to determine the broader impact of the conflict between Russia and Ukraine to the travel industry, undoubtedly, it will be felt. Whether through the loss of revenue owing to an absence of Russian and Ukrainian tourists or, more broadly, from a new cloud of uncertainty for travel. For now, the travel industry and international travel are relatively insignificant collateral damage from a terrible war. Nevertheless, ongoing conflict will only compound the woes of travel industry players.
*GlobalData Q4 2021 Consumer Survey – 22,074 Respondents