GONE OR STAYED?

After the start of a special military operation in Ukraine (February 2022) many foreign companies announced their withdrawal from the Russian market. But not all of them actually left the country. A significant part of the foreigners continued their activities, and some of those who left began to return to the Russian market. Others never left at all. The list of brands that have left the Russian market is not final, it will be updated regularly, as many companies have taken a wait-and-see attitude.
We will explore the companies related to the tourism business.

HOTEL BUSINESS
President of the National Union of the Hospitality Industry (OSIG) Mr. Alexey Volkov noted: “Only brands are leaving. As a rule, 99% of hotel facilities are owned by Russian companies or beneficiaries. All the staff operating the existing facilities will continue their job.”

Mariott International
    Marriott International currently suspended investment and the opening of the new hotels in Russia. According to Forbes in 2019 the hotel chain was named "The Largest Hotel Chains in Russia". The company owned 29 hotels in 13 regions of the country. Five hotels under the Marriott brand that operate in Moscow belong to the Safmar group of businessman Mikhail Gutseriev. The Marriott Tverskaya, Marriott Royal Aurora, Marriott Grand Hotel, Sheraton Palace and National Luxury Collection Hotel are managed by the British company Interstate Hotels & Resorts. These hotels continue to operate in Russia without changing their name.
But the Moscow Ritz-Carlton hotel, which is part of Mariott International, decided not to violate international law. Its management announced that it would become an independent hotel under a new name. The hotel now operates under The Carlton Moscow brand. According to Oksana Leonenko, the hotel manager, these changes had little effect on the hotel's operations. The legal entity has not changed, the owners have remained the same. Standards, procedures, culture and service for guests have remained the same. The tools of some working procedures have been changed. “We are not on the general Marriott.com site and cannot earn Marriott Bonvoy points. Otherwise, guests receive all the privileges under the previous loyalty program, and we launched our own website,” commented Oksana Leonenko.

Hyatt 
    March 2022 the Hyatt hotel chain announced the suspension of development activities and any new investments in Russia, where the company had six hotels. The corporation ended the contract with the Russian owners and banned the use of its name and brand. At the same time, Hyatt management noted that it “hopes for a speedy normalization of the situation and complies with the sanctions regime”.
So, the Moscow hotel Hyatt Regency Moscow Petrovsky Park had to change the sign urgently - it is no longer related to the Hyatt brand and is now called the Petrovsky Park Congress Hotel.
    Hyatt also stopped managing one of the largest hotels in Sochi - Hyatt Regency Sochi, which changed its name to Grand Karat Sochi.
Moscow's Ararat Park Hyatt on Neglinnaya said it would use the old name, but write it in Russian: "Ararat Park Hyatt Moscow." The owners of the building removed the logo of the chain, made a new website and continue to work as if nothing had happened, not responding to claims from the international hotel operator.
    There are also Hyatt hotels in Rostov-on-Don and Yekaterinburg. Most likely, soon they will also start working with a new name.

Hilton
    Hilton announced the suspension of investments and the opening of new hotels. All hotels already operating in the country will continue to operate under their former names.
    Hilton Russia has 29 hotels in Moscow, St. Petersburg, Ufa, Tyumen, Novosibirsk, Krasnoyarsk, Orenburg, Kazan, Samara, Nizhny Novgorod, Volgograd, Kaluga, Voronezh, Vladikavkaz, Krasnodar and Novorossiysk.

Four Seasons Hotels and Resorts
The hotel chain left Russia, however it has allowed the hotels to operate under this brand. According to a Four Seasons representative in Moscow, the company has suspended the direct management services for the Four Seasons Hotel Moscow and Four Seasons Hotel Lion Palace St. Petersburg, which now continue their independent operations. Rejection of direct control, as in the case of The Carlton Moscow, means that hotels must run their own software and create a new web-page independent of the corporate platform.

TOUR OPERATORS
    The Russian tourism industry has just recovered after the pandemic crisis, as it fell under the rink of Western sanctions. Due to the airspace closure, Western countries have become inaccessible to Russian tourists, airlines are threatened with the loss of leasing aircraft, and the unstable ruble exchange rate leads to higher prices.
    Meanwhile, Russian tour operators, including major international brands (Coral Travel, Fun & Sun/ex. TUI Russia, Anex) continue their work in Russia, adopting to modern realities. In this regard we distingue 2 trends: domestic tourism boom and “turn to the east” as for foreign destinations.
    The TOP-10 foreign destinations included Turkey, UAE, Thailand, Maldives, Egypt, Qatar, India, Seychelles, Israel, Indonesia.
In general, almost all the main key and mass non-European markets in January-March 2023 showed a very significant increase - even when compared with pre-Covid times. This “turn to the East” made it possible partially to compensate for the narrowed choice of foreign destinations among Russians and the actual loss of European markets.
    TUI Group, which is the largest travel company in Europe, commented on the impact of extensive anti-Russian sanctions on operations. The statement was made due to the fact that almost one third of the business belongs to the structures of Russian businessman Alexei Mordashov, who was on the US and EU sanctions list. Mordashev owns 34% of the company through the Cypriot Unifirm Limited. The cost of this package is estimated at $1.4 billion.
    The TUI Group said in a statement on the matter that Mordashov has been appointed to the TUI Supervisory Board and his term expires in 2025. The board of directors, not the supervisory body, is responsible for the business and activities of the company.
“Alexey Mordashov owns 34% of the shares. The remaining 66% is owned by sovereign wealth funds and individual investors from the EU and the US. The executive board is located in Germany and we have a three-tier system consisting of a board of directors and a supervisory board which provides general policy, has a total of 20 members. Mr. Mordashov is just one of them,” said a representative of the TUI Group. He also added that Mordashov does not participate in the formation of the strategy and operational management of the company: the shareholders exercise their rights at the annual general meeting. “In this regard, we do not see any impact on the company and operational issues,” the statement said.
At the meantime the ex. TUI Russia is operation in full under the name of Fun&Sun.

TRAVEL EXHIBITION 
British trade show organizer Hyve Group
    Hyve Group Plc (formerly ITE Group) is on the Russian market since 1991. In Russia, the company runs 19 industry exhibitions, including the MITT travel fair, one of the most prestigious in the country. In 2021, the company received 27% of its revenue in Russia.
In March 2022, Hyve Group announced that it was selling its business in Russia and intended to leave the Russian market. As a buyer was named a company from the UAE Rise Expo. The deal was finalized in May 2022 for £72 million. And in December, the top manager of the English holding reported that "the business has been cleared of risky assets."
    Hyve Group also announced that the Russian company Hive Expo International LLC, later renamed ITE Expo International LLC, will now directly organize international exhibitions in Russia. The company has two founders: the British company Hyve Enterprises Limited with a share in the authorized capital of 99.999975% and the Dutch company ITE International Holdings B.V. with a share in the authorized capital of 0.000025%. The total authorized capital of ITE Expo International LLC is around 40 mil euro, its General Director Dmitry Georgievich Zavgorodniy is a Russian citizen.
The next MITT is scheduled for March 2024.

NATIONAL TOURISM BOARDS
    Many of the foreign tourism offices operating in Moscow were closed or “paused” last spring. 
Among them is the representative office of the National Tourist Office of Germany Deutsche Zentrale fuer Tourismus (DZT), which has been actively functioning until recently. Alla Belikova was its head since 2012. Now she is managing the Berlin project Perspective, which is engaged for the employment of Ukrainian refugees in the German hotel business. 
    It is noteworthy that not all national tourism offices of "unfriendly" countries have been closed. Thus offices of Austria, Italy, Cyprus, France and Japan continue working in Moscow. The Alliance Française, which promotes French language and culture, also continues to work in many Russian cities.

HOTEL AND ACCOMMODATION BOOKING PLATFORMS
    In 2022, the Russian online market experienced revolutionary changes - large Western booking systems – Booking.com and Airbnb - left it, and all three leading global distribution systems (GDS) - Amadeus, Travelport and Saber lost a significant market share. Travel agencies in Russia can still use the Amadeus Travel Platform to book flights (excluding e.g. Aeroflot), hotels and other travel-related services, but new commercial projects in Russia are currently on hold and no new contracts are being signed on the Russian market.
Booking.com and Airbnb were the most famous and convenient platforms for booking tourist accommodation in Russia. According to Kontur-Hotel data from a private chat for hoteliers, Booking accounted for 78% of all bookings in Russia.
At the same time, guests from Russia can easily book any foreign hotels from all over the world. Despite this the guests are not able to pay them with Russian credit cards. There are some exceptions in the form of "Mir" and "UnionPay" cards, but they are rarely accepted abroad.
    Due to sanctions, Agoda, Momondo, HotelsCombined do not operate for Russian clients any more. Hotels.com service stopped working in the country early February 2022. Travelers can no longer find accommodation in Russia on these platforms.
At the same time, Booking.com and Airbnb have several alternatives. These are three large Russian aggregators – Ostrovok.ru, Yandex Travel and Sutochno.ru, as well as the international OneTwoTrip, which is represented in Russia by White Travel LLC. The sole founder of White Travel LLC is the British company OTT Service Ltd. 

AIRLINES
    After the start of the special military operation in Ukraine, the US and EU countries closed their airspace to Russian airlines. As a mirror measure, Russia officially banned the use of its airspace (flights from Russia, to Russia and transit flights) by airlines from 37 countries. The list is published on the official website of the Federal Air Transport Agency of the Russian Federation (Rosaviatsia), it currently includes: Austria, Albania, Anguilla (overseas territory of Britain), Belgium, Bulgaria, British Virgin Islands, Great Britain, Hungary, Germany, Gibraltar, Greece, Denmark + Greenland + Faroe Islands + Territorial Sea, Jersey, Ireland, Iceland, Spain, Italy, Canada, Cyprus, Latvia, Lithuania, Luxembourg, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Finland, France, Croatia, Czech Republic, Sweden, Switzerland, Estonia.
    As for the EU countries, the exception is Serbia, which has direct flights with Russia (Air Serbia). Turkey and the United Arab Emirates have become the largest interchange hubs for air traffic between the Russian Federation and Europe.
    As for the "unfriendly" Japan, after the start of a special military operation in Ukraine, it stopped operating direct flights with Russia, while the airspace of this country is not closed to Russian aircrafts, nor is Russian airspace closed to Japanese aircrafts.
    Airlines from Russia have lost many destinations, but increased the number of flights to Thailand, Turkey, the United Arab Emirates, Armenia, Kyrgyzstan and Tajikistan, wrote Bloomberg. May 15 after a 4-year pause Russia resumed flight program with Georgia. According to Cirium, Russian airports now serve about 270 international flights daily. At the same time, when flying to Asia and the United States, Western companies have to fly around Russian airspace to make the flights longer and costlier. According to experts, the losses to Western airlines are estimated at $70 billion. Benefits are received by two market players - Asian and Middle Eastern airlines, whose competitors are deprived of the Russian market.

We will follow the situation furthermore and inform you about the market changer in future publications.