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Profi.Travel will bring Bollywood to Russia

Interview with Profi.Travel СЕО Alexey Vengin.
The Head of Profi.Travel has shared his thoughts on how to manage the crisis in the travel industry, where the market is going and what changes the market players should already prepare for.
Alexey, the travel industry is among the most affected by the pandemic - the clients have no money, and a lot of tourism-related projects are frozen. How comes that Profi.Travel has managed not only to survive, but also not to remain in the red in such conditions?

It may be just luck (laughing). Twice! But seriously, it's still a strategy. Firstly, we've decided to focus on online activities at the very beginning of our work. For instance, most of the travel exhibitions started to refuse from offline format in 2020 only, while Profi.Travel has been running them online for over 6 years. In 2020, we have already reached a new level: now we know how to make them no less effective than offline events. They can be even more efficient considering time and money savings, and also wide coverage that can be immediately converted into real negotiations and contracts. This became especially evident during our RED exhibitions on inbound tourism, where we've organized real networking and face-to-face meetings. I am sure this is the format of the future. The point is not only that the restrictions will remain with us for some time, I believe the market itself will never be the same again, there would be new traditions and rules. For example, five years ago no one used to order a taxi through the app, but nowadays nearly everybody does it. The processes in the exhibition business are just the same.

Secondly, we have always focused a part of our work on domestic (and inbound) tourism, so in 2020 when this topic became notably relevant, we already felt like fish in water. Generally, in this regard not only Profi.Travel is lucky, but the whole country: we have a large and promising domestic market, unlike many others, where everyone is sitting at home and the travel industry is going bankrupt. Perhaps, in the whole world today only Russia, China and the United States can boast of the fact that airlines continue to work actively, and the tourists travel around their country. This greatly helps the travel business, gives a chance to earn for the hotels, places of entertainment, carriers and everyone in the industry who were able to reorient themselves to the domestic segment.
If not the pandemic, would the domestic market be able to achieve this level of development?

In Russia it's already a system that any good project starts with a crisis. Let's recall 2014 - of course, we remember the Olympic Games, the renovated Sochi and the Krasnaya Polyana, which was created from scratch. But a spurt in domestic tourism happened due to the economic and political crises. It was taken seriously for the first time then, the promotion of the regions has begun, the first charter flights have been launched. The market received a powerful boost of energy and continued its development for the next six years. In 2020, by coincidence, the crisis became the driver of new growth again. Although the losses in the travel business are also significant, now we have a formed basis to develop the market in the next 5-6 years. We saw the start of this process in the summer and now observe its continuation in the winter: the tourist flow to those regions that managed to offer an interesting tourism product has increased significantly. Basically, we are talking about interregional tourism, for the first time so many travelers went on vacation to their «neighbors». The first charters flew to non-beach destinations - Buryatia, Kaliningrad, Novokuznetsk, Murmansk. All this launched the following development stages: investors came to promising locations, businesses were able to receive grants for the most interesting projects, and the legislation began to change.

Some regions have managed to push tourism development, and some of them did not take advantage of such a chance. How can you evaluate the role of local authorities in this sense?

It is difficult to overestimate this role. I can give two examples where the regional authorities work was especially noticeable - the Republic of Buryatia and the Tyumen region. Essentially, the administration took on the role of a management company, which determines the target audience and helps the business to build or adapt their travel programs for it. The authorities of Buryatia, for example, realized that their consumers are tourists from Moscow, who can take a charter flight by a large tour operator. They helped to establish a dialogue between the federal player and regional business and launched subsidized flights. As a result, this is the second year when charter flights will fly to the region.

Another example - the Tyumen region has been developing its tourism product for several years, and of course, in 2020 it has shown rapid growth. It's one of TOP-10 regions that received the most significant influx of tourists and income in the first cashback wave. This is the result of the fact that the region decided to invest in three clearly defined areas, but not on the wide audience and dozens of different routes. Firstly, this is Siberia with a cool excursion program including Tyumen and Tobolsk. Secondly, an oil-related topic. Could you imagine that some tour operator would open its own oil rig to send tourists to it? The Tourism and Promotion Agency of Tyumen Region managed to find such an object nearby, turn it into a real tourist site and start organizing group tours there. The third thing they did was to position themselves as the main Russian thermal resort. Hot springs have been developing there for a long time, but they were mainly known to neighboring regions. Now they also have programs for investors and better promotion. I am sure that a competent approach can shape such a product in any region - after all, each has its own interesting stories, its own nuances and zest.
The role of regions is clear now, but how do you assess the help of the federal authorities provided to the travel industry?

Perhaps, for the first time we've noticed the work of the Federal Agency for Tourism not only in the segment of control, as it has always been, but also in the development sphere. Most of the charter programs of 2020 were launched only due to the fact that Rostourism has obtained subsidies for them. In addition, the Agency helped to establish a dialogue between tour operators and local companies, to find their common interests. This is essential, as the business itself is scattered, each has its own commercial goals, it is difficult to unite in such a way that the territory begins to grow explosively. In general, the last half year trend is that tourism-related topics make up a significant percentage of the news flow that comes from the authorities. That's great! Obviously something might not work out the first time, for some projects you have to put a lot of effort - from legislative to economic. But I don't think that anyone will doubt the benefit of the cashback program, let's say. It attracted tourists, gave money to regions and businesses in difficult times. As any new project developed in time trouble, it has some rough edges. However, the project took place and worked out twice, it means a lot.

Rostourism has a clear understanding of the business problems associated with increasing the flow, and options for their solution as well. For example, the lack of quality accommodation facilities in the regions. The regulator began to drive the topic of glampings - cheap and easily constructed buildings that can be placed where it is not possible to build a stationary object. This is a profitable story for business, it received a serious development in 2020. From my point of view, this is also the Agency's achievement.

Another tool for real business support, which was used by the Federal Agency for Tourism, is a competition for awarding grants for tourism projects. Not everything went smoothly here either, but the main thing is that the topic was not discussed behind the scenes for the first time, and all the market participants really knew about it, everyone could take part. As a result, even relatively small projects received money from the state. This is a very cool story! Three million RUB for the route or object development is a lot of money for a small regional entrepreneur. And for the country the whole program is a penny. Undoubtedly, it needs to be more transparent and elaborated, but the most important thing is that this support has already helped many people.

Alexey, is there a chance for those regions that did not manage to make such a big leap forward during the pandemic to do it in the next year or two? Tour operators' air resources are limited, and in order to deliver charters, they need to understand if they can increase demand, and the local infrastructure can withstand an organized flow.

I would not rely on operators and charters only, in fact, interregional tourism has been and will remain the leading one in such a large country as Russia. Our key suppliers of tourists are neighboring regions, and the main transport is cars and trains. For example, in Altai, 90% of travelers in 2019 and about 80% in 2020 arrived by car from Siberia.

It is clear that tour operators are launching flight programs to those regions where a large tourist flow is guaranteed. Why did everything work out with charters to Buryatia? Because of Baikal, which is known all over the country. I doubt such a charter program to the Chelyabinsk region, for example, would be successful, there is no such brand. All in all, new flights can be launched successfully to «wow»-places: Baikal in Buryatia, the Black Sea in Sochi, Sheregesh in Novokuznetsk. Mass tour operators will not enter every region, and in fact not all the regions need charters - the target audience of the majority is nearby, in neighboring regions.
My personal discoveries of the past year were the Krasnoyarsk and Primorsky regions. I went on a cruise ship for a week in the Krasnoyarsk region, covered more than 2 thousand km - and still in one region! Can you imagine how many interesting things are there? Krasnoyarsk itself is a clean and beautiful city, with a huge number of attractions for the city breaks. There is excellent northern cuisine, restaurants that are not inferior to the most popular capital one's. Primorsky Krai with awesome Vladivostok amazed me as well. People think the sea is cold here and you cannot swim, but that's not true! The water temperature is excellent, the beaches are really cool, so a full-fledged sea vacation is possible in Vladivostok. Of course, it's not the same as a Turkish option - there are no large hotels, developed infrastructure, but the city itself is impressive. And again - excellent gastronomy with a lot of seafood, with a mix of Asian cuisine.

At least these two regions can build their solid tourism way with proper positioning and competent work with a tourism product, brand, and logistics.There are plenty of such examples. The Samara region is interesting both in summer and in winter; Kostroma, which is not very far from Moscow; Murmansk has a huge potential for tourist traffic growth, because it's the most accessible of the Far North regions. Many places have really good potential, it's essential to put all the puzzle pieces together: the work of regional authorities, availability and capability of infrastructure, or the investors' desire to develop it, as well as the attitude of the distribution chain (tour operators and agencies) to sell this product.

How to understand if the region needs charters or not, who is its audience, what flows can it count on? Otherwise, it can happen that the lack of infrastructure will cause a low tourism flow, so the investor will not catch the region's potential and will not build hotels as a result. The cost of making a mistake can be high.

Of course! In order not to make a mistake, one should start counting the real tourist flows. For example, the Golden Ring tourists' are counted based on the data of the collective accommodation facilities of the cities included in the route. But everyone understands perfectly that 30 counted million is not a correct number: one tourist can be counted 5 times, besides there are also business travelers and just people staying at the hotel for any reason. But why are these calculations still needed? Firstly, to understand the tourism contribution to the economy in a certain region, so it can be supported by the federal authorities. Secondly, to see whether there are enough hotels or they are underutilized, etc. At the same time, it is necessary to know how many people stay not in hotels, but in individual accommodation facilities of the private sector.
How to count those tourists who do not stay in hotels, how to track them and sort out those who stay in the private sector not for tourism purposes, but to visit relatives, for example?

Everyone has a mobile phone today, which means there is a history of movements, Google requests, etc. Our IT giants aggregate this information, and its analysis allows us to understand whether it is a tourist or not. Plus we can link the tourist's portrait to the visited region: gender, interests, income. Profi.Travel has been engaged in analytics for several years already, but since last year we have been offering travel analytics as a separate product. We work with Mail.ru Group on an exclusive basis, their technologies allow to get a very detailed tourist portrait with over hundred different characteristics. In addition, we can see these data in dynamics, for example, in retrospect five years ago. As a result, each region can get a specific portrait of its tourist, including different target markets, to see the potential audience and to choose who to bet on.

It may turn out that the tourists visit the destination for active recreation, but additionally they are interested in national cuisine, or in types of recreation that are currently not presented in the region. This may become the basis for the development of additional products or changes in the region's positioning. If the tourist flow passes the region in transit, "Why?" question immediately arises. Maybe the region needs more hotels, restaurants, entertainment facilities and tourist locations. This helps to make conclusions for investment points, as well as for marketing promotion strategy. Or if the portrait shows that tourists are emotional, then advertising should be aimed at emotions as well.

Profi.Travel Analytical Center has already conducted two studies this year: for the Altai and Sakhalin regions. These regions have received a wealth of insights into consumer behavior and what products they should develop. Mail.ru Group technologies allow counting tourists even where there is no mobile operators coverage: the photos geolocation is analyzed, then a heat map is built on its basis. These opportunities allow you not to act blindly and not rely only on experts' opinion, but to see and understand your tourist indeed.

Now let's talk about the future of inbound tourism: the e-visa system is being launched this year. So when the borders open, we will see a completely different market. What is it going to be like?

We are facing the beginning of a new era of inbound tourism. In Russia, since the Soviet times, foreigners only knew the Golden Ring route, Moscow, Saint-Petersburg, Transsibirian and Baikal a bit. That's all, nobody actually travelled.

So, from 2021 this whole scheme will be reset. Every tour operator, region, hotelier, or a person engaged in domestic tourism in Russia will have the opportunity to receive foreigners, as far as a visa becomes available. Anyone from 80 countries of the world can come both individually and in small groups, which was not the case before. This is a very promising market segment. The question is who will navigate it faster.
So when there is no inbound tourism at all, you're holding two RED exhibitions at once - for India and Germany markets. Do you want to give the regions and travel companies an opportunity to orient themselves?

Exactly! Inbound tourism is always long-term planning, especially in Europe. The contracts are signed here two years in advance, and tourists start booking their trips a year in advance. Therefore, if you want to do something in 2021 or even in 2022, marketing activity had to start already in 2020. Moreover, there is a great reason - e-visas. Russia needs to promote this topic to all available markets. So we did it - last year we held Russian Expo Days online exhibitions for India and Germany.

We got very interesting insights: travel business received such detailed information about tourism products from St. Petersburg to Kamchatka for the first time, and was ready to send tourists groups even now (of course, if the borders were open). To be honest, we did not expect such feedback: now we receive a lot of requests, sometimes unusual ones, for example, about organizing Indian films shooting in Russia.

Really? So you'll bring Bollywood to Russian regions?

Yes! Well, of course, we will not bring them by ourselves, but by redirecting them to the region's representatives. We also want to involve Rostourism in this story so that they can help. By the way, in Russia there is a system that allows the region to receive a tax refund when filming a movie - so everyone is interested. Moreover, this is advertising of your destination all over the world or in a specific country. In addition, film tourism can also appear from this, when travelers start to visit filming locations.

This is really curious! What other openings from online exhibitions you can share?

There were plenty of them, and in fact not always pleasant ones. For instance, we found out that regional businesses are often simply not ready to work with foreign ones. Many do not have presentations in English, I'm not even talking about German. And Germany is one of the largest suppliers of tourists. It turned out that serious work is needed with host companies, hoteliers, administrations, in order for them to understand the importance, significance, growth potential in the field of inbound tourism. After all, it is no less important than domestic. From a financial point of view, it is even more important - it is not just money circulation within the country, but the direct export of services.
What markets are next for online exhibitions?

In 2021 we will definitely have Germany and India again. We saw their interest and willingness to work together, we now want to attract new regions to the exhibition, which also have the potential to develop tourist flows from these countries. In addition, we plan to enter China and France.

Alexey, in your answers you've already given lots of forecasts and tips on the future market development. However, let's still summarize: in your opinion what will happen to the tourism market in Russia in general? Obviously, the old schemes are no longer so effective, the tour operating itself and tour agent's role are being reformatted. What should companies do to save their business?

I guess it's quite clear in regards to federal tour operators, their steps are visible. First, they quickly found their bearings and began to develop domestic tourism products actively. Secondly, they are betting on the growth of inbound tourist traffic, you can see that by ANEX Tour activity - they've bought Intourist for this purpose as well. Obviously, only those who can become more flexible to the tourist needs will remain in the market. Who will be able to think out their boxes and previous schemes, develop GDS-tours direction, work harder with individual products. Another very important topic is the trust of tourists. Who can take it back by making quick returns so that customers do not have the feeling that they have been left without a trip and money.

Concerning local tour operators that shape the tourism product on the places, this year they have all the opportunities for growth and reforming their activities. For the first time, federal players are truly attentive to domestic tourism, tourist flows have grown (and this is just the beginning), and with e-visas launching the tourist flow from abroad will increase. This is a perfect chance to find your niche, define a consumer and create a unique offer.This can be done in any city or town: you can come to a federal tour operator with your product and profit from receiving his clients. But you need to understand what exactly the federal company may be interested in, what volumes it can have, what will attract a tourist? Start doing this systematically. In the second year, such activities will definitely give results.

As for travel agents: people will always need a tourism consultant. There is always a category of clients who do not want to waste their time on the tour choosing, or who are afraid to make mistakes and so on. Competent agents who have studied the internal product are making money even now. Less than it was before, but do not forget that the market will continue to be structured, new interesting programs, objects, regions, tourist flows will also only grow.

So I wish everyone to start working in 2021 with optimism! Don't forget that if something fails, then somewhere there will definitely be growth. We see this in the example of domestic tourism, and soon we will notice in inbound tourism. I wish everyone not to despond and to see the crisis as opportunities, not losses. Be flexible and non-trivial! Happy New Year everyone!
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