June 3, 2023

Entrepreneurs’ expectations for a high tourist flow did not come true: the number of guests on the long May weekend did not reach last year’s and, all the more so, pre-Covid indicators. Few foreigners do not do the weather, wealthy Russians are tired of domestic tourism and have gone abroad, and domestic travelers have not found money for tickets. But the main culprit is the calendar.

On the May holidays of 2023, 770 thousand guests visited St. Petersburg, the Association of Tour Operators of Russia (ATOR) reports on May 12, citing data from the city committee for tourism development. Among them were about 570 thousand tourists and about 200 thousand sightseers – those who came to the city for one day. For comparison, last year about 560,000 guests visited St. Petersburg during the entire period of the May holidays.

But business did not notice the growth reported by officials. The occupancy of hotels in the northern capital for the May holidays turned out to be lower than in the previous two years, follows from the data of the Hotel Advisors analytics system. The peak of demand fell on May 6 (91.8%) and May 7 (94.1%), there were also many guests in the last days of April (78.1% – on the 29th and 74.1% – on the 30th). On these dates, the indicator exceeded the level of 2022 and 2021, but was noticeably lower on other dates. So, on May 9, the rooms were only 45% occupied, while in the past two years the occupancy rate was over 60%. On May 1, 55.7% of the rooms were occupied, although in the past two years about 90%.

As for the yield per room (calculated from the occupancy and the average price), on the first long weekend it was noticeably lower than in 2022, on the second – at about the same level. This means that the hoteliers compensated for the lack of guests by indexing prices.

Analysts’ conclusions are confirmed by market participants themselves. “In a nutshell, the first May ones didn’t go well, the second ones were more or less worthy,” commented Sergey Bulzov, General Manager of ROSSI Boutique Hotel&SPA.

“Worse than it should be, but better than expected,” says investor Hotel Indigo St. Petersburg-Tchaikovskogo Victoria Shamlikashvili. According to her, the indicators do not reach the level of last year and, moreover, did not exceed the pre-pandemic levels. So, the average load from May 1 to May 9 this year was 60%, in 2022 – 70%, and in 2019 – 80%.

The tourist flow was influenced by several factors, the entrepreneur explains. Firstly, the calendar failed: last year, the first and second May days could be combined, while this year there was an almost full-fledged working week between them. At the same time, there were much more guests on the longer weekend before May 9th. Secondly, whatever one may say, the solvency of demand fell: those who could afford it went abroad, and less wealthy travelers either looked for cheaper accommodation options or abandoned the trip due to the high cost of tickets. “A ticket cannot cost more than the stay itself,” notes Victoria Shamlikashvili. Emotional fatigue also affects the mood of tourists, she adds.

Flights to the most popular tourist destinations in the Russian Federation for the May holidays of 2023 have risen in price by an average of 7–10% year on year, Kommersant previously reported, citing data from three ticket aggregators. Travel abroad, on the contrary, has fallen in price.

Room rates at Hotel Indigo St. Petersburg-Tchaikovskogo was the same this year as last year, but higher than before the pandemic, the entrepreneur says. Thanks to cancellation of VAT for hotels, revenues remained flat, but margins sank due to higher costs.

More than half of the guests who came to St. Petersburg for the May holidays are Muscovites. Mostly they are individual travelers, but there were also a few groups. “But they are not an adequate substitute for tourists from unfriendly countries,” comments Victoria Shamlikashvili. Foreigners – a few. For example, at the Hotel Indigo St. Petersburg-Tchaikovskogo in May, independent travelers from some countries of the Middle East rested.

“The May holidays did not live up to expectations,” agrees Helvetia co-owner Yunis Teymurkhanli. According to him, the flow of guests was 17-20% lower than last year. But due to the fact that the price is higher, for the first long weekend the hotel missed about 10% of revenue compared to last year, and in the second it earned the same amount as last year. “But if we take the totality of holidays, the gap in revenue is 12%,” the entrepreneur comments.

Fewer tourists came, as the first and second holiday weekends were interrupted by a large number of working days, Yunis Teymurkhanli believes. But there are also market reasons. “We felt a strong rise in domestic tourism in 2021-2022, but interest cannot be maintained at a high level all the time. There is satiety from domestic tourism,” he argues. If last year the market was affected by pent-up demand due to the pandemic and the closure of borders due to NWO, now these factors are starting to weaken.

The wealthy audience of the past two years was enough to get enough of the beauties of their native country, so wealthy travelers are starting to look for other vacation options abroad, especially since there are more options.

Thus, if in past years domestic travelers replaced some of the absent foreign guests, then this is no longer the case. “The market works at 50%, there are practically no foreigners,” says the co-owner of Helvetia. Hopes for guests from the Middle Kingdom, too, have not yet materialized. “Chinese tourists are just appearing in Moscow and not much,” he adds.

The current level of bookings at SPIEF is also a matter of concern for hoteliers. If earlier all the rooms were bought out already 4-5 months before, now, a month and a half before the forum, there are still free options, although hotels are in no hurry to put the most expensive suites in the public domain so as not to “shine” prices in front of competitors. At the same time, some of the regular customers begin to “fall off”, and the elimination of even 2-4 such guests can be critical. “We had one of the guests who lived in our hotel drop out [во время ПМЭФ] the last 10 years and took more rooms for colleagues. The company simply rented apartments in apart-hotels,” notes Yunis Teymurkhanly. The entrepreneur considers such a trend towards “frugality” among the premium audience to be a “wake-up call” for the market. “Prices have reached a ceiling above which it is impossible to rise,” he concludes.

Restaurateurs are also disappointed with the May holidays. “These May ones are noticeably weaker than the previous ones. Of course, we expected more, ”comments the head of the Rubinstein Street Union, chairman of the catering committee for small and medium-sized businesses of the St. Petersburg regional branch of Delovaya Rossiya Maxim Zhukov.

According to the entrepreneur, the revenue of the association participants in May turned out to be 20-25% lower than a year ago, without adjusting for inflation. And if we take into account that prices have been indexed several times over the past year, then in physical terms the drop was even more significant.

Maxim Zhukov also explains the reduction in the flow of guests by a decrease in the interest of Russians in domestic tourism. “Last year, the population was shocked by the closure of borders and actively went to buy tours in Russia, this year they got used to it – and now Turkey, Egypt, and the United Arab Emirates have begun to buy up,” he comments.

Petersburgers themselves also parted for a long weekend, so that tourists prevailed among the guests. “There are a lot of spontaneous entries in the city center,” says the entrepreneur. 90% are Russian tourists. “The Chinese, whom everyone is waiting for, are not there yet. There were guests who spoke English, but no one knows where they come from. But foreigners are a drop in the ocean and don’t make the difference,” he concludes.

Galina Boyarkova, Fontanka.ru

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