War between Russia and Ukraine: Impact on Travel and Tourism

How the Russia-Ukraine war impacts travel and tourism: analysis and forecasts.

The brutal war of Russia against Ukraine, while primarily a humanitarian tragedy, has caused widespread economic damage worldwide, not least in travel and tourism. Among them, Russian and Ukrainian tourists typically spend about 45 billion USD annually on outbound travel, most of which occurs in emerging European countries. Here’s an in-depth analysis from Breaking Travel News on the war’s consequences for the tourism sector.

The Covid-19 pandemic had just subsided when Russia invaded Ukraine, posing yet another challenge to the travel and tourism sector across all emerging Europe.

According to Economist Intelligence Unit, the war will impact the European tourism industry in four ways:

1. a loss of Russian and Ukrainian tourists;
2. restrictions on airlines and the use of airspace;
3. higher food and fuel costs;
4. a significant blow to traveler confidence and disposable income.

The loss of Russian and Ukrainian tourists, who previously spent a total of 45 billion USD per year before the Covid-19 pandemic (about 8% of the global total), will impact many countries in emerging Europe. However, some regional experts also see the positive side of reduced dependence on tourism, especially from Russia.

Loss of tourists in the Baltic countries?

Estonia, Latvia, and Lithuania may potentially lose 10% or more of their annual visitors due to the effective ban on Russian travelers, as more countries in the Schengen area are choosing to halt the issuance of tourist visas to Russian passport holders.

“The war in Ukraine came as we were still recovering from the impact of the last two years, and the tourism numbers were not yet at pre-Covid levels,” says Kadri Gröön of Travel Estonia to Emerging Europe.

She indicates a 50% decrease in the number of cruise ships docking in Tallinn as a direct effect of the war. She also states that this is not due to fear but because ships can no longer visit St. Petersburg, a key attraction for cruises in the Baltic Sea. Optimism remains, however, about the future of Estonia’s tourism industry.

“We have heard of the war’s impact as a reason for canceling group trips, but we have not seen the war’s direct impact in tourism statistics. The number of passengers has gradually improved each month,” she states.

Regarding cruise ships, she notes that ships arriving in Tallinn will stay longer than before. Additionally, more cruise ships have visited other ports compared to previous years, such as Estonia’s largest island, Saaremaa.

Similar situation in Latvia.

“The Covid-19 pandemic and the war in Ukraine have impacted the tourism sector, reducing travelers from North America, Asia, Russia, Belarus, and Ukraine,” says Janis Kovalevskis of Latvia’s Investment and Development Agency to Emerging Europe.

“The war in Ukraine had an immediate impact on reservation data for the spring and summer seasons, especially for the group segment. Many group bookings made were canceled in March and not resumed for the summer. According to estimates from the tourism sector, cancellations are around 60-70%. Currently, inbound tourism mainly relies on individual travelers and small groups, including domestic travel and domestic and regional business travel,” she explains.

She states that to mitigate the effects of the war, Latvia’s tourism marketing strategy has been revised in close collaboration with industry stakeholders to redefine markets and priority products.

“Due to the geopolitical situation, a large part of our tourism marketing budget is now invested in campaigns in our target markets in Scandinavia and Western Europe. Most tourists come from Lithuania, Estonia, Sweden, Finland, Germany, and other European countries,” Kovalevskis adds.

Loss of tourists in the Balkans?

It is anticipated that Montenegro—which has attracted wealthy Russians to its exclusive resorts and ports—will see a sharp decline in tourism-related revenue, although some Russians still travel to the country via Serbia. Belgrade is one of the few European airports still open to flights from Russia.

In May, the World Bank downgraded Montenegro’s economic growth forecast for 2022 from 5.9% to 3.6%, partly due to the expected decrease in high-spending tourists.

“Russia and Ukraine have been among Montenegro’s most important markets in recent years, as they ranked in the top five sources of tourists. Before the war, tourists from Russia and Ukraine accounted for 15.8% of foreign visitors and 21% of overnight stays,” says Milena Vujović of Montenegro’s National Tourism Organization to Emerging Europe.

She notes that the country’s tourism industry has undergone significant changes due to this crisis, but managed to have a successful season by attracting tourists from the region, Western Europe, Israel, Kazakhstan, and emerging markets like Saudi Arabia and Egypt.

“Based on our data on tourist numbers since the beginning of this year, we are experiencing an average growth of 9.91% compared to the same period in 2019, pre-pandemic,” Vujović states.

The Bulgarian Black Sea was another important tourist destination for Russian and Ukrainian travelers, with Deutsche Welle Bulgaria estimating that over 350,000 Russians own property by the sea in the country.

A government program to promote tourism and aid some of the 297,000 Ukrainian refugees who had settled or passed through Bulgaria by the end of May included payments of 20 euros per day for food and accommodation to hoteliers hosting over 40,000 refugees in seaside resorts.

However, Ilieva states that the uncertainty over the program’s end date has made it difficult for participants to accept bookings. Bulgaria, Estonia, and all other eastern EU member states currently have the lowest travel alert status (Level 1) issued by the U.S. State Department.

Pubblicato in TravelNews