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For Russians Abroad, a Ruble Doesn’t Go as Far as It Used To For Russians Abroad, a Ruble Doesn’t Go as Far as It Used To
(35 minutes later)
LONDON — Tatyana Khanina and her boyfriend, Dmitry Anikhovsky, were wandering around, along with hundreds of other tourists, outside Westminster Abbey and the Houses of Parliament. Muscovites visiting Britain, they were enjoying themselves the only way they could — by looking.LONDON — Tatyana Khanina and her boyfriend, Dmitry Anikhovsky, were wandering around, along with hundreds of other tourists, outside Westminster Abbey and the Houses of Parliament. Muscovites visiting Britain, they were enjoying themselves the only way they could — by looking.
“Things are so expensive, we’re just not buying anything,” she said. Mr. Anikhovsky, snapping photos as Ms. Khanina posed in front of Parliament and Big Ben in the rose light of the setting sun, said that they would just have to make do with sightseeing.“Things are so expensive, we’re just not buying anything,” she said. Mr. Anikhovsky, snapping photos as Ms. Khanina posed in front of Parliament and Big Ben in the rose light of the setting sun, said that they would just have to make do with sightseeing.
Mr. Anikhovsky, a businessman in his early 30s, said he had lived and worked in London in the past; now he was showing Ms. Khanina the city on her first trip here. “But even for coffee it’s at least double the price,” he said. “We’ll continue to go on holidays, but we just won’t buy things.,” Mr. Anikhovsky, a businessman in his early 30s, said he had lived and worked in London in the past; now he was showing Ms. Khanina the city on her first trip here. “But even for coffee it’s at least double the price,” he said. “We’ll continue to go on holidays, but we just won’t buy things.”
Ms. Khanina shrugged. “Now it’s better to buy stuff at home than come here to buy it,” she said.Ms. Khanina shrugged. “Now it’s better to buy stuff at home than come here to buy it,” she said.
The collapse of the Russian ruble — down more than 45 percent against the dollar this year — has jangled nerves in Russia, but the reverberations are being felt far beyond the country’s borders. The price of travel has nearly doubled, Russians say, pricing many people out of more exotic plans and causing them to think instead of domestic vacation spots, like Sakhalin, Lake Baikal, St. Petersburg and now, of course, Crimea.The collapse of the Russian ruble — down more than 45 percent against the dollar this year — has jangled nerves in Russia, but the reverberations are being felt far beyond the country’s borders. The price of travel has nearly doubled, Russians say, pricing many people out of more exotic plans and causing them to think instead of domestic vacation spots, like Sakhalin, Lake Baikal, St. Petersburg and now, of course, Crimea.
Elena Polobryukhova, a London tour guide, said the number of Russians booking excursions had dropped by 75 to 80 percent, compared with last year. “The situation is considerably worse than last year,” she said. “What else do you want me to say?”Elena Polobryukhova, a London tour guide, said the number of Russians booking excursions had dropped by 75 to 80 percent, compared with last year. “The situation is considerably worse than last year,” she said. “What else do you want me to say?”
Britain granted 146,588 visitor visas to Russian-passport holders in the year to September, a fall of 10.5 percent compared with the same period a year ago, according to the Home Office. But that was well before the ruble took its dive.Britain granted 146,588 visitor visas to Russian-passport holders in the year to September, a fall of 10.5 percent compared with the same period a year ago, according to the Home Office. But that was well before the ruble took its dive.
And Russians who do come are spending less, as much as 27 percent less than the previous year, said Global Blue, a Switzerland-based company that handles tax refunds for tourists coming from outside the European Union.And Russians who do come are spending less, as much as 27 percent less than the previous year, said Global Blue, a Switzerland-based company that handles tax refunds for tourists coming from outside the European Union.
Until last year, industry experts saw the rise of the middle-class Russian tourist as a driver of European recovery. In 2013, nearly 32 million tourists from Russia visited Europe, an 11 percent rise compared with the previous year.Until last year, industry experts saw the rise of the middle-class Russian tourist as a driver of European recovery. In 2013, nearly 32 million tourists from Russia visited Europe, an 11 percent rise compared with the previous year.
But the European Travel Commission expects those figures to fall by at least 10 percent this year and again the next, with sunnier destinations like Spain and Turkey bearing the brunt of the decline.But the European Travel Commission expects those figures to fall by at least 10 percent this year and again the next, with sunnier destinations like Spain and Turkey bearing the brunt of the decline.
The most popular Western European destinations for Russian tourists have been France, Italy, Germany and Spain, with Britain close behind. But the decline in ticket sales has been rapid.The most popular Western European destinations for Russian tourists have been France, Italy, Germany and Spain, with Britain close behind. But the decline in ticket sales has been rapid.
Ski resorts in Austria have already seen tourist flows fall by more than 40 percent, reported Gazeta.ru, a Russian online newspaper, citing a Russian travel agency. According to DaTravel.com, another agency, ticket sales for the most popular destinations, such as Paris, Barcelona, Rome, London, Vienna and Milan, have fallen by 28 percent.Ski resorts in Austria have already seen tourist flows fall by more than 40 percent, reported Gazeta.ru, a Russian online newspaper, citing a Russian travel agency. According to DaTravel.com, another agency, ticket sales for the most popular destinations, such as Paris, Barcelona, Rome, London, Vienna and Milan, have fallen by 28 percent.
Even the lower-cost destinations that are popular among Russians, including the Czech Republic and the Baltic nations, have seen airplane ticket sales fall by at least 14 percent this year, said Martina Bozadzhieva, head of research for Central and Eastern Europe at Frontier Strategy Group, an advisory firm for executives working in emerging markets.Even the lower-cost destinations that are popular among Russians, including the Czech Republic and the Baltic nations, have seen airplane ticket sales fall by at least 14 percent this year, said Martina Bozadzhieva, head of research for Central and Eastern Europe at Frontier Strategy Group, an advisory firm for executives working in emerging markets.
And that is only the start. “We probably won’t see the obvious changes until next summer, when Russians may just cancel their holidays and go to their dachas instead,” Ms. Bozadzhieva said.And that is only the start. “We probably won’t see the obvious changes until next summer, when Russians may just cancel their holidays and go to their dachas instead,” Ms. Bozadzhieva said.
Less-wealthy Russians tend to go toward the sun, to Egypt, Turkey and Thailand, or take the train to Finland. A New Year’s holiday in Thailand for a family of three last year cost about 200,000 rubles, then around $6,000. This year, it is twice that. Less wealthy Russians tend to go toward the sun, to Egypt, Turkey and Thailand, or to take the train to Finland. A New Year’s holiday in Thailand for a family of three last year cost about 200,000 rubles, then around $6,000. This year, it is twice that.
Part of the fall in tourist numbers is linked to the bankruptcies of 20 tour operators and agencies in Russia so far this year. Many Russians depend on travel agents to book their holidays. Agencies relied on bank loans to pre-book hotel rooms and flights, but went bust after banks were hit by Western sanctions and stopped providing credit. One of the most spectacular failures happened this summer, when the firm Labirint collapsed with huge debts to a subsidiary of Aeroflot, stranding 27,000 Russian tourists in Bulgaria, Egypt and Tunisia.Part of the fall in tourist numbers is linked to the bankruptcies of 20 tour operators and agencies in Russia so far this year. Many Russians depend on travel agents to book their holidays. Agencies relied on bank loans to pre-book hotel rooms and flights, but went bust after banks were hit by Western sanctions and stopped providing credit. One of the most spectacular failures happened this summer, when the firm Labirint collapsed with huge debts to a subsidiary of Aeroflot, stranding 27,000 Russian tourists in Bulgaria, Egypt and Tunisia.
European destinations are now too expensive for travelers whose average budget for a 10-day holiday now rarely exceeds 50,000 rubles, or around $850, said the director of a mid-sized Moscow travel agency. As a result she has had to redirect customers to cheaper destinations in Asia, but also to rural Russia, where infrastructure and services have improved.European destinations are now too expensive for travelers whose average budget for a 10-day holiday now rarely exceeds 50,000 rubles, or around $850, said the director of a mid-sized Moscow travel agency. As a result she has had to redirect customers to cheaper destinations in Asia, but also to rural Russia, where infrastructure and services have improved.
As for the reputation of London as “Londongrad,” a haven for Russian oligarchs and wealth, even that somewhat exaggerated appellation is taking a knock. A drop in new Russian buyers is hitting the overheated London luxury property market, which has also been damaged by excessive prices and higher British taxes on the purchase of expensive homes.As for the reputation of London as “Londongrad,” a haven for Russian oligarchs and wealth, even that somewhat exaggerated appellation is taking a knock. A drop in new Russian buyers is hitting the overheated London luxury property market, which has also been damaged by excessive prices and higher British taxes on the purchase of expensive homes.
The John Taylor real-estate agency, which specializes in luxury properties, said that there has been “a collapse of interest” from Russians. The drop in the ruble has made London “prohibitively expensive,” said managing director David Adams. People just cannot see the value in paying 40 percent more for a property that they could have got for less, before the ruble fell,” he said. The John Taylor real-estate agency, which specializes in luxury properties, said that there had been “a collapse of interest” from Russians. The drop in the ruble has made London “prohibitively expensive,” said managing director David Adams. “People just cannot see the value in paying 40 percent more for a property that they could have got for less, before the ruble fell,” he said.
Knight Frank LLP, a real estate consultancy, said that Russian buyers of expensive London property, who ranked first in the first six months of last year, have dropped to third, behind Italian and French buyers.Knight Frank LLP, a real estate consultancy, said that Russian buyers of expensive London property, who ranked first in the first six months of last year, have dropped to third, behind Italian and French buyers.
Moscow is also threatening capital controls and Russian banks are limiting the amount of money clients can withdraw, so that is also hitting the so-called “mainstream” London market of properties costing under 5 million pounds, around $7.8 million. But Russians who have already chosen to park money here in expensive property are likely to sit tight.Moscow is also threatening capital controls and Russian banks are limiting the amount of money clients can withdraw, so that is also hitting the so-called “mainstream” London market of properties costing under 5 million pounds, around $7.8 million. But Russians who have already chosen to park money here in expensive property are likely to sit tight.