Cash-strapped, Russian tourist buys less

Photo: Peeter Langovits

After the Ukrainian crisis erupted this February, Estonian tourism firms feared the political situation, the various sanctions and mainly the fall of rouble will rob Estonia of Russian tourists also.

Though only down by 0.5 percent year-on-year, Russian tourist numbers have dropped every month since March, except in June. 

The traditional two digit growth figure of these past years is but a beautiful memory.

May to August, Russian tourists’ tax-free buys via Global Blue network dropped by a whopping 20 percent year-on-year. This, mind you, is the sole reliable data available as also used by Tax and Customs Board.

€100 no more

According to Global Blue Estonian regional head Kati Aru, developments vary in retail sectors. «The daily stuff is still being purchased, thus the supermarkets are the least affected probably. Those hardest hit are fashion and garment stores, and those selling household electronics,» she said.

According to Ms Aru, Russians’ tax-free buys have been going up since 2010, as their middle class likes the Estonian shopping environment.  

Regionally, the average amounts spent vary – with about €120 spent by Russian tourists in Narva, the Tallinn figure is nearly €200. 

«True, the average is in downward trend compared to 2013; regionally, the drop is mere 3 to 5 euros at places, and two dozen elsewhere,» related Ms Aru.

Baltika Grupp Estonian market manager Pille Põldsam said tourists from Russia pose an important target group for them. «Those coming from the East [i.e. Russia – edit] trust Estonian trademarks, and their average buys tend to be higher,» she said.

With its Monton store this year opened at Narva Astri Centre, Baltica gets a tax-free boost from there. Overall, however, their tax-free purchases have dwindled: over the initial eight months, these dropped by a tenth year-on-year, and the total tax-free-buy sum fell by 15 percent.

Põldma Kaubandus chief Heinar Põldma said Russians buy close to 5 percent at his stores (Guess, Tommy Hilfiger, Pepe Jean­s, Diesel, Tom Tailor, Denim Dream, Mustang, Outlet), depending on where the store stands.

Since spring, with some exceptions, their tax-free turnover started to decline – by a staggering 45 percent in July, September bringing slight sales recovery.

On the average, the drop has been 15 percent – except for Narva, where the turnover keeps quietly growing. The «shopping cart» price is down ten percent.

As also admitted by Kaili Nikkinen, marketing manager at Samdman Grupp in charge of Euronics household electronics stores, the Russians’ tax-free buying is on downhill slope. According to her, the trend is most clearly felt – as pertains to numbers of tourists and the dwindling purchases – in Narva.

When it comes to Estonia having less Russian tourists, a factor may be the 4 million Russian security service employees banned from travelling abroad on April 21st while, traditionally, it is the very middle class who comes to Estonia for vacations – the «class» including lots of officials.

Among others, the Finns have also detected austerity in Russian tourists. «While formerly they spent the €100 bills, now they wave €50 notes,» Kotka region Chamber of Commerce chief Tiina Paavola told Yle. According to her, the crisis was worst in summer; in the fall, the tourism is in the rise again.

Rattled rate

Yesterday, Enterprise Estonia tourism development centre director Tarmo Mutso was back from EU tourism committee meeting where everybody was asking about the Russian tourists.

«Well we keep shrugging our shoulders whether the year will turn up positive or negative. We have had many record-breaking years in a row, and I think we may be able to lift the overall figure a bit by end of year,» he said.

According to Mr Mutso, the amount of tourists is most impacted by the sharp drop of rouble, making everything 30 percent more expensive for Russian clients.

«That is a painful difference. This is a place where people will think if and how they will have a vacation. First in line, they cut the faraway and more expensive spots. That, however, may be in our advantage – the faraway place will, perhaps, be substituted by coming to us,» he said, hopes up.

Mr Mutso’s optimism is also fed by visa issuance statistics which is not in decline – business trips are down, but holidays travel is up. «These are the people who will still be coming to us, at the end of this year or the start of the new,» underlined Mr Mutso.

What complicates the issue is the wave of bankruptcies hitting Russian tourism industry, said Mr Mutso, meaning that many firms which sold trips to Estonia are already bankrupt – or on their way there. Meanwhile, he still believes these will soon be replaced by new ones. 

«It is currently important for us to be present there, to meet with partners and not disappear from the picture. To that end, we did a trip to St Petersburg and Moscow last week, with entrepreneurs, to meet travel agencies, and made them fresh offers irrespective of which firm they will be working under,» described the man.

According to Mr Mutso, the fact remains we are Russia’s neighbour and we must stay ready to host their tourists. But the event organisers who have planned their New Year parties for Russian tourists only, ought to find ways to make these more international.

All countries counted, seven first month tourism into Estonia is up 0.5 percent as fed by tourists from Finland and Asia.