Market monitor: Russia

Opportunities abound in the Russian global economic powerhouse

Economic overview

Russia’s fast-growing economy is fueled by oil, gas and other commodities. In 2009, it was the world’s largest exporter of natural gas, the second-largest exporter of oil and the third-largest exporter of steel and primary aluminum. Russia’s economy is expanding at roughly 4 percent a year.

Business travel industry insight

Traditionally, bureaucracy, tax and foreign exchange rules have made Russia a difficult market in which to do business. But the financial crisis of 2008 prompted some improvements. For example, billing and settlement plans are now a reality, as are lodge cards in local currency. But cash flow remains critical.

Opportunities

  • Russia is one of the world’s fastest-growing markets, so business travel demand is high.
  • Productivity can be greatly enhanced by technology.
  • Russia is a regional influencer; gains made there can translate to success in neighboring countries.
  • The oil and gas industries that lead the economy, while volatile, have weathered the economic downturn better than many industries.

Challenges

  • Travel programs must contend with multiple booking systems: one for rail, one for hotels and two for airlines.
  • Contracts must be in Russian if payments take place in Russia, and payment must be done in rubles.
  • Online booking is just beginning to take hold and is hampered by a low penetration of credit cards.
  • Established relationships can carry more weight than competitive factors, such as price and service.
  • Corruption is prevalent, even in the travel industry (Transparency International score of 2.4 out of 10).

icon-electricWhen your business expands into new markets, BCD Travel can get your travelers where they need to be. Talk to your account manager about how we can support your company’s growth across the globe.

 

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