Tourism recovery faces double whammy of Russia’s war, China’s covid policies

Russia’s invasion of Ukraine caused turmoil.

Western sanctions and corporate actions meant Russian credit cards didn’t work, sending tourists scrambling for cash to pay restaurant and hotel bills. As the ruble crashed, Russian vacationers invited friends to share their luxury villas and split costs. Many cut their trips short to avoid being stranded when Aeroflot, Russia’s largest airline, suspended nearly all international flights in early March. Those with hotel reservations canceled.

The war in Ukraine is hitting global tourism just as the industry tries to recover from a two-year battering during the pandemic. The revival was already slowed by uneven travel barriers in Asia, including Japan and, most prominently, China, which prepandemic accounted for 17% of the world’s international tourism expenditure, twice that of the U.S. Now, sun-soaked Mediterranean countries such as Turkey, Cyprus and Egypt that catered to Russia’s middle class, as well as Russian favorites in Asia including Thailand and Vietnam, expect little business from the country this year.

The impact goes beyond these destinations. The war has driven up oil prices, making travel everywhere more expensive. Because Western planes are banned from Russian airspace, some trips are taking much longer. A Finnish airline has revived a Cold War route to Japan that goes over the North Pole, adding three hours to the journey from Helsinki. Air tickets for international trips to Europe declined 7% in the two weeks ended March 9, compared with the two weeks prior, according to data from travel consulting firm ForwardKeys. It excluded Russia, Ukraine and Belarus from the analysis, suggesting that foreign travelers are more hesitant about going to Europe.

The war “is a significant blow to a still slow and uneven recovery," said Sandra Carvao, director of market intelligence and competitiveness at the United Nations World Tourism Organization.

Before the pandemic, Russians took 45 million trips abroad each year, shopping for jewelry and coats in Cyprus boutiques and lounging with beer on Vietnamese beaches. Many countries prized Russian tourists because they tend to travel for long stints. In Vietnam, Russians spend more than visitors from any other major market, in part because they stay, on average, for more than two weeks.

“There is no other nationality or other tourists who could come in to fill these villas," said Ramon Ferrari, a Swiss resident of Thailand who rents high-end vacation homes on the country’s tropical Phuket Island to a clientele that, in the months before the war, skewed 70% Russian. He said visitors from China, Japan and Hong Kong are still missing, and there aren’t enough tourists from other wealthy countries visiting Phuket.

In 2019, China accounted for more than a quarter of Thailand’s 40 million tourist arrivals. During the first two months of 2022, 8,000 Chinese tourists visited Thailand—fewer than the number from Sweden. Local business owners hope that an end to major travel restrictions in Australia and Singapore will provide a boost, but the overall recovery remains uncertain.

“We’re still not seeing broad, mass tourism anywhere near the numbers we’d expect," said Bill Barnett, managing director of C9 Hotelworks, a Thailand-based hospitality consulting firm.

Hotel owners in Cyprus, where Russians usually represent a fifth of tourists, are bracing for the worst. The European Union has banned Russian aircraft from flying to the EU, including Cyprus.

Thanos Michaelides, chief executive of Thanos Hotels & Resorts, a luxury hotel group on the Mediterranean island, said Russians typically make up around 30% of his guests but have stopped booking for the summer. Even if the war were to end in the coming weeks, a weakened ruble would likely prevent many Russians from taking lavish vacations, he said. Mr. Michaelides is using digital advertising to draw potential German and French travelers, though he says it will be difficult to fully replace his lost Russian patrons.

In the Maldives, Russians made up 16% of arrivals in the first two months of 2022, more than any other country, and triple the Russian share in 2019. In February, three direct flights brought around 700 Russian tourists to the island daily. The war has knocked that down to about 300, according to official data.

“Tourism wants a healthy world, a peaceful world," Abdulla Mausoom, the archipelago’s tourism minister, said in an interview. “We were hit really bad because Russia and Ukraine together is nearly 20% of our market share."

On the Indonesian island of Bali, where the government dropped mandatory quarantine requirements for tourists in early March, local business owners say they have yet to see a significant pickup in visitors. Around 20,000 overseas passengers have flown into Bali’s international airport this year, roughly 1.5% of total international visitor arrivals in the first three months of 2019. Ketut Purna, a Balinese business owner with two spas on the island, said he is feeling the absence of Russian tourists. “If they stay in Bali for 15 days, at least they go to the spa for more than 10 days," he said.

Denis Kondratev, a model and fitness trainer from St. Petersburg, Russia, who has lived in Bali for two years, said he pays for purchases by converting rubles into cryptocurrency, which some vendors in Bali will exchange for Indonesian rupiahs. Instead of planning short trips, he said, some Russians are looking to relocate rather than living in Russia.

“Now it’s not a question of vacation," he said. “It’s a question of expat living."

This story has been published from a wire agency feed without modifications to the text