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Will the Russian offensive in Ukraine weaken the tourism recovery in Europe?

The first impact of the Russian aggression on Ukrainian territory was the closure of airspace, paralyzing international traffic to and from the country. The suddenness of the attack has also put European countries in difficulty, as they were still hoping for a diplomatic solution. As a result, many European citizens were, last week, required to remain in "a safe place" until their potential evacuation is organized. They are now asked to find a way to flee Russia and Ukraine but the situation is very complicated.

Ukraine's neighbors are also gradually closing their airspace to protect their territorial integrity, so Moldova closed its skies on Thursday morning and Belarus for the southern part of its territory bordering Ukraine. Many companies do not fly to Russia any more.

A market that was beginning to emerge

Odessa, the Carpathians, so many known and recognized destinations on the international tourist scene. If the tourist activity in Ukraine is still being structured, the most tourist destinations have their ambitions to address the domestic and international markets. Odessa had welcomed a record number of visitors in 2019 with 3.3 million tourists hosted against 700,000 in 2014. The top 3 foreign tourist basins are Russia (22%), the United States (19%) and Poland (10%).  We can therefore understand the violent impact that this conflict could have in the medium term apart from all the brutal consequences related to an armed conflict on the territory.

Like many Central European markets, Ukraine was slowly entering a new phase of its tourism development. Investors were interested in the destination especially since the European Football Cup in 2012. Sébastien Bazin indicated in an interview on BFM Business on Thursday morning, February 24, that investment projects in the Russian territories and surrounding areas could be reviewed in the medium and long term in view of the instability in the region.

Will history repeat itself?

The crisis linked to the annexation of Crimea in 2014 had some slight repercussions on the countries of Central and Eastern Europe, with a decline in occupancy of -1.15 points, breaking the occupancy growth dynamic that had been established. This was quickly reversed in 2015. However, this decline in occupancy did not affect prices, enabling hoteliers in the sector to maintain RevPAR growth.

However, this attack is described by many international players as the most serious crisis in Europe since World War II. Once again, hoteliers will have to deal with endogenous factors that will disrupt their business at a time when they need it most after more than a year of cumulative revenue decline over the past 24 months.

What impact will this have on the French market?

Coastal destinations and the capital must be holding their breath as they have not seen Russian customers since the beginning of the Covid 19 crisis. The hoteliers of La Croisette in Cannes have joined forces with the city to restore the luster of the famous destination, investing 100 million euros on the part of the municipality and several hundred million euros on the part of the hoteliers to renovate such flagships as the Carlton and the Martinez.

The Côte d'Azur's luxury hotels have been waiting impatiently for the return of the Russian clientele, which is a major contributor to the region's economy and which complements other markets. However, since the beginning of 2020, a number of initiatives have been taken in conjunction with local authorities to attract new customers. Thus, a consultation was conducted in early 2021 under the auspices of the SEMEC (cannes tourism board and Palais des Festivals) to identify with the professionals tracks of action to revitalize the tourist attendance and to find a customer base more in line with the offer of the destination.

In 2019, the Russian clientele accounted for 343,000 overnight stays in the Southern Region, placing the market in 8th position among international visitors.

And the Russian market?

The Russian market was recovering with a satisfactory year 2021 according to hotel operators, even better than expected. They also fear lasting damage to the brand image of Russian destinations for hosting congresses, conventions and events. A fear that actually started to come true wiht the moving of several international sport events announced last week-end.

An extremely tense situation on an international scale that further complicates the conditions of recovery for the European tourism sector in addition to panicking the global and European economic indicators with the price of oil skyrocketing above 100 dollars per barrel and a drop in the stock market.

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