The economic situation remains unstable in Russia and many startups are losing faith in the Russian market. But at the same time, some major players are placing their trust in the “crisis means new opportunities” motto and are including Russia in their international plans.
This is a guest article by Valentin Dombrovsky, head of market relations for Excursiopedia.
I have tried to gather some data on four online travel companies that have entered the Russian market during the past couple of years to sum it up into this article.
(Russian market launch date: February 2012)Airbnb entered the Russian market at a time when the economy was on the up, recovering from the crisis of 2008. Airbnb was already pretty well known in the country and had a presence in Moscow and St. Petersburg, but there was no specific marketing activities for Russian market.
In an interview about its launch in Russia, Airbnb co-founder Nathan Blecharczyk acknowledged that Russia is more difficult, in terms of market adoption compared to other European markets. Nevertheless, during the first year of its official presence in Russia, Airbnb was able to grow: in February 2013 Eugen Miropolski, Airbnb regional director in Europe at the time, noted growth of 400% in the number of listings from Russia on the Airbnb website, with up to 3,000 properties available. Moscow and St. Petersburg were the leading destinations.
And the number of bookings by Russian travelers increased by 1,625% during 2012.
Eighteen months later, in September 2014 Airbnb co-founder Brian Chesky gave his first interview to Russian media and said Airbnb had 8,000 listings in Russia, 3,000 of them in Moscow.
He also mentioned that more than 1 million nights were booked on Airbnb by Russians travelling abroad.
Today, Airbnb’s Russian website has about 2.3 mln. visitors according to Similarweb – this makes it one of the country top-10 websites in travel category.
Russian market launch date: November 2013In November 2013 Uber announced the launch of Uber Black in Moscow and later in St. Petersburg. It is worth noting Uber was entering the market with strong, established rivals. The most notable ones are Yandex.Taxi (the taxi application developed by Russian leading search engine Yandex) and Gettaxi (that was recently rebranded to Gett).
The taxi market in Moscow alone worth an estimated $1 billion a year.
Until September 2014, Uber's Russian business was exclusively “Uber Black” with no presence in the “economy class” market. But in September Uber X was launched in Moscow, bringing a cost-sensitive audience to its app. Other taxi apps tried to match Uber's pricing but failed because Yandex.Taxi and Gettaxi work with taxi companies while Uber works directly with unlicensed drivers.
This gives Uber more flexibility in terms of pricing, but, as in other cities around the world, makes it makes in vulnerable to legislative pressure.
Russian Duma deputy Alexander Starovoytov has written an “open letter” to Vladimir Putin in which he claims that Uber should be banned as it promotes illegal passenger carrying and doesn’t pay taxes in Russia.
The consequences of this letter have yet to materialise.
It's also worth noting that two features which Russian taxi users insist upon are not part of Uber's offer: it doesn’t accept cash payments and taxis cannot be ordered in advance.
Russia was no exception in terms of Uber's experienced its usual clash with taxi companies. But cabbies in Moscow say that Yandex.Taxi and Gettaxi are too harsh in terms of contract conditions such as commissions and minimum tariffs. Uber has brought competition into the market by not working with taxi companies at all.
Russian market launch date: January 2014French ridesharing giant Blablacar's acquisition of Podorozhniki (which covered the Russian and Ukranian markets) was its first move outside the European Union. Expansion to Turkey, India and Mexico soon followed.
According to Podorozhniki founder and Blablacar country manager in Russia and Ukraine Alexey Lazorenko, the service managed to get 1 million users during the first 10 months of its existence in Russia.
Despite the fact that ridesharing is unknown to most Russians, who also seem to be unwilling to travel with strangers, Blablacar proved its value to those who want to spend less on their travels (and it seems that its launch in Russia happened at the right time).
Lazorenko said that adverts on social networks (especially VK.com) proved effective. The leading route for travelers is unsurprisingly Moscow – St. Petersburg. Blablacar doesn’t collect money from Russian users, so it’s too early to speak about financial results yet.
Russian market launch date: April 2015HotelTonight was launched in the middle of April in Moscow and St. Petersburg. Of course, we can’t say anything about results yet– we can only see what expectations the company has at the moment.
When asked about launch in Russia at the time of political and economic uncertainty HotelTonight COO Jared Simons gave Forbes Russia several reasons.
Firstly, European travelers familiar with HotelTonight want to use it when they visit Russia. Similarly, 70,000 Russians have used HotelTonight when travelling internationally.
Second, mobile penetration is about 45 %) in Russia and HotelTonight sees a domestic opportunity in the growing mobile audience.
Finally, the current situation could work in HotelTonight's favour. Properties are looking for new distribution channels while travellers are looking to save money on their stay. HotelTonight expects to gain traction in Russia and to be present here when the crisis is over and the market is back on track.
HotelTonight's commitment to Russia - in financial terms - will equal if not exceed its investment into Italy, Spain or Germany. Simons told Forbes it would be at least $1 million over the next twelve months.
Simons also noted that HotelTonight came across a dozen or so companies trying to launch a HotelTonight-model for the Russian market but without any success. Launching a last-minute hotel booking app is not as easy as it sometimes seems.
NB1 This is a guest article by Valentin Dombrovsky, head of market relations for Excursiopedia.
NB2 Map image by Shutterstock