how the Russian online travel market is developing and what legal changes it needs

Restrictions on international travel by Russians and difficulties with paying for services abroad after the outbreak of hostilities in Ukraine seriously pushed the growth of the digital segment of the tourism market – online travel. The regrouping of forces was also facilitated by the departure of Booking.com from the Russian Federation, which until the spring of 2022 was a de facto monopolist. At the same time, the legal field for online travel is just being formed. The status of aggregators has not been determined, and the companies themselves, tourists and law enforcement agencies have a vague idea of ​​their responsibility. But the situation may change in the near future, including under the pressure of the summer scandal surrounding the tragic excursion through the Moscow underground sewers, which ended with many victims.

The place is never empty

After the blocking of cards of Russian banks in other countries in the spring of 2022, the cessation of flights to the Russian Federation by most foreign airlines and the termination of their code-sharing programs with carriers from the Russian Federation, online travel agencies (OTAs) became one of the main operators in the sale of air tickets. Now agencies account for at least 50% of the total volume of air tickets sold, says Dmitry Gorin, vice-president of the Russian Union of Travel Industry (RST). According to him, OTA operators sell a quarter of all railway tickets, which is one and a half times more year on year.

According to Bnovo COO Alexandra Naumova, today OTAs account for 72% of online hotel bookings and 32% of their total volume. “Local players have practically replaced Booking.com, which left the Russian market, whose share was comparable until 2022,” she clarifies. Bronevik.com executive director Marina Goncharenko believes that in physical terms, the number of hotel bookings through OTAs in 2023 increased by 69% year-on-year, and seven new players entered the market. The head of the analytical department of the Ricom-Trust investment company, Oleg Abelev, speaks of a multiple increase in the indicators of Russian ecosystems against the backdrop of a low base: for example, the volume of bookings through Yandex has tripled this year, and through Avito – nine times.

The segment continues to grow following the overall growth in travel demand. According to the FSB Border Service, the total number of foreign trips alone in January-September 2023 increased by 20% year-on-year, to 21 million. It is difficult to assess the internal flow of independent tourists who do not use the services of tour operators. According to Rosstat, 66.3 million people stayed in hotels in the Russian Federation in nine months, which is 19% more year-on-year.

Tutu board member Igor Sivets clarifies that two-thirds of Russians prefer to book tickets and accommodation on their own – both directly from hotels and carriers, and through OTAs. The head of Yandex Travel, Pavel Aleshin, adds that most often tourists independently plan trips within the country. Experts cannot estimate OTA’s share in the independent tourism market as a whole. The Ministry of Economy believes that in the next two to three years it will reach 70%.

Irresponsible and relaxed

Despite the active growth of OTAs, the legal field for participants in this segment is still not clearly defined. Managing Director of Ostrovok.ru Daria Kochetkova believes that e-travel is regulated by two main laws – on tourism and consumer protection. Pavel Aleshin adds to the list the regulatory framework for online platforms in general, including laws on information and advertising. “There are still a huge number of by-laws and norms of the Civil Code of the Russian Federation,” notes managing partner of Enterprise Legal Solutions Yuri Fedyukin. Offenses and crimes when initiating cases, according to him, are qualified in accordance with the Code of Administrative Offenses or the Criminal Code. But the concept of “tour aggregator” is not enshrined in any legislative act, which means that the specifics of the work of OTA operators are not taken into account, Ms. Kochetkova emphasizes.

The legal situation in the online travel segment “resembles the situation of marketplaces, where the rules of the game are also interpreted vaguely,” says Skif Consulting senior lawyer Anastasia Shchitova. “Market participants and courts do not always understand how to apply existing laws, but this is more a question of the quality of legal expertise than of the legislator,” notes Digital & Analogue Partners partner Yuri Brisov.

Managing partner of Genesis Artem Denisov believes that now the work of the aggregator can be built on an agency scheme or using a contract for the provision of paid services. This is enough for the OTA segment, Mr. Brisov believes. But the platform’s agency agreement is concluded with service providers, while there are no formal obligations to the user, warns Anastasia Shchitova.

The average consumer also has no understanding of how OTAs work. Mr. Denisov believes that, as a general rule, aggregators act as information intermediaries. This role, Skif Consulting emphasizes, has led to the fact that aggregators are not responsible when a hotel cancels a reservation made through an OTA at the last minute, or when checking into a room that does not match the description.

“This allows online players to feel relaxed,” the company adds. They say that until 2022 the problem was solved more simply: for violation of agreements by hotels, Booking.com, as a de facto monopolist, could afford to stop working with the property.

Tour operators and their agents, according to experts, on the contrary, are directly responsible for the quality of services. “For this reason, unequal market conditions have arisen between the offline travel business and aggregators,” says Dmitry Gorin.

Sewer horror

The issue of implementing regulation for OTAs is constantly being raised: the introduction of the concept of “tour aggregator” into the tourism law began to be discussed back in 2021. But if initially the introduction of legislative norms, according to Kommersant’s interlocutors in the tourism market, caused business rejection, now the situation has changed dramatically. Daria Kochetkova hopes that regulation of the industry can make relationships with consumers more transparent. “The whole market wants this, but business needs to be involved in discussing the topic,” says YouTravel.me Operations Director Inna Zakharova. According to her, market participants have already developed their own set of rules that require legitimization at the legislative level.

Igor Sivets believes that now there is a problem related to determining the responsibility of aggregators for the quality of services. “Unscrupulous players can abuse their powers and violate consumer rights, which creates a negative image for the entire tourism industry,” he worries. General Director of MTS Travel Vadim Melnikov expects that, at the legal level, the activities of market participants will be divided into tour operators, travel agents and travel aggregators – “they all differ both in business model and in degree of responsibility.” The Ministry of Economy is also confident in the need for additional regulation of aggregators, since their business “contains signs of tour operator and travel agency activities.”

Explaining the interest of OTAs themselves in developing industry regulation, one of Kommersant’s interlocutors in the market says that most companies already understand the inevitability of restrictions. Now their main task is to ensure comfortable working conditions for themselves in the future.

“There is no understanding yet of how the concept of a tourism product will be defined in the new tourism law. It is likely that with the new formulations, the activities of aggregators will actually be equated to tour operators,” explains Mr. Gorin. This, according to him, can significantly tighten the requirements for companies, so it is important to fix the definition for them before starting active work on the new law.

The arrest in August of the CEO and co-owner of the excursion aggregator Sputnik (Sputnik8 brand), Alexander Kim, could also have a psychological impact on market participants. Through this site, tourists booked a tour of the Neglinka underground sewers in Moscow, which took place on August 20 and ended in tragedy when eight people died. The organizer of the excursion, digger Nikita Dubas, was also arrested as part of the investigation, and the head of Avangard LLC, Alexander Lazovsky, who also sold this tourist product, was put on the wanted list.

The tourist community, for its part, actively tried to stand up for Alexander Kim. In October, RST President Ilya Umansky sent letters to the head of the Ministry of Economy, Maxim Reshetnikov, and the Chairman of the Investigative Committee of the Russian Federation, Alexander Bastrykin. The appeals called the detention of the co-owner of Sputnik unlawful and indicated that finding him guilty under the article of the Criminal Code of the Russian Federation on the provision of services that do not meet safety requirements, resulting in the death of two or more people, contradicts the meaning of this norm. According to RST, posting information on the aggregator’s website does not constitute an objective aspect of the crime. The initiative has not yet had a direct effect: on October 16, Messrs. Kim and Dubas had their arrest extended for three months.

Sputnik8 explained to Kommersant that after the August events the service abandoned non-standard excursions. The company associates the emergence of the problem with the lack of proper regulation of the excursion services market: requirements for certification of guides will come into force only in 2024.

It is difficult for an aggregator to check the legality and safety of excursions, they say at Sputnik8. It also indicates that the guide may provide false information. “For example, the organizer of excursions in the Neglinka collector informed site visitors that they were approved by the State Unitary Enterprise Mosvodostok and were safe,” explained Sputnik8.

Artem Denisov believes that such situations can arise precisely because the responsibilities of the parties are not clearly defined. “This could lead to prosecution of a person who may seem to have nothing to do with the situation,” he says. Skif Consulting calls the Sputnik case evidence that it will not be easy to get by with spontaneously developed practices in the OTA market. “The risk of similar cases arising, to put it mildly, is not zero,” notes Anastasia Shchitova. The decision on the current proceedings, in her opinion, may well create a precedent that will affect the future fate of the entire OTA segment.

Alexandra Mertsalova, Anatoly Kostyrev