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Russian travelers shun Southeast Asia as currency crisis bites

PATTAYA -- It is Friday night in the heart of Pattaya, the famous and colorful Thai beachside resort town that became an irresistible lure for Russian tourists during the energy boom that followed the 2008 global financial crisis.

The Cartoon Network's theme park in Pattaya, Thailand, holds its pre-opening ceremony, in July 2014.

     But on the city's notorious Walking Street, it is oddly quiet, and there is plenty of space to stroll -- a rarity during the November to February high season. At the usually raucous bars lining the street there are many empty seats. In Rasputin, a restaurant that serves Russian favorites like beef stroganoff and borscht, only a handful of tables have customers. A year ago the place was packed, the waiter says.

     Some 10km away, down the long stretch of beach lined with the city's hotels and apartment blocks, business is equally slow at the Ravindra Beach Resort & Spa on Jomtien Beach. "Room bookings are down by as much as 80% compared to last year," front office manager Nannicha Watjirametakul told the Nikkei Asian Review. "And it's mainly the Russian market."

     Tourism to Asia from Russia has soared in recent years, especially in the perennially warm countries of Southeast Asia. China remains the most popular destination for Russian tourists, with 2.1 million visits in 2013. But the total was down from 2.6 million in 2011, as Russians eschewed the beaches of China's Hainan Island for Thailand, Vietnam and Cambodia, according to the Pacific Asian Travel Association.

     Russian tourist numbers to Thailand -- now the No. 2 choice for Russian travelers in the Asia Pacific  -- jumped from 1.1 million in 2011 to 1.7 million in 2013, when they constituted 2.5% of the country's total international arrivals, according to figures supplied by the Pacific Asia Travel Association.  Saluda Sarutilavan, Pattaya director of the Tourism Authority of Thailand said that for Pattaya, the proportion was much more significant, at 22%. 

     Rising numbers of Russian visitors have benefited hotels, restaurants and tour operators across the region, with the total increasing significantly between 2011 and 2013, PATA said. In two years Japan saw a 79% rise in Russian tourists, Hong Kong 70%, India 79%, Cambodia 94% and the Philippines 75%. Thailand, which has benefitted most in terms of absolute numbers, had a 68% lift over the two-year period.

     Now Russians are voting with their wallets after a collapse in the ruble caused by a combination of plummeting energy prices and Western sanctions following the Kremlin's territorial disputes with neighboring Ukraine, part of which Russia annexed last year.

     In the 12 months to mid-January 2015, the ruble lost almost 50% of its value against the dollar, and a similar amount against many Asian currencies, including the Thai baht, falling from 0.98 baht to 0.50 baht. Another factor in staunching the flow of regular Russian tourists was the collapse of at least 20 Russian travel agencies and tour operators in mid-2014, according to Russian news agency Itar-Tass. With their cheap deals disappearing, booking options dwindled for many potential travelers.

     According to the president of the Thai Hotels Association (eastern zone), Sanpetch Suppabawonsathien, Russian tourism declined in all parts of the Pattaya market. "The four-to-five star hotels were more affected, with about a 70% decrease, compared to the two-to-three star hotels, which saw a 50% to 60% decline," he told the Nikkei Asian Review.

     Sanpetch noted that the situation was also bad in other parts of Thailand, such as Phuket and Koh Samui, that are "popular with Russian tourists and property investors."

Lots of other woes

Thailand is also suffering from the impact of six months of political street protests that began in November 2013. At least 28 people were killed in and around Bangkok, and hundreds more were injured before the protests ended with a military coup in May 2014. The coup further spooked tourists, and invalidated many of travel insurance policies for use in the country.

     Exacerbating the situation, the baht has strengthened considerably against the currencies of many international tourists as it tracks the strengthening dollar, against which it has remained steady. The dollar bought 32.77 baht on Jan. 27, compared with 32.92 a year earlier.

     Over the same period, the purchasing power of the euro fell from 45.01 baht to 36.96 baht, the Japanese yen from 0.32 baht to 0.28 baht and the Australian dollar from 28.75 baht to 26 baht. Even the Chinese yuan, which is not freely traded, has slipped from 5.44 baht to 5.23 baht.

     Overall, tourist numbers fell 6.9% to 24.71 million in 2014, compared to the previous year, according to the Tourism Authority -- a stark contrast to surging tourist numbers in 2013, which were up 20% on 2012. The Tourism Authority estimated at the end of 2013 that numbers would rise 10% in 2014.

     Some of the missing tourists went elsewhere in Southeast Asia -- particularly to Cambodia and Vietnam, according to the Tourism Authority. "They have the same product -- beach holidays in Southeast Asia -- as Thailand, but their product is newer in the market and it's cheaper," Saluda said.

     According to Vietnam National Administration of Tourism, the country attracted 364,873 Russian tourists in 2014, a 22% increase over the same period for 2013, although numbers were flat in December, compared with the previous year, suggesting that the surge might be running out of steam.

     There were also signs that Cambodia was being hit by the fast-fading Russian market. Seng Bonny, executive director of Cambodian travel agency Eurasie Travel, told The Phnom Penh Post that his company had seen a 40% decline in Russian customers compared to December last year.

     "The numbers could change, but we can't do anything about the [ruble crisis]," he added.

     In Thailand, a big rise in Chinese tourism is picking up some of the slack. Saluda said that the two bright spots for Pattaya were domestic tourists, which had risen by 7% in 2014, and the Chinese market, which was up by more than 10%.

     "The Chinese and Indian markets are expected to increase but we have no figures yet," Sanpetch said, adding: "It will be two more years before the Russians are back."

     The Tourism Authority is optimistic that a new campaign encouraging tourists to "Discover the Thainess" will see numbers bounce back by about 15% this year to 28.36 million.

     But there is plenty of work to do, especially in Pattaya. Back on Jomtien Beach, in the heart of one of the city's key tourist zones, hundreds of deck chairs sit empty. It is a forlorn sight.

     "I need more tourists," complains Aoun, the proprietor of a beachside restaurant and bar. It is a cry being echoed by tourist businesses across Thailand and, increasingly, around the region.

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