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Business news, 21.10.2005 12:33

Tour Operators Start Consolidation Deals

tourism Moscow-based TUI Mostravel Russia acquired the option to buy a 51 percent share of Riviera, one of the leading tour operators in the Northwest region, the Moscow firm said Thursday.

Some market insiders saw the move as the first step in the consolidation of Russia’s tourist market, necessary for the domestic industry to compete on the global arena.

TUI Mostravel Russia, or TMR, can realize the option of acquiring a controlling stake in Riviera during the next four years, as Riviera expands its business and opens branches in Russian cities outside of the Northwest, Vadim Lezhnin, president of Riviera, said Thursday.

“TMR is interested in buying Riviera shares once the [Northwest] company becomes bigger. We’ve been assigned the task of developing our network of branches across the country. Cooperation with Mostravel can speed up this process, Lezhin said. “Riviera’s second task is to expand the number of destinations the company offers.”

Riviera has an extensive branch network and 19 direct sales offices in the Northwest and the Ural regions. TMR will look to promote the awareness of its brand and increase its own sales volumes through its involvement in Riviera, Lezhin said.

Helene Lloyd, director of TMI tourist consultancy, welcomed the deal as “very much needed for [Russia’s tourism] industry.”

“It is probably the first move in terms of consolidation of the market,” she said Thursday in a telephone interview.

“The fact that the Russian market is not consolidated prevents it from developing further. There are many small companies, but some big players need to emerge, if Russian firms are to compete with global tour operators,” Lloyd said.

“If you compare the Russian market to any other European market, there are probably four or five major tour operators in Western European countries. In Russia there are hundreds,” she said.

In the case of Mostravel, which in 2004 formed a joint venture with one of the largest international tour operators TUI AG, it is also a move that shows a bigger involvement of foreign firms in Russia, Lloyd said.

Steven Caron, president of Sindbad Travel International saw the agreement between Riviera and TMR as a part of the current trend of Moscow companies from various sectors expanding their network and operations by purchasing smaller agencies throughout Russia.

“It’s an economy of scale. Companies need to grow in order to compete not only in Russia, but on a global level. It is pretty important these days to align your company to an international global partner,” he said.

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